STATE NOTE ISSUE.

Dominion, Volume 5, Issue 1255, 11 October 1911, Page 4

STATE NOTE ISSUE.

LIMITED TO £3,000,000. SCHEME POSTPONED TILL NEXT SESSION. The issue of bank notes by tho Government of New Zealand is proposed in a Bill introduced in tho Ilouso of Representatives yesterday afternoon. Tho Bill will be advanced to tho second reading stago (his session, and further consideration will then 1)0 postponed until next session, in order tliat nil interested persons may havo ample opportunity of considering the scheme. Tho essential features of tho measure wore explained by the Minister for Finance (Sir Joseph Ward). Ho said that it was intended that tho solo issue ot bank notes in Now Zealand .by tho Govonimont should commence on January 1, 1 ( J13. There will be no tinio limit for tho return of notes now in circulation, and banks will be responsible for payment of tho fnco value of those at any time. By delaying the operation of the Act till 1913, the Government was providing sufficient time for arrangements to la made for the change without friction or inr.om'iniuicc ki tiado and commerce. Notes aro to be issued by tho Minister for Finance at any time, and in any amount, and tliev are to ho legal tender except in payment of any claim or demand against tho Crown, the latter provision being intendedto prevent the possibility of anything in tho shape of a paper currency. They will be payable on demand in gold at tho Treasury in Wellington. Th# notes will be of the denominational values that tho Minister for Finance directs, imd as tho present values have been' found convenient, no change in denomination is contemplated. Tho proceeds from the salo of notes to tho banks ora to form part of tho Consolidated Fund, all expenses incuirod in oonnoction with tho administration of the Note Department aro to be appropriated by Parliament in tho ordinary way. and the Minister for Finance is to hold at all times ft reserve, in gold amounting to not less than ono-foiirlh of tho amount of New Zealand notes issued and outstanding up to ,£3,000,000, and of an amount equal to the value of tho notes 1 outstanding in excess of .£3,000,000. The intention is to limit tho issue to jC3,000,000, but if occasion demands tin issue beyond that amount, tho excess filial! bo secured by a gold reserve of .£1 for iJ. Mr. Wilford (Hntt): Wliat is the value of the notes now in circulation? Sir Joseph Ward: About JC1,600.000. The reserve, ho continued, would bo held solely for the redemption of New Zealand notes, and would not be used for any other purpose. Tho custody and administration of tho reserve would bo provided for b,y regulations, and the reserve will be maintained at tho required amount by payments from or into the Consolidated Funds. A monthly return will lie propared by the Secretary of tho Treasury, counter-signed by tlie Minister for Finance, and published in the Gazette, showing tho number and the amount of New Zealand notes outstanding and tho amount of gold held as reserve. There aro provisions that any bank issuing or circulating other than State notes after the Act comes into operation will bo liable to a lino of ,E5 for cacli note, and that all tho provisions of tho Crimea Act relating to bank notes are to apply to Stato notes. 1 Tho Leader of tho Opposition (Mr. W. F. Massey) suggested that tho Bill should be referred to the Public Accounts Committee. Sir Joseph Ward replied that his intention was that tho Bill should pass. its second reading thi6 6ossion, and if necessary it could Jjo referred to tho committee next session. In reply to questions, Sir Joseph Ward said that the reserve would be kept in gold ingots, and would bo not utilised in any way. Tho remaining 75 per cent, of tho proceeds will bo used probably for advances to farmers and workers. The Bill was read a first time.