THE COMMERCIAL DEPRESSION.

Inangahua Times, Volume IX, Issue 1392, 25 April 1884, Page 2

THE COMMERCIAL DEPRESSION.

In the course of an address to the Wellington Chamber of Commerce the other day the Chairman in alluding to the existing depression accounted fov it in the following manner : — This depression had been attributed to over importing, and attention called to the large increase in the value of our imports. This excessive importing was encouraged by the many travellers sent out by' firms in Great Britain and elsewhere, who, not being able to .do business with substantial merchants in the large towns, found their way up country, and iuduced people to import in excess of their requirements. There were other causes which contributed to commercial depression, and to which they could not shut their eyes. He referred to the large joint-stock companies mostly under the name of banks, eithei alone or associated with other institutions. They were nominally bankSj hnt in reality trading companies carrying on a combination of the business of land, loan, and investment societies, cormmssion agencies, &c. These were gradually extinguishing the merchants as a class, for private enterprise and capital could not compete against such companies with large capital of their own and large sums of money borrowed in England at low rates. These companies had means of ascertaining the financial position of the customers of merchants, and to those who were fairly substantial it was not uncommon to offer such inducements for direct importation that merchants either found the markets for their goods closed or had to support in business retailers whose financial positrionsdid not justify them in dealing with them. It must be apparent to every observer that the companies were absorbing the trade of the colonies. The trade of Wellington was large enough to maintain in business many more than those trading in the town, but, as it was many existing firms were with difficulty carrying on their business on a profitable hasis. The institu* tions were drawing the life blood of the colony, and were enabled, in addition to tiie interest upon their borrowed capital, to declare dividends ranging from 19 per cent, and the profits of trade were spent in England instead of being retained in the colony. The banking returns as published showed that the business of banking here was very different from that in England, aud also that the present depression was chargeable not only on the excessive importing, but also ou the policy of these institutions in locking up their capital is fixed securities. He was convinced that the recent severe depression was mainly attributable to the colonial system of banking, which loekes up in landed securities <: 70,000,000 out of desposits of £78,000,000.