standing of all obligants was well known. They were governed by local directorates and were absolutely unfettered by legislation, having an unrestricted right of note issue, and being under no statutory compulsion to publish statements of their position.

In practice, however, these rural banks exhibited a tendency to become family affairs, granting advances only to the directors, their relatives and friends. The growth of our trade outgrew them, and there not being a sufficiency of capital wherewith locally to start banking institutions on the required scale, the colony looked naturally, and not in vain, to the mother country. The capital was forthcoming, but of course the control of it passed out of colonial hands, a fact which for awhile created a strange spasm of resentment.

In 1861, the pioneer of Imperial Banks, the London and South African Bank, appeared on the scene, followed in 1862 by the Standard Bank of British South Africa, in 1879 by the Bank of Africa, and in 1890 by the African Banking Corporation. During the interval, the Oriental Bank had opened, but withdrawn again for reasons unconnected with the Cape.

In or about 1864, an era of absorption and amalgamation set in, the Imperial banks playing the part of Aaron's rod. One by one the Colonial institutions failed or were merged in stronger banks. In 1869, the Frontier Bank collapsed. The Agricultural Bank of Queen's Town, founded in 1863, was compulsorily closed in 1872. In 1882, the Cape Commercial Bank, having unwisely locked up its assets in the Transvaal, had to succumb. On 30th July, 1890, the Union Bank, Cape Town, closed its doors, and on 20th September of the same year, the Cape of Good Hope Bank, once the leading institution, did the same, and was followed on 8th December by the Paarl Bank. The good-will of the remaining Colonial banks was purchased by the African Banking Corporation and of all the old local institutions, there is now only one small survivor.

During the transition period, while the little country banks, so applicable to colonial requirements at an earlier stage, were, one by one, passing out of sight, the two Imperial banks were reduced to one by the purchase of the business of the London and South African Bank by the Standard Bank. The number was again raised to two by the advent of the Bank of Africa, and to three, when it was followed by the African Banking Corporation. These three Imperial banks now divide the business of the Cape Colony between them. During the stress of the last 30 years the only bank which has continuously existed in the Colony is the one to which I have the honour to belong. Measured by years, it cannot claim, even now, to compare with those venerable banks of the mother country of which you, as an Institute, are justly proud, but in a new country, where changes are rapid, it is something to be able to say that, having repeatedly encountered stormy times we have survived the commercial shocks of a whole generation.

It may be convenient here to refer briefly to the legislation we have been subject to in the course of our Cape career. By an Act of 1864 a duty was imposed on our note circulation, and by an Act of 1865 we were compelled to publish half-yearly balance sheets. Both Acts were badly drafted, and the former led to prolonged litigation. Again in 1875 an Act was passed prohibiting the issue of notes of a smaller denomination than £4.

*

By Act No. 6 of 1891, the then Cape treasurer, Mr. Merriman, a man of singular ability, swept away all the earlier enactments relating to banking, substituting for the same a comprehensive measure which, with a few amendments now seen to be necessary, seems likely to stand on the statute book for many years to come. The undoubted excellence of the Act is due, I think, to the administrative wisdom of its author in freely consulting the two parties primarily concernedthe public and the banks-whereas, in some countries, such Acts are apt to be evolved from the inner consciousness of departmental head clerk.

At the Cape, Mr. Merriman transmitted advance copies of the proposed Act to each of the banks, to the chambers of commerce, and to influential merchants and others. No reasonable suggestions were denied a hearing and, as a result, the Act, as finally passed, placed banking law on a sound and durable basis. You would not thank me for submitting to you a detailed analysis of the Act, but I may mention that it permits the issue of one-pound notes, and enacts that all notes, while acquiring a legal tender quality, must be absolutely secured by the lodgment of Cape Government Securities. The amount of the issues, and of the coin in hand to meet them, require to be published in the Gazette monthly. In regard to balance-sheets quarterly statements are provided for, in lieu of half-yearly returns as heretofore, and, apart from these, the treasurer of the Colony is empowered and obliged, at least twice a year, to call upon the banks without prior notice, for what is popularly known as a "surprise statement up to date. All these various balance sheets are published for general information, and to guard against a bank being prejudicially affected by speculative transactions in other colonies or states, a separate statement is required of its affairs outside, as well as inside, the Cape Colony. The Act, in short, while a terror to evil doers, is admirably adapted to prevent recurrent crises, and, as such, is framed in the public interest.

Turning from the Cape to Natal, I may say that, in the latter, the publication of statements is regulated by an Act promulgated by Sir Evelyn Wood, in 1881, and which runs somewhat on the lines of the obsolete Cape law, but one institution is dealt with by special enactment. I allude to the Natal Bank, the senior bank in South Africa, established so far back as 1854, and which, by Acts of the Legislative Council, passed in 1874 and 1875, has to publish average statements, and is debarred from varying the amount of its capital without the

* See Appendix, p. 298.

sanction of the Lords of the Treasury. The government of the colony have also the right to appoint one of the auditors of the bank, the reasons underlying these provisions being that the bulk of the public account is kept at the bank, which is an institution of which Natal colonists are justly proud.

Coming to the Orange Free State, we shall find an institution of a type much fancied by Republics, I mean a quasi-government bank. The National Bank of the Free State, established in 1877, has a paidup capital of £100,000, the bulk of which belongs to the State, but strange to add, the Free State Volksraad has declined to grant to its own bank any exceptional privileges, its notes are not a legal tender, and it is taxed heavily by the State, whenever it opens a new branch, even for the State's convenience.

