NOTE CIRCULATION OF GERMANY.

WE gave in the "Bankers' Magazine" of February a statement showing the legal limits of the note issue of the Bank of Germany, and the proportion of the circulation allowed to be issued without security being held against it. The following table gives the actual circulation of all the note-issuing German banks at the date of the latest return in October, and the amount allowed to be issued tax free by each bank. It will be observed that the Bank of Germany was very close to its legal limit at that date, and two banks, the Banks of Saxony and of Baden, exceeded it.

THE HISTORY AND DEVELOPMENT OF BANKING IN

AUSTRALASIA.

MR. EDWIN BRETT read a paper on the above interesting subject before the Institute of Bankers at their monthly meeting held at the London Institution, 18th October, the President (Sir John Lubbock) occupying the chair.

Mr. Brett commences by referring to the magnitude of the subtject he has undertaken to discuss, which, although so very young has become of such gigantic growth as to require much time and space to narrate a comprehensive history of its development. Before coming to the immediate subject of the paper, Mr. Brett gives some details of the particulars of the different colonies which make up the group, noting how that the independent legislation of each has affected the local banks in the conduct of their business. He then says:—

"Prior to the advent of parliamentary government in the several colonies the local banks obtained incorporation by "Acts of Council," which are equivalent to the later Acts of Parliament, and both were framed very much upon the lines laid down in the Royal Charter granted by the Crown to the "Bank of Australasia" in 1835, and which has apparently been the model of subsequent "Royal Charters" under which other banks in Australia and elsewhere have been incorporated. It is only proper to speak with all respect of such documents as these, emanating from the Crown, and verified by the Great Seal of England; but it must be admitted that the "Royal Charters" granted to the Australian banks are needlessly cumbersome in some of their provisions, whilst in others they impose disabilities and restrictions upon the operations of the banks which are impotent to the protection either of the public or the proprietors. The liability of the shareholders, under all the charters, is limited to double the amount of their shares, and it is understood that shareholders are made responsible to this extent in the interest of the bank's creditors, who would otherwise have no personal recourse against them if the corporate assets were exhausted.

"That the charters have proved a source of embarassment to the government has been sufficiently manifested in the difficulty the Lords of the Treasury have experienced in the exercise of the rights reserved to the Crown in matters of comparatively immaterial detail. When, for instance, two of the chartered banks applied to the government for necessary permission to increase their capital, in accordance with resolutions of their shareholders, they were informed, in effect, that the Lords of the Treasury were incompetent to judge of the expediency or otherwise of the proposed step, and they therefore declined to move at all in the matter, thus practically prohibiting a proceeding by the negative but none the less effectual process of declining all interference with it.

"At the same time it was intimated to the banks in question that the government wished to relieve the Crown from the controlling powers reserved to it, and bills were subsequently introduced into Parliament with the object of merging all existing charters into statute law, divested, however, of these inconvenient clauses. Owing to the lateness of the

session, rather than to any opposition they had to encounter, the bills never got beyond the second reading, and the government have lately devised another plan for meeting the difficulty. This is by the issue to each bank of a subsidiary or qualifying charter, which dispenses with all reference to, or control of, the Crown in matters of detail, but leaves the original charters untouched in every other respect, and terminable at the end of ten years.

"It was under instructions from the Imperial Government that the disabilities and restrictions embodied in the Royal Charters have been reflected in the Local Acts under which the colonial banks are incorporated. I am sorry that the space at my disposal will not allow of my printing in the Appendix the full text of an important circular which was addressed from Downing Street to the governors of all the British Colonies, on the 30th May, 1846. Here, however, is the 9th Regulation which they were enjoined to see was embodied in every Act for the incorporation of banking companies:-"The company not to advance money on security of lands or houses or ships, or on pledge of merchandise, nor to hold lands or houses except for the transaction of its business, nor own ships or be engaged in trade except as dealers in bullion or bills of exchange, but to confine its transactions to discounting commercial paper and negotiable securities and other legitimate banking business."

Mr. Brett comments upon the apparent anomaly at the present day of such interference with the business of banking, and suggests that a movement in favour of its freedom from vexatious restrictions would be within the province of the Institute. Before entering upon the different phases of banking in the colony, he reviews its prior commercial condition as a means of enabling his hearers to form some idea of the remarkable nature of the soil in which these institutions were planted :

"It must be borne in mind that the parent colony of New South Wales was originally formed in 1788 for the exclusive purposes of a penal settlement of the severe type of the period, and that so far from offering inducements to free settlers to follow the fortunes of the new country, private enterprise was distinctly discouraged by the government of the day. The irrepressible British merchant, however, was not to be shut out from any territory over which the flag of his country floated, and consequently after the lapse of the first ten years, i.e., in 1798, a vessel (the second private ship) arrived in Port Jackson from Calcutta, with a cargo of merchandize under the personal charge of Mr. Robert Campbell, one of the owners, who thus laid the foundation of the eminent mercantile house with which the name of Campbell has ever since been associated. At this period the colony was almost entirely dependent upon foreign importations for its daily food, and as the government transports and provision ships occupied many months on their passage from England, occasionally meeting with disasters or destruction on the voyage, the supplies of the necessaries of life were exceedingly precarious, and the whole settlement was more than once on the verge of starvation.

