56 



AUSTRALASIA. 



On May 27 a conference was held at Mel- 

 bourne between the Premiers of Victoria, New 

 South Wales, and South Australia, with the ob- 

 ject of determining upon a basis of common 

 action in regard to banking legislation. The 

 Premiers of Queensland and Western Australia 

 were to have participated, but both were un- 

 avoidably absent. All those present deemed it 

 advisable to place the banks of issue doing busi- 

 ness in the Australian colonies upon a footing 

 similar to those of the United States ; that de- 

 posits not bearing interest should be a first 

 charge upon assets, and that current accounts 

 should rank next, Government accounts in each 

 case having priority ; that it would be inadvisable 

 for the colonies to establish national banks in the 

 popular signification of the term, and that the 

 savings banks in each colony should be controlled 

 by the state. It was agreed that Sir John 

 Downer, Premier of South Australia, should 

 draught a bill embodying the conclusions 

 reached, and that the measure should be sub- 

 mitted for the approval and legislative action 

 of all the colonies. 



Reconstruction. Following immediately 

 upon the suspension of the various banks, schemes 

 were in most cases presented for their reconstruc- 

 tion for the purpose of resuming business, and 

 these were for the most part promptly accepted 

 by the shareholders and depositors. While dif- 

 fering in minor details these schemes bore a strong 

 resemblance in their general features, and the 

 following, upon which the reorganization of the 

 Commercial Bank of Australia was based, will 

 serve as a fair sample of all of them : 



1. The present company shall be placed in volun- 

 tary liquidation. 



2. A new company shall be formed with a capital 

 of 6,000,000, represented by 600,000 shares fully paid 

 up to 10, composed of preference and ordinary shares 

 as follows : 300,000 preference shares to the creditors 

 in respect of their deposits, or to the old shareholders 

 paid for in cash, thus representing a total of 3,000,- 

 000; 300,000 ordinary shares of 10, each paid up to 

 4, to be allotted to old shareholders in exchange for 

 their present shares paid up to 1,200,000, the uncalled 

 6 per share to be paid by quarterly installments 

 of 5s. per share extending over six years, totaling 

 1,800,000. 



5. Preference shares shall be preferential as to divi- 

 dend, so as to be entitled to a dividend of 5 per cent, 

 before ordinary shares shall be entitled to any ; there- 

 after ordinary shares shall be entitled to a dividend 

 of 5 per cent., after which both classes of shares shall 

 be entitled to equal dividends. 



6. In order to insure the taking of the requisite 

 number of preference shares, all the depositors shall 

 be bound by resolution sanctioned by the court to 

 apply for them pro rata. 



7. The liability of the shareholders in the old com- 

 pany for its uncalled capital shall be extinguished. 



8. The new company shall take over all the assets 

 and liabilities of the ofd company. 



9. Creditors of the old company shall accept deposit 

 receipts of the new company for the balance ot the 

 amounts not absorbed in the payment of the prefer- 

 ence shares for five years from their due dates of pay- 

 ment, carrying interest at 4i per cent, payable half 

 yearly ; the new company to have the option to pay 

 oif any such deposits before maturity, on giving three 

 months' notice. 



10. The assets in globo of the old company shall be 

 constituted an assets arid realization account in the 

 books of the new company, and be credited with such 

 items as are taken over by the new company, and 

 debited with interest half yearly at the rate of 4i per 

 cent, per annum. 



11. If the assets of the old company when realized 

 do not produce sufficient to pay the liabilities of the 

 old company paid by the new company as purchase 

 money, and to provide capital for the snares issued to 

 the creditors ofthe old company, the dividends of the 

 ordinary shareholders, or such portion thereof as the 

 directors of the new company may from time to time 

 decide, shall be retaine dand applied until the defi- 

 ciency is made up ; and the directors may exercise this 

 power before the realization, if a deficiency is antici- 

 pated by them. Should the realization result in a 

 surplus, it shall go to a new reserve fund in the new 

 company. 



12. The bank premises shall be treated as if realized 

 and taken over at the actual amount standing in the 

 books of the old company. 



This scheme, with a few minor modifications, 

 relating chiefly to trustee depositors precluded 

 from taking preference shares, was sanctioned 

 by the court, and the reconstructed bank opened 

 its doors for general business. The following 

 table compares the scheme of reconstruction with 

 that of seven other prominent banks that had 

 suspended : 



3. The formation of the new company shall not 

 depend upon obtaining the whole of the above capital 

 of 6,000,000. 



4. The preference shares shall be preferential to the 

 ordinary capital until the new company shall have 

 paid 10 half-yearly dividends of 8 per cent, per annum, 

 when the preference as to capital shall cease. 



The scheme of the Commercial Company of 

 Sydney differed from all the others tabulated in 

 that it did not provide for any preference shares 

 for depositors. It provided for registration un- 

 der the Limited Liability act, with a capital of 

 2,000,000, in shares of 25, half paid in. Cur- 



