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.** M*. Atotot 21, 1858.1 THE LEADER. **...
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^ 1 Stafliriutatft CBirnmrriitl. -*-
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^—SHOULD BANKERS PAY INTEREST ON DEPOSIT...
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Rah/way Enterprise at the Cape.—The conc...
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Note: This text has been automatically extracted via Optical Character Recognition (OCR) software. The text has not been manually corrected and should not be relied on to be an accurate representation of the item.
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Cape Of Good Hope Railway. There Is No Q...
Sit the Cape colony is one of . tire very few colonies Sat caasliow an . increasing revenue , and what is fil Tetter a large surplus , amounting in the last fiuLcfal year to upwards of 40 , 000 * But from Sul estimates and Government returns of the Sable traffic to the railway , it appears very Soubtful indeed wliether the local Government will pver be called upon to furnish one sixpence towards fhe euarantee . The calculations made by the . JotbofSe . in 1857 , showed that 70 , 000 / . yearly nfeht be expected to accrue to the railway , but Snce that period considerable increase la all branches of goods and passenger traffic has occurred From the last official returns it appears that . in the thirty working days , exclusive of Sundays , from the 4 th of March to the 8 th of April last year the traffic on the upper and lower roads into Cape Town included more than 50 , 00 ft passengers in velncles , besides nearly 10 , 000 on foot ; 10 , 000 waggonsand carts , carrying above 11 , 000 tons of goods ; 3800 omnibuses and carriages ; and at least 10 , 000 sheep and cattle . In wine and brandy alone the districts . through-which the line runs produce . 31 , 000 pipes and 873 , 000 bushels of «^^ nSfSS ° ^ ' ? iSt from the Cape has risen from 7 , 864 , 000 in 185 . 3 t < -i i g \ c \ i r \ r \ r \ : ^ i ccft . m \ A flint nf wiii p . in the sam (
period from 271 , 707 gallons to 923 , 066 gallons . The revenue of the colony appears to have nearly doubled itself in tlie last ten years , and now exceeds ' 400 , 000 / . But the advantages secured to the railway -proprietors do not end here .. In order to place the payment of the 6 per cent , guarantee to the proprietors beyond contingencies , the act of the colonial legislature by which the 0 per cent , interest is granted , adds a further security to the guarantee l > y a rate m aid , to the extent of 3 per cent ., from the districts through which the railroad passes . We tlunk we ^ have * v . «™ . o « n « cA \ to t > rovc the soundness ot tins
, undertaking , and the prudent foresight which , regulated every step taken by those who will have the honour of inauguratiog a system of railwaysior the Cape , which-will yield a good returnfor outlay , and , wliat is better , wilL be of incalculable service in developing the large latent resources of this most important British dependency . .
.** M*. Atotot 21, 1858.1 The Leader. **...
. ** M * . Atotot 21 , 1858 . 1 THE LEADER . **& — ———^———— , nii « a « r anA r ) iirAraifif > r 1 liniifirtakinfirs- but he can ' in all and diversified undertakingsbut he can '
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^ 1 Stafliriutatft CBirnmrriitl . - * -
^—Should Bankers Pay Interest On Deposit...
