The Pamphlet Collection of Sir Robert Stout: Volume 44
Chapter X. Banks and Financial Companies
Chapter X. Banks and Financial Companies.
This sketch of the trade of the colony would be incomplete without a slight glance at its monetary institutions, and other joint-stock companies of a financial nature. The banks are partly local, with resident shareholders, and partly foreign. The two purely local banks, namely, the Bank of New Zealand and the Colonial Bank of New Zealand, transact more than one half of all the business; the former, established nearly twenty years ago, having numerous branches, and the largest proportion of business. The National Bank of New Zealand is a London establishment; with a proportion of shareholders in the colony. The other banks, which are branches of Australian banks, are the Union Bank of Australia, the Bank of New South Wales, and the Bank of Australasia. The whole banks have amongst them a circulation of notes amounting to a million sterling. The total deposits amount to nearly eight millions. The notes and bills discounted amount to six and a quarter millions, and other debts due to the banks to seven and a half millions. The total capital of the banks is about five and a half millions, besides two millions of reserve. Several of the banks have English deposits, which are probably not included in the colonial returns. They all pay page 79 dividends to their shareholders, varying from six per cent, to seventeen and a half per cent., the oldest bank paying the highest dividend. They are well managed, and possess the confidence of the community.
There being no colonial clearing-house, the banks require to keep a large amount of coin and bullion on hand, usually not less than one and three-quarters of a million. The want of a system of clearing is a defect in colonial banking. There is continually seen the anomaly of one bank importing sovereigns from Melbourne, and another exporting them. In 1878 there were three hundred thousand sovereigns imported, and one hundred and five thousand exported. It is also attended with the evil of considerable parcels of gold being scattered about in the small seaport towns, offering a tempting bait to an enemy's cruiser in the event of England being involved in war.
These institutions occupy the most central sites in the various towns. Their buildings are elegant and commodious, rivalling each other in architectural display. We annex an illustration of the Colonial Bank's premises in Dunedin, formerly occupied by the Otago University; but the site being in the central thoroughfare, it was found to be unsuitable, and was sold to the bank by the Council, that they might enjoy academic quiet in a new Gothic structure in the valley of the Water of Leith.
At one time the colony was dependent on English companies for its insurance, but the traders have now taken this branch of business very much into their own hands. There are six local companies, having a subscribed capital of seven millions, a paid-up capital of half a million, and a reserve of £350,000. They have on the whole been successful, although some seasons sufferers from marine risks. The fire premiums are high, varying from 10s. to 15s. per cent, on common risks. Both banks and insurance companies are excepted from the operation of the Colonial Joint-stock Companies Act. Each bank has its own special act, under which the liability of the shareholders is limited to twice the amount of the subscribed capital. The liability of the shareholders in the insurance companies is unlimited. The insurance companies usually invest their capital and reserve in mortgages, retaining a sufficient balance with their banker to meet demands.