New Zealand Spectator, AND COOK'S STRAIT GUARDIAN. Saturday, May 18, 1850.

New Zealand Spectator and Cook's Strait Guardian, Volume VI, Issue 500, 18 May 1850, Page 2

New Zealand Spectator, AND COOK'S STRAIT GUARDIAN. Saturday, May 18, 1850.

Our renders are aware that, as has been notified in the Government Gazette, Colonial Banks of Issue have recently been established by the Governor- in- Chief in Auckland and Wellington under the provisions of the Paper Currency Ordinance, passed in October, 1847, which has received the Royal confirmation, and that the Branch Bank in Wellington will be opened for business on the 3rd June. This Ordinance, it will be remembered, was passed in conformity with Lord Grey's despatch, Feb. 27, 1847, in which his Lordship explains his object to be to secure for New Zealand a uniform paper currency of the best description, and regulated upon the most correct principles. With this view it is intended to place the colonial currency entirely under the control of the Government by the establishment of Banks of Issue, the notes of which shall only be issued in exchange for specie and shall be payable in specie on demand. These notes are to be a legal tender in payment of all sums above forty shillings, and their ultimate payment is charged on the general revenue of the colony. Commissioners are appointed to ascertain the average amount of notes of the Union Bank in circulation during the period of two years preceding Ist July, 1847, when the Union Bank will be allowed to isssue its own Bank notes to the extent of the amount so ascertained until a day to be fixed by the Governor in Council of which twelve months notice shall be given, after which period the notes issued by the Government will be the only legal paper monej in the Colony. By a Treasury Minute, May 20, 1848, one- third of the money received in exchange for the notes is to be retained in the Bank and the remainder is to be invested in the British funds, and authority is given to the Commissariat to render any assistance which may be required in the event of any extraordinary demand on the Bank, the Home Government having the power of selling an adequate portion of the Govern-

ment securities of the investments made by the Bank, to repay the assistance so rendered. By the Ordinance the manager is obliged to make a weekly statement to the Treasurer of the amount of notes in circulation and the amount of gold and silver coin, in the Bank, a copy of which is to be posted in the Bank for the inspection of the public, who will thus receive every information as to the actual state and management of the Bank. From the above sketch it will be seen that these notes will be issued by the Government under all the conditions of a currency " regulated upon the most correct principles." It is a currency established on the faith and ere- ' dit of the Government which is or ought to be a higher guarantee than that of any private Company however wealthy ; it is regulated by the public through the action of exchange, since the notes are only issued in exchange for specie ; it is uniform throughout the colony, and payable immediately on demand in specie. The chief objections raised to this currency are, that in a memorial dated Sept. 7, 1847, several merchants and storekeepers of Wellington declared themselves opposed to the measure ; that a pap,er currency (the notes of the Union Bank of Australia) already exists in this settlement with which , the public are satisfied; and that the expense of working the measure will be more than i the profit to be derived from it. In considering the first objection, after allowing all the weight due to the memorial alluded to, which was signed by forty persons, six of whom have since left the colony, it must be i borne in mind that two of the persons engaged in getting up the memorial (Mr. M'Donald, the late Manager of the Wellington branch of the Union Bank of Australia, and Dr. Featherston) were chiefly remarkable for their inveterate hostility to Sir George Grey's government, and that the* memorial only represents the opinions of a portion of one class in one settlement, while the Government is bound to legislate for the interests and convenience of all classes in all the settlements of the colony, and it can be shewn that to a considerable extent the class protesting against the measure will be directly benefited by it. Since the passing of the Ordinance a Branch of the Union Bank has been established at Auckland, and it might be supposed that the notes of the Auckland branch would be readily exchanged at par, by the branch at Wellington. In effect a charge is made of two per cent by the Wellington branch on exchanging Auckland notes, and an additional premium of one per cent, for gold, while no facilities exist for remitting from any other settlement to Wellington. But by means of the Government notes remittances may be made between the different seettlements free of any charge, since these notes are immediately payable on demand in specie at the branch banks of issue. In addition to the facilities for remitting, the advantage of a good paper currency uniform throughout the colony, in the place of the present imperfect substitutes for it, will be sensibly felt in the more distant settlements. In answer to the second objection it is to be observed that Lord Grey's object is to establish, while the field is comparatively clear, a uniform currency on sound principles which shall grow with the growth and strengthen with the strength of the Colony, that however unexceptionable the character and credit of the Union Bank may be, other banks will in time be established in this and other settlements of different degrees of credit and stability, when the value of this currency will be more obvious in preventing the inconvenience arising from the circulation of different private notes, and the mischief caused by the failure of any one of the banks issuing them. While many of the assumptions of the Independent of the expense of the New Bank are probably exaggerated and false, one source of profit, and that not an inconsiderable one, the profit arising from the accidental loss or destruction of notes in a circulation of £15,000 has been overlooked. And it must be borne in mind that while the expenses will remain the same for-some years to come the profit derived from the circulation will be -every * year _ increasing,