I now pass to the Transvaal, where the Standard Bank is the senior institution. The Bank of Africa, the African Banking Corporation, and the Natal Bank, have now also opened in the Republic, and a foreign bank founded in the Netherlands is also in existence.

But the whole support of the Executive Government is given to "The Nationale Bank," established in 1891, by special decree of the Volksraad. The subscribed and paid-up capital of the bank is £502,000, of which half a million consists of ordinary capital, the remainder being represented by founders' shares, a species of capital capable, I understand, under expert direction, of formidable results to the general proprietor. Of the ordinary capital, £100,000 is held by the State, who possess certain rights of nomination in regard to directors, managers, and auditors, as well as a general control over the bank's policy by virtue of a regulation enabling them to appoint a syndic-an office at present held by a government official.

In return for these and other supervisory rights, the bank is clothed with various privileges, being created bankers to the State for 50 years and being exempt from note duty, licenses and other taxation, and its officers from military service.

Its note issues are a legal tender to any extent, but coin must be held to the amount of one-third thereof, with a provision, however, that a debt due to the bank by the State shall count as coin.

In addition to the foregoing concessions, the Bank is entrusted with the sole right of coining money within the Republic for a term of twenty-five years, a Mint having been erected in Pretoria and leased to the bank at a nominal rent, the bank contracting to allow the State 30 per cent. of the net profit on all silver minted.

It was, however, discovered that the demand for such silver, if confined exclusively to the Republic, would not of itself suffice to keep the Mint at work all the year round, and the Transvaal Government issued invitations to the other South African States to attend a Mint Conference in Pretoria in order to arrive, if possible, at an agreement to utilise Pretoria Mint silver throughout the country. I had the honour on that occasion to act as delegate for the Cape Colony, but

after prolonged discussion in February, 1893, the Conference was unable to agree to either of the alternative proposals placed before it by the Transvaal Government, but, in lieu thereof, we suggested the cancellation of the coinage concession, and the reconstruction of the Mint as an inter-State Mint, under the joint control of commissioners appointed one by each of the four States, and issuing coins with the arms of those States quartered thereon, such coins to be a legal tender throughout South Africa.

I considered the settlement of the metallic currency on this basis as a distinct step towards the eventual unification of South Africa, and at the request of the Transvaal Government I formulated a draft convention embodying my ideas. The step I advocated has not yet been taken, but I am still disposed to believe that the advantages of an inter-State Mint will, sooner or later, be generally recognised.

To complete my survey of banking in the Transvaal, I must refer to the question of legislation connected therewith. The Nationale Bank, as already stated, is governed by special statute. All other banks are regulated by an Act of 1892, which restricts the right of note issue to certain selected banks, and limits the amount to that of the capital of the issuing bank. All such notes must be covered in full, as to one-third by specie, and as to two-thirds by other assets within the Republic.

In regard to balance sheets, the Transvaal law goes further than that of the Cape Colony, in requiring the publication of monthly, fortnightly or weekly statements, at the discretion of the Government. I am not prepared to condemn this reserved power, which may be of service in checking a bank disposed to launch out beyond the limits of safety.

I have now passed under review the various banking institutions, past and present, of South Africa, and the laws by which they are governed. Something must be said as to the precise distribution of banking facilities and as to the nature and extent of the business transacted. The following analysis approximately enumerates the number of banks and branch banks open for business according to the latest advices ::

It will be seen that the Cape Colony takes a natural lead in respect of the number of points to which banking conveniences have been extended, but the Transvaal is now assuming a good second place, owing to its enormous mineral discoveries. The Free State, once a purely pastoral community, now has its diamond fields at Jagersfontein, Kaal Vallei, and elsewhere, and will ere long need additional banking facilities. Natal, a narrow wedge-shaped territory, with a limited coast-line and only one port, is adequately served, but the growth of its coal output and the gradual rise of its tea and sugar industries, may eventually necessitate an extension of the banking accommodation it now enjoys.

It marks the steady growth of South Africa to remember that, with the exception of a limited number of old-established offices in the Cape Colony, nearly all the remaining branch banks on my list have been opened within the last few years. For a long period there was no large bank save at the coast ports, and the resources of the Colonial banks did not permit of branch extension. Even when at last they moved and opened at interior points, they soon had cause to repent it, neither their resources nor their organisation enabling them to transact a distant and unfamiliar business with safety. It was reserved for English capital-that great fertiliser of the world's financial soil--to extend banking facilities throughout the country.

Now as to the character of the banking business of South Africa. Its tendency is in the direction of diminished discounts and increased open advances, a tendency not unknown I believe among yourselves. Thirty years ago South Africa had no cable communication with the outer world, and no internal railways or telegraphs, while the ocean passage between Plymouth and Cape Town occupied forty days, where now it occupies sixteen. Consequently wool, the staple product, and then, indeed, the only product, of the country, took a long time to reach the coast, and again a long time from the coast to the London market, thus creating a system of long credit. Wholesale merchants, again, unable to send orders to Europe by cable, had to maintain heavy stocks and give purchasers extended credit.

The banks, from these causes, once possessed well-filled Bill-pads, and had the quality of the paper equalled its quantity, an excellent business would have ensued. But excessive credit resulted in heavy losses, leading more than once to severe crises. Gradually, as communication quickened, the usance of credit shortened, until produce was drawn against at sight, and goods were sold for cash less discount. In a few years, the conditions of trade were revolutionized, and whereas the Bills under discount in the Cape Colony stood in 1881, at £10,536,000, they fell in 1891 to £2,800,000. Ordinary advances based on security and repayable on demand, meanwhile largely increased. The change, though having obvious drawbacks, has, on the whole, conduced to a sound and healthy state of