There is a great difference between a bank which has gradually become larger and one which, in consequence of many amalgamations, has doubled its deposits.

It was recently stated by the official liquidator that one of the reasons why a certain bank failed was the difficulty of effective control and proper supervision over a branch so far away from the central establishment.

It is the age for large banking institutions, like it is the age for the conversion of large undertakings into limited companies. We can only hope that the great influence which large banks possess may prove beneficial to the community. If the banks satisfy the legitimate wants of the community, and charge a moderate amount for banking accommodation, there will be no justification in the remark that the tendency of modern banking is towards a monopoly.

One of the difficulties of the present day is that of the deposit system. We find reference made at bank meetings to the difficulty experienced in utilising deposit money. At times the rate for call money and three months' bills has been below the rate allowed on deposits, or the margin has been so small that no profit could be made, or not sufficient to pay working expenses. We do not think this ought to be the case, because the banks should be able to combine among themselves, and then either refuse deposit money or lower the rate so that a margin for profit should exist.

We have recently been reminded by the official liquidator that the high rate of interest allowed by a certain bank was one of the causes of its failure. At the present time we have a curious instance of the deposit system, and that is, the Government allowing £2 10s. per cent. on deposits which are invested in Consols realising £2 6s. 3d. per cent., in addition to the expenses of management, which amount to 9s. l 1/2. per cent. Thus the total loss is about 13s. per cent.

During the present year Consols have risen to 112, and therefore the loss on the Savings Bank deposits is still greater. However, the present Chancellor of the Exchequer recognises the position, and will no doubt suggest some modification of the present system.

The deposits in the Savings Banks amount to £90,000,000 and in the Trustee Banks to £43,000,000. It seems an anomaly that such a loss should occur, and that the Government should compete for deposits against the other banks of the country.

Again, there is practically no cash reserve held against deposits amounting to £133,000,000.