The times. [volume] (Richmond, Va.) 1890-1903, 1893-05-20
THE AUSTRALIANS pANK FAILURES.

The astonishing collapses Of Australian
hanks that have lately taken place have
naturally excited the curiosity Of the
public regarding the causes. We have
watched our exchanges to get some in
tauirible idea of these and feel entirely
prepared TO say that they have been
caused by wild land speculadons OF what
we call the "boom" order I'm which the
Government as well as the banks have
taken a leading part AS sample Oh lhe
wild form that speculation took on there
il may be stated that the Province oil
Victoria had, 10y the year 1891, ioated
bonds to the amount of about SZo1Jtt'
tboueb her population consisted then of
only 11m.0o0 souls. We surrender great
part of our editorial space this morning
TO the following interesting account OF
the general condition of things in Aus
tralia. which we take from the London
Times:
Australian Banking.-It IS probable that
the Victorian Government has by inns
time begun 20 doubt the wisdom of lis
action in pr0claimng five days bahN
holiday. Far from ailayinS the excite
/ ment i'm Melbourne the closure OF lHe
banks has increased it. while seriously
interfering with business of all kinds and
putting the community to great neon
verience. The Bank of Australasia, the
Union Bank of Australia, and the Bank
/ of New Zealand have indeed mitieated the
public inconvenience by disreeardins the
/ PROCLAMATION and opening their offices as
| usual for the receipt and payment OF
money as far ass these operations are
practicable i'm the unusual circumstances.
/ All three occupy as is well known
/ very strong position. which has probably
been yet further strengthened by their
independent action at this crisis.
But If the Government had amy rational
end in view at ALL 80 must have supposed
/ Itself to be STRENGTHENING the weaker
banks. and it is very difficult 10 believe
that this end has been iu any degree ate
tanned by calling attention 10 the differ
euce between them and the stronger ones,
and by giving the public nothing 10 do
for five days except 10 ponder upon the
situation. 10 is said that the Government
contemplates guarantee of the remain
ing banks, and has adopted this original
device of a five days holiday in order 10
gain time to make mp its mind. We can
only hope, I'm that case, that IT'S deIilera-
tions will enable IL TO perceive the folly
Of any such attempt 20 transfer liabilities
To the community at large The strong
banks will not accept it's assistance, and
the weak ones cannot profit by 10 further
than to drag ON a discredited existence.
There is no Government guarantee that
car. convert bad business into good busi-
ness. or enable two banks TO flourish upon
an area which yields proper sustcuauCe
only TO one. There are too many com-
petitOrs for Australian bank business. and,
! as necessary consequence. they have
created an essentially hollow and uns0uud
condition of affairs. That fact has to Doe
faced. and the sooner IL is faced the more
readily will the colonies recover from the
depression they are now grooming under.
out OF fifteen Australian banks. seven
have suspended payment. with deposits
amounting I'm the aggregate TO forty-seyen
millions sterling. Eight Tor nine. if we
include the Bank of New Zealand re-
main standing. with a total os deposits
reaching eishty-one and q half millions.
If we compare the standard of twelve
years ago with that OF to-day. we shall
find that the aforementioned sum repre-
seEts an increase OF banking business very
fairly proportional 10 The increase OF
genuine trade i'm the same period But
Of the banks that have suspended pay
nenti some are undergoing reconstruc-
ton, and viii thus continue TO figure
among the competitors for whatever sound
business is going. In these circumstances
10 seems somewhat rash 10 assume that
the whole OF the banks stiu standing are
in a position so sound as 10 justify the
Government in imposing the risks OF a
State guarantee upon the general body Of
Taxpayers.
An unsOund banking system must al
ways have a prejudicial influence upon
trade and commerce. but il is perhaps not
sufficiently realized how deeply the evil
has eaten into the commercial system Of
the Australian colonies The banks have.
in fact, 10 a great extent superseded the
merchants who ought 10 be their Gus
toners They have become traders and
exporters on their own account. thus
taking the risk of operations which they
are necessarily unfit to conduct with
safety. No doubt they have drifted gradu-
ally INTO that position through the neces-
sity OF taking goods I'm repayment instead
OF money. But that necessity itself is an
indication Of reckless banking. at all
events when developed upon a large scale;
and the forced trading necessarily tends
70 assraVate the evil which IL Is sought
70 remedy. In some Of the worst cases
Australian banks have come 10 grief
through what Is q practical partnership in
an even less justihable form Of enterprise
namely, wild speculation ia land. I'm
mense sums have been advanced upon
land which had risen in price at q rate