but this consideration ought to be subordinate to that of the other advantages sought to be obtained. An opposition is intimated by this writer on the part of the Union Bank of Australia. In explaining the operations of the new bank we are told that " The Colonial Treasurer receives from the Collector of Customs £4,000 in specie every quarter — he exchanges this sum for the Colonial Notes, and then issues these notes in payment of salaries and other demands upon the Govern- • ment. What follows? The whole of these notes within a day or two find their way into the Union Bank, which at once returns them to the Bank of Issue, and takes the £4,000 specie in exchange. The Manager of the Colonial Bank is therefore just where he started from — he has got back his £4,000 of notes — but cash he has none — and his notes he cannot re-issue except in exchange for cash. Where then are the funds for investment?" The answer to this is sufficiently obvious. Since these notes are the only paper currency allowed by law, on the withdrawal of the notes of the Union Bank that establishment must either make use of the Government notes in their transactions, or gold and silver, and it will in effect be found that the new notes will circulate to the amount to which a paper currency is required by the wants and convenience of the public, in other words to the amount of the present circulation of the notes of the Union Bank. But lastly an objection of another character is advanced, and an attempt made to insinuate doubts and suspicions as to the character of the Bank. We will give the objection of this writer in his own words — " But at any rate the Bank of Issue will be safe? Being bound only to issue notes in exchange for cash on demand, it cannot fail ? We doubt it. Suppose a party brings to the Wellington Bank £1, 0( 0 of notes issued at Auckland, and demands, as he is entitled to do, specie in exchange — what follows? Suspension of payment — Notes at a discount — and a second Debenture fraud upan the public !" That a factious opposition will be offered to the new Bank of Issue by those who are opposed to Sir George Grey's government we can readily believe, and the only effect of this opposition will be by its failure to strengthen the Institution and confirm its credit in the estimation of the public. But supposing, for the sake of argument, that in the operations of business £1,000 of notes issued at Auckland are presented for payment in specie at the Wellington Bank. Since the notes are issued only in exchange for cash, it would show the introduction, to that amount, of paper into this Settlement beyond the ordinary circulation, the specie representing its value remaining at Auckland. It does not follow that this sum, sud- I denly demanded, would be productive of injurious consequences ; nevertheless the Government have the power to obviate the possibility of any inconvenience by instructing the Commissariat to advance specie to the Bank in exchange for such notes, if required, and to remit them to Auckland, where specie would in return be received for them, and vice versa, if similar circumstances occurred at the North. Such an arrangement would only be in accordance with the spirit of the Treasury minute previously adverted to ; and we do not apprehend that any further inconvenience would arise in such a contingency beyond the occasional transmission of a few parcels of notes between the two Settlements.

The Cornelia sails this day for England with a valuable cargo of wool, oil, bone, and other colonial produce of the estimated value of £11,600. This is the second ship this season which has sailed from this Port, affording the settlers the opportunity of di - rect communication with England, and from the increasing quantity of wool produced each year in. New Zealand, this article of export is becoming of considerable importance. The Cornelia may be regarded as a regular trader between London and the Southern settlements, and has usually performed the voyage considerably under the average time. She has several cabin passengers.

A farewkll dinner was given to Mr. Marriott on Thursday evening, at Barrett's Hotel, by his friends and admirers, when the opportunity was taken of presenting him with a neat silver snuff-box, with an inscription expressive of their regard and esteem, a compliment which was acknowledged by him in a neat and appropriate manner.

The American Barque Le Baron, on her way to California, put in to this Port on Thursday evening, in consequence of a leak in her upper works. We understand the leak is of a trifling nature and can soon be stopped. She left Nelson on Tuesday.

We have been requested to publish the following letter to Captain Potter of the barque Clara : — Monsieur le Capitaine, Recevez, a votre depart de Wellington l'expression de ma reconnaissance pour tous les egards que tous avez eus pour moi et mon Clerge, pendant notre traversee d' Auckland a la ville de ma residence. Jeme rappellerai toujours avec satisfaction les jours que j'ai passes a bord de la Clara ; et c'est une dette de reconnaissance dont je m'acquitte en cc jour en vous exprimant les sentimens d'estime dont je suis penetre pour vos manieres pleines d'affection et de delicatesse. Puissent dcs prevenances si genereuses dun Protestant envers une . Mission Catholique attirer sur vous dcs faveurs plus solides que celles gui vous viennent dcs hommes. C'est, mon cher Capitaine, le voeu sincere de mon coeur. Recevez, mon cher Monsieur, l'assurance de ma haute consideration. P. L. J. VIARD, Eveque, Adir. Apost. dv Diocese de Wellington. Wellington, le 15 Mai, 1850. Monsieur, Monsieur Potter, Capitaine de la Clara.

[Translation.] Sir, — Accept, on your departure from Wellington, my grateful thanks for your attention to me and my Clergy during our passage from Auckland to Wellington. I shall always remember with satisfaction the time I have spent on board the Clara: and I only discharge a debt of gratitude in expressing my acknowledgements to you for your assiduous kindness. May such generous attention on the part of a Protestant towards a Catholic Mission receive a better return than man can bestow. This, my dear Captain, is the sincere wish of my heart. Accept, my dear Sir, the assurance of my profound consideration. P. L. J. VIARD, Bishop, Apostolic Administrator of the Diocese of Wellington. Wellington, 15th May, 1850. Captain Potter, barque Clara.