^—SHOULD BANKERS PAY INTEREST ON DEPOSITS ? The answer to this question is theoretically so clear and practically so decisive in the affirmative , that we arc astonished ' to find the Times saying that ¦ " the extended practice of hanks allowing interest upon deposits can easily be demonstrated , to be objectionable . " The journal would graciously allow—which is something in a would be dictator" joint-stock banks to bid any terms they think proper for the capital of the community , but their system of business must not be confounded , " it says , " with the old ideas of safe banking " The community and the Times van at variance on [ this point , and the public will now only entrust its ' capital to those who conduct their business , ac-[ cording to the Times , on unsafe principles . Dis-> claiming all intention of informing bankers how i + l . i-c mie-htto carrv on their own business , which
we hold to be a piece of impertinence in public writers , vre shall only endeavour to show that the modem and extended practice of allowing interest on deposits is , at least , compatible with safe banking . Let it be remembered that this is a refined art ; in its present condition it is one of the latest growths of our complicated industrial system , and its practices can no more be prescribed by law or journalism than the practices of the iron shipbuilder or the railway engineer . We explained last -week that the great extension
of banking in modern times has its origin in the vast increase of capital , particularly of share capital . As the rule , share capital is - capital embarked in industrious undertakings , such as railways , jointstock banks , mines , telegraphs , reclaiming lands , & c , andthe extraordinary increase in such undertakings is
one of the . distinguishing features of modern society . It pervades the whole civilised world . By its means almost all great improvements have been in . latter times , and will be i n future , carried out . There will be as much or more capital required tor new undertakings hereafter as heretofore . Jointstock banks are not improperly named investment nnhmanics . bv the . Times . This is , in truth , the
characteristic of- all hanks . So far as they are connected with industry , and are not mere creatures ot the Government , they all hold capital for investment , and especially for investment m new enterprises . When an enterprise is well ^ established , and is of long standing , it is supported b y its -own revenues . The very condition ot its continued existence is that it shall yield a revenue , or be profitable , and not need help . In this condition its ¦ , «* ;« 4 rt fliA hanVfirs hands , it may
, sometimes require to forestal them , or it may require them to l ) e temporarily invested ; but it makes no demands on floating capital . This is all needed for new enterprises . m , „ . Now these arc very numerous . They are not confined to railways , telegraphs , or opening new mines , which call on bankers , for , at least , temporary assistance . Every commercial transaction , every cargo imported or exported on a venture is a new enterprise . It has not been done before , and its results are always doubtful . It begins wththe order of the article to be imported or exported , it ends with its sale and consumption , replacing , as it «« b 1
ought , all the capuai cmpioycu , » .. « , >—a profit . Every extension of cultivation , every opening of a new shop is a new enterprise , and requires capital to commence it , while the returns are doubtful . T ? cr new enterprises the capital in the hands of bankers is required , and to them it is generally applied for . Accordingly , it is considered a rule for Employment of capSal entrustedtolmnkors invested in swi euiwi ^
that it shall bo .. replace , in comparatively short periods , like al dcalinc for approximate consumption , the capital advanced . Jl tanker , then whether a private 01 : » joint-stock banker , is really the active agent for collecting and investing the floating capital of the community in new and productive enterprises . This function requires a very peculiar skill . We cannot possibly himself know the chances of success |
new , acquire a knowledge of the men who conduct them . He may be a veryiaad judge of the probable success of importing a cargo of wool or sugar , but an excellent judge of the character and means of the importer . He may he totally ignorant of the propriety of a farmer extending his business , but he may know Mr . Jobson to be a very trustworthy man . He deals with men , not with goods , and he fails or succeeds as lie estimates them correctly . As a borrower or receiver of capital , he requires little judgment or discretion , except in fixing the rate he will give for it . As a lender , he ought to have extensive knowledge of the persons whom he trusts , and exquisite skill . Writers on the subject of wealth , especially English writers , are apt tcv conl fine their attention too much to material products , I and overlook the more important moral and mental elements of success . They forget that labour without skill may be destructive , and that skill makes it productive . The hanker must be skilled in the character of men as well as in the value of shares , and his opportunities of acquiring a knowledge of the former by receiving their money , and keeping their accounts , enables Mm to lend money , with advantage to them and himself . He thus can do 1 -4 . _ n + r . v ^ = f n f \ nmrlrp . ds or thousands 01 people
| who have small sums , to spare what they could not possibly do for themselves . He can lend these sums with advantage to them and to himself . He spares them the trouble of disposing of their capital ; he relieves them from the anxiety of taking care of it ; it is in no danger from thieves ; and he reaps a lave reward by the services he renders them . He I is enaUed to give them interest on the small sums which they could not possibly obtain without his asssistance . He may have a capital of ! }« own , and Iris skill in employing it may recommend him to others ; but , independently of this , his pecuhai : knowledge enables him to invest money
advantageously , and pay interest to those who entrust it to ° his keeping . . „ Who then , except the skilful banker himself , can decide what he can give for the loan of capital and how he can employ it ? No one , Nor can any rules be laid down for the exercise of his art , especially as to the rates of interest he is to give and take for 01
money . Each new enterprise must be judged . » y itself and by the person who undertakes it . ± 0 prescribe a limit to the interest a banker is to give For deposits , or the sura he is to take on deposit , is to hamper his discretion and substitute blind ignorance for perceiving skill . If new enterprises yield 15 or 20 per cent ., or even 50 per cent ., as many probably did at certain periods between 1 S 5 ^ ana ioec i— ^ v , « ,, i ^ « nt flift hRnlcer cive o oroper cent .