"Small as were the commercial transactions of such a period, apart from the government disbursements of money or provisions, it soon became evident that the specie imported from England was inadequate to the requirements of business, and it thus became necessary to utilize any other

coins which chance or circumstances had introduced to the community. This heterogeneous currency had to be marshalled into something like order, and to be valued by authority, if it was to serve the purpose of a circulating medium, and accordingly the governor issued a proclamation in the year 1800, fixing the relative value of the various coins as follows::

At the same time copper coin was made legal tender to the amount of £5, and thus the recipient of such a sum would become the possessor of 374lbs. weight of metallic money.

"Still the increasing population and growing trade of the colony outstripped the government importations of coin, and other devices had to be adopted to meet the want of a circulating medium. In this emergency the governor, in 1812, sanctioned the issue, by private individuals, of promissory notes payable on demand in copper coin. It need scarcely be said that the ponderous character of the metallic equivalent-nearly 2lbs. weight of copper for 5s.-favoured the circulation of these promissory notes, which were mostly for that sum, and they passed from hand to hand with greater freedom than a strict view of the obligant's means or credit would always justify. Indeed it was soon found that persons of no means at all were only too willing to accommodate the public by issuing these promises to pay. Notwithstanding, unless they were made by "convicts," they were not only legalised as 66 currency," but the public were prohibited from circulating them at differential rates of exchange, and they were thus placed on a par with the "Commissariat” or government notes.

"By this time the appreciation of the metallic money mentioned in the governor's proclamation of 1800 had been considerably extended, and the Spanish dollar, which had been valued at five shillings, was made to do duty for 6s. 3d., by the ingenious and notable expedient of punching out of the centre a circular piece, which was called a "dump," and was valued at fifteen pence, whilst the rim, now dignified by the appropriate name of a 66 holey dollar," legally circulated for five shillings. These coins (first issued in 1813) were not called in until 1829, and were, therefore, in circulation long after banks were established. In fact, the Bank of New South Wales was accustomed to advertise the payments of its dividends in "dollars" or "Commissariat notes" at the option of the shareholders."

Mr. Brett accounts for the shortness of the supplies of money sent from home by recalling the fact of England being engaged at this

period in a heavy war, and that whilst all supplies of money had to be imported, there were but few articles of export available, added to which the dangers of the seas had to be provided against at great cost and difficulty. Upon peace being restored, however, public attention and private enterprise soon became drawn to the colony, and this brings our author to the subject of Australasian banking. He remarks :-

"The study of Australasian banking statistics is greatly facilitated by the compulsory publication of the quarterly averages of assets and liabilities of the banks trading in the colonies. An Act requiring this was first passed in New South Wales in 1840 (4 Vic. No. 13), and the other colonies have since legislated to the same effect, although_not_in identical terms. For instance, the Victoria "Banks and Currency Statute, 1864," allows any bank not issuing notes to escape the responsibility of publishing returns, and thus the Bank of New Zealand, which carries on à considerable business in Melbourne, but without issuing notes, does not figure amongst the Victorian Banks, and the statements in the appendix to this paper are consequently defective so far as that bank is concerned. The only other material variation in the form of return is seen in the New Zealand average statements. In that colony the Act aims at distinguishing the nature of the banks' advances under three separate headings. and, if any reliance can be placed upon the classification attempted, orthodox bankers may form their own opinions as to the proportion of legitimate business disclosed by these returns."

Mr. Brett then goes on to call attention to the points of information on which these statistics are defective, inasmuch as some of the Australian banks do business outside of the colonies, a statement of which is not embraced in these returns. A summary of the returns for the quarter ending 31st March, 1882, is given in an appendix to the paper. After giving some explanation of various large items which appear in the returns, Mr. Brett proceeds to give some account of that rapid progress of banking business at the Antipodes, which shows a growth of more than double itself in the last ten

years:

Looking back then to that age when the mineral resources of the country were little thought of, and the production of gold was not so much as a dream of the future, the attention of the early colonists was specially turned to pastoral pursuits, and it was seen that the natural grasses of the country were adapted to the rearing of sheep and cattle in numbers which would rapidly increase and become an ever-accumulating source of wealth. This is not the place to dwell upon the heroic and far-seeing achievements of those pioneers of an industry which has done so much to clothe the world in woollen garments, and which promises further to

The words of the Act are

"engaged in the ordinary business

of banking by receiving deposits and issuing bills or notes payable to bearer at sight or on demand."

† 1. Notes and bills discounted.

2, Debts due to the bank.

3. Securities not included under other heads