Run On Bank.

Banque Chin Foo Ceases Payment.

From Our Own Correspondent.

Papeete, Feb. 25.

THE cessation of payment at the Banque Chin Foo, owing to a lack of liquid resources, created unusual ex citement in Papeete business circles, to say nothing of the really serious incon venience caused to numbers of tourists and temporary residents who placed their funds in that institution for safe keeping.

It is stated that a run on the bank was brought about owing to the collapse of the important Chinese firm of Kong Ah and Co., with which the former was involved. The Kong Ah Co. is now in a state of “liquidation judicaire” and under the control of liquidators appointed by the creditors under the auspices of the Commercial Tribunal of Papeete. It is expected that several smaller subsidiary Chinese houses will be forced into liquidation, owing to the failure of the parent concern.

The Kong Ah Co. has for some time handled a considerable portion of the copra output of the Group. It maintained branches throughout the various archi pelagoes, and several schooners to facili tate the transportation of produce to Papeete headquarters. Among the rea sons given for the failure are undue pressure by the banks for immediate re payment of advances made for purchase of produce, outside borrowing at ruin ous rates of interest in an endeavour to stave off the inevitable crash, the severe drop in copra values, and a general fall ing off of business owing to the low price of all island products.

A meeting of the depositors in the Chin Foo Bank was held yesterday on the bank premises, when a balance sheet was presented, showing an excess of as sets over liabilities of nearly two million francs, but with only the nominal sum of 220,000 francs cash on hand. The assets, which are largely made up of town pro perty in Papeete, coconut plantations scattered throughout the Society Group, live stock and material, have been con servatively valued by competent ap praisers, leaving little doubt that in or dinary times the bank would have no difficulty in quickly finding the neces sary financial aid. As a preliminary measure towards the prevention of bankruptcy proceedings or a forced liquidation of assets, in which case the depositors would probably realise only a small percentage of their credits, it was agreed that the bank would assign all its assets to the creditors, and pay the latter off within two years, in full plus a low rate of interest, and by quarterly instalments; the operations of the bank meanwhile to be under the control of three prominent business men elected by the creditors. This arrangement, how ever, is subject to the approval of the Commercial Tribunal, but with this dif ficulty overcome it appears very likely that sufficient capital will be forthcom ing from local sources to enable the bank to carry on as before, and immediately to pay off numerous small depositors who really need their money for living expenses. There appears to be a good deal of anxiety lest some importunate and chagrined small creditor—of whom a few held aloof from the meeting—may precipitate a crash before the proposed arrangement can be put into effect, and

thus ruin the prospects of all. On the other hand, there is a large amount of influence at work trying to keep the bank afloat, particularly among mer chants who believe that competition be tween rival bankers works to their bene fit in regard to exchanges and remit tances to foreign countries.

Bouffa Cascades,

One of the beauty spots of New Heb rides, within half an hour’s motor-car run of Vila. There are delightful bathing pools above and be low the falls, and one may go into a large cavern, directly beneath the lower Cascade. —Photo by Mrs. D Seagoe.