_ for money which he can advantageously and safely lend at 9 or 12 ? To say , then , that any extension of interest on deposits " can be demonstrated to be objectionable , " is to misunderstand the phenomena and use inappropriate language concerning them . An individual banker may mistake , may he greedy or heedless , may give too high a rate of interest on deposits , and may lend on unsafe or < improper securities , but no extent of allowing interests on de-01 aisuuuw
posits , and no raie ,, u « *»*»«— - — objectionable wluch the fact of success justifies . Our contemporary writes more than he reflects on such subjects , and so falls into errors which a little more thought would enable him to avoid . What seems to us wrong is the general practice of fixing a rate of interest for deposits , varying with the minimum rate of discount decreed by the Bank of England . The rule apparently by which the banker should be guided , is what lie can make by what ho borrows . This will at all times depend on the rule of profit in business and the demand lor capital . But the capital in the hands of joint-LtnnV and rmvate banks , and their advances on
. bills , & c , or for new enterprises , are very much in excess of the capital and advances of the Bank ot England . There seems no reason , therefore , why the men who do the most business , and have by tar the best opportunities of knowing good irom bad business , should regulate their conduct by the conduct of those who do the least , and have only a I i ; ni \ i » A m ,, ni . » of knowine the nature of the business dis
| carried on . Moreover , the minimum rate ot - count at the Bank is not determined by . the . general relation between the demand and 8 X > ° / S an ignorant Legislature . The gold in the Bank is I r ^^ S portion of the nat ional capital , chiefly
Rah/Way Enterprise At The Cape.—The Conc...
Rah / way Enterprise at the Cape . —The concession for a railway at the Cape of Good Hope has necessarily directed attention to the position of that colony . As far back as 1847 a project for the construction of the present proposed line was started , and the contract for its construction tendered for by Fox and Henderson . Of this proposal nothing came , the colonists being content to ? m / wW . n « w r « nds would do before they took to the
rail . However , in 1852 , the idea was revived in another form , to make a large inlet called Sandanha Harbour , the port of Cape Town , and to connect it witn the capital by a coast rail of some fifty or sixty miles . Sir John Pakington , then colonial minister , referred the project to the local authorities , who , condemning it , euegested the old line from Cape Town to Wellington . This suggestion was at once adopted by the " Cape Town Railway and Dock Company , ' at the end of 1853 , * ith the project of adding docks m Tab e Ba ^ -to ? ¦ the ««
railroad . As tlie local government n « vc »« .. . r - execution of the breakwater in Table Bay into their own hands , the company have abandoned the dock portion of the scheme . In 1853 the company in England cot an act of incorporation . Various delays occurred ia consequence of the change m the form of tho colonial government , the ltussian war , & c ; but in 1857 the Legislature passed an f act giving a colonial guarantee of a minimum interest of 6 / . per ] cent on sum not exceeding 500 , 0 OOZ . for constructins a railway from Cape Town to Wellington ; threw the whole matter open to competition , and issued as a euido to competitors a report of its civil engineer , which , however , was not of a character to enable parties to j
tender with any accuracy , wihuikj w »«« - - - report , the company , In October 1857 , sent out their enslneer , Mr . Brownger , who laid out a very different line to that of the civil engineer , without any serious difficulties , and sent in a tender on behalf of Ins employers . Tho local authorities referred the whole matter home to Captain Douglas Gallon , of the Board of Trade , -who called for fresh tenders , on new conditions , ana finally decided tho competition in favour of tho old com-™ in t . im ™» rso of last week , securing them M . per
cent , for fiftv years from tlio opening of the line , and giving them power to pay interest at tho same rate on calls during construction , by including tho amount in thoir estimate . The Government give the land free and allow the company to import all materials without duty , and to take -stono and other materials free of cost from government lands . The Cape colony is one of tho very few that can show an increasing revenue , and , what is more , a largo surplus , amounting lu the last fliianciul year to more tlmn 40 , 000 ? .
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Citation
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Leader (1850-1860), Aug. 21, 1858, page 25, in the Nineteenth-Century Serials Edition (2008; 2018) ncse.ac.uk/periodicals/l/issues/cld_21081858/page/25/
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