NELSON. [From the Nelson Examiner, June 29.]

New Zealand Spectator and Cook's Strait Guardian, Volume VI, Issue 517, 17 July 1850, Page 2

NELSON. [From the Nelson Examiner, June 29.]

There is no branch of the science, of Government which has been more perplexing to the statesman of our country than the question of the currency. While every tyro in the art, every unfledged politician, will tell you how a nation should be ruled, the majority of those who even for years have given some study to the business of government, will be found to profess little knowledge of the mysteries of gold and paper issues, bank circulations, and other similar questions. The subject, somehow, has never been a popular one, which is the more strange, seeing its close intimacy with the breeches pocket — about which, of all things, people generally are the most sensitive. Without speculating* ' further on the singularity of the fact, we may instance as the effect of it, that whenever the currency of the country comes to be discussed, much ignorance of the first principles of the subject is betrayed by many of our public men, while the mass of the people are content to let the combatants settle the points in dispute among themselves, and rarely venture to commit themselves so far as to offer an opinion on either side. It was very natural, then, that when, in the session of 1847, the Governor of this colony introduced a Bill into the Legislative Council for giving New Zealand a Government paper currency, that conflicting opinions should exist as to the wisdom of the measure; and while it was violently opposed by respectable persons at Auckland and Wellington it found little favour, as far as we know, with any considerable body of people in any part of the colony. Nevertheless, in an article we wrote at the time, we stated at considerable length our own views on the question, which were decidedly in favour of the principle of ,

the measure ; believing as we did that it had for its leading objects, 1, public security ; 2, the maintenance of an equal standard of value ; and 3, public economy. There is no need that we should again enter so fully into a consideration of the measure, but as the Bill has become the law of the colony, and government notes are now in circulation, we will briefly recapitulate the arguments used by us on the occasion we refer to. 1. That the system of banking pursued in Great Britain for the last three quarters of a century had failed to give the requisite security to the public. That periodical fits of over-trading, followed by frightful panics, constantly recurred, and that much of this over-speculation was clearly traceable to the easy manufacture and issue of paper by private banks. That these examples of the evils of banking are not confined to Great Britain; in America the same thing had occurred, where, in 1836-7* every bank of the States stopped payment. That the magnitude of the evils created by such repeated failures of banks,; had brought' the more far-sighted and sagacious economists to the conclusion, that the only safeguard against future crashes occurring periodically, was to restrict the issue of paper money by private banks, and that this had been effected, as far as it was possible, where such large money interests were at stake, by the passing of the Act 7 and 8 Viet., c. 32. 2. That one of the greatest evils in British banking is the fluctation in the value of the currency, which, by disturbing bargains and deferred money payments, is often the cause of serious losses to individuals, without fault on their parts. That it is the Province of the State, and the State alone, to issue paper money, for nowhere else can the public look for perfect security, and the maintenance of an equal standard of value. As an illustration of what might be done in banking, we gave the example of the Bank of Amsterdam, which for a long period kept the currency of Holland in an enviable state of equilibrium, by purchasing bullion and specie with its notes whenever its paper rose to a premium of five per cent., and by purchasing back its paper with bullion and specie when its notes fell to four per cent., thus never allowing- the premium on the notes to vary more than one per cent. 3. That a great saving is effected by the substitution of paper money for a metallic currency, which is a pure perquisite of nationality, and should not therefore be conceded to private persons for their individual profit. It is true the profit at first may be but small in a colony like this, perhaps barely sufficient to defray the expenses of the bank, but with the increase of commerce must come an increase of business and profits. To introduce a sound system it is necessary to begin in the infancy of a country, in order not to suffer interests to grow up, which hereafter could only be got rid of at an enormous cost to the public. The deductions which may be made from the above, are, that on the score of economy as well as of safety, a Government paper currency is greatly preferable to the currency of private individuals, however wealthy in repute, or high in station. There is considerable profit, as is well known, attending the issue of paper money, which it is generally agree should be national, and not an individual gain. " If," says Mr. Ricardo, " a charter were about to expire, the public might question the policy of permitting a company to enjoy, all the advantages which attend the supplying a great country with paper money. Paper money may be considered as affording a seignorage equal to the whole exchangeable value — bur seignorage in all countries belongs to the State." And the same excellent authority also observes, " that provided bank paper were issued under Commissioners, independent of the Ministers and of the Parliament, like the Commissioners of the Sinking Fund, proceeding on the principles of keeping, the notes within the real demands of trade for circulating medium, that a paper circulation might dispense with coinage of metallic money." Indeed the only objection of any force which we can see urged against a Government paper currency, is the danger of placing in the hands of Ministers the temptation of an easy manufacture of money ; but if proper checks can be framed in this respect and the notes are convertible on demand, there seems no solid objection to the plan, while much may be said in its favour.