, 1893-06-21

~ dSOAcS 0hJ AA'GOA 0hfAS WAAAN0AA la ~ A4AAO
of experienced bank manage s, was likely to
pay. Nothing could be better; but il the
confidence of depositors is destroyed, how is
this system to be recommended, and how can
confidence revive under these reconstruc.
tions," which are in practice refusals to pay
back deposits for FIVE years? When an English
bank fails the depositors come upon the share
holders, and after some delay get their money
or most Of it back again but under these re-
constructions they have no security of that
sort. They are told that to press Q liquida-
ton would be luinous, that they must go on
depositing for FIVE years longer-in a recent
scheme we see it is actually ten years and
that then, if the bank can pay, which ia al
ways represented as certain, they will ell be
paid. They will not all be paid, for # they
all want to withdraw at once, the banks wilt
no more be able to pay them OF than they
are able now. How should they be, or whence
is the new resource to be obtained ? It is all
very we'll to say. as half the City Editors are
saying, that in future the Australian banks
will prosper because they will ''keep their
resources liquid but the statement is the
merest vrrbiage. Australian banks are not
established to lend money on Console, even il
Consols were saleable in Melbourne or Sydney
du ilg a panic, but to lend money like our
old country banks, on half-cleared farms and
half built houses, sHnd every variety OF I'm.
finished undertaking. 1t is capital business
if wisely managed, with large interest in it,
the Commercial Bank of Sydney paid Is per
cent for seventeen years on end-and except
when "a booming lit" seizes the people, with
very little risk but if the bankers want
money in masses at a days notice, they simply
cannot get it. They might as we'll try to get
it from farmers six weeks before harvest.
Even if they force sales they get next
to no hing; and transfers Of their rights of
fol eclosure involve excessive losses, and ae
sometimes as impossible as foreclosures
themselves. They are all in one boat, all
doing the same thing, and all therefore,
want money just at the same moment. We
do not see how money lent to Australia can
be exempted from this risk, except, sslndeed,
by a System Of insurance.; and confidence
in insurance seems to us heavily hit by
these constructions The great companies
which insure do not as we understand the
matter, pay up at once the deposits insured
and take over the depositOrs' claims, but
only say they will pay if the depositors are
not ultimately repaid. That is not what tho
regular ruok of depositorS want; and if the
system cannot be improved, We may rely on
it that money will not go to Australia, as
heretofore in millions for 4 per cent. or any-
thing like that inter est. We may Judge Of
the exteAt to which confidence is at present
NA"NCA ~ Ills NAHO VIZ = -
bank which suspended closed it's doors
ON receipt of advices that the whole Of it's
Scotch depo>itors intended on the next te,n
day to call in their deposits. an event which
would bring down any bank in the world.
We are wholly unable 80 see any scheme
under which the lending Of money 10 Colo
MES can be made safer than il is. The Colo.
nial Governments would not accept the po-
rition of Auditors General and if they did
their audit, beyond preventing dishonesty,
would produce but little result. How are
they to know that the rise of values in Mel
bourne has been carried too for? or that there
is agreat fall coming in the wool trade
Governments rather believe in "boOms'
as proofs that they are governing wisely; aud
think, IS the Government of Bombey thought
just before the cotton boom smashed
everybody, that prosperity once set going
will last forever. The trust companies will
not run the risk of p~eremptory insurance
that is, insurance against every form Of loss
without asking prohibitoIy rates; and as
to an improved method of business
that is q promise merely. Depositors cannot
send their own ohairmen to Australia to see
that their bank does cot lend it's money too
fast, nor Can commuters of depositors here
govern directors action in Melbourne.
Banks are not set up in play; they must