[The following letter was received too late for insertion in our last number.] To the Editor of the New Zealand Spectator. Wellington, Sept. 15th. 1854.

New Zealand Spectator and Cook's Strait Guardian, Volume IX, Issue 953, 20 September 1854, Page 3

[The following letter was received too late for insertion in our last number.] To the Editor of the New Zealand Spectator. Wellington, Sept. 15th. 1854.

Wellington, Sept. Sir, —As the report of a Committee of the House of Representatives upon the Bank of Issue has been placed before the public, and I think uncommented upon by the Press, and as Mr. Raymond's notes appended, although with one exception very just, may fairly be looked upon as coming from a source not altogether independent, the following remarks from one who has given the subject some consideration, may not be entirely misplaced, and may serve to call attention to this somewhat important subject. I will pass over the wordy portion of the document^ , which is got up in that claptrap style often adopted bypretentious persons, in order to create an impression in others that they fully understand the matter in hand. It is easy to see that an attack was to be made, with or without reason, upon the scheme of Lord Grey and his colleagues which, to do it justice, bears the stamp f views somewhat in advance of the political economy o the day, and these barbarian politicians must Jnecessarily have their war dance in order to intimidate their civilized compatriots of the old world in their humane overtures. As in some measure the champion of the defenceless Bank of Issue, I will not waste my strength in useless gesticulations, but stand firm where they come to bfcws, I refer to the concluding part where the whole is condensed in a series of objections to the scheme. First, then, it is not entirely uncalled for. It must be in the recollection of many persons here, that before the establishment of the Bank of Issue, the Union Bank of Australia, which then monopolized the circulation, was in the habit of sweating the colonists by charging one per cent. (I think I have paid two per cent.) exchange upon their own notes issued in the different settlements. Previously to that it had issued notes not payable in cash at all, but in bills on Sydney : so much for the blessings of free banking Institutions as they are adroitly described. As to its being unfitting in a young colony, when, I should like to know, could the experiment be tried better than in a young colony where there are no long established customs to break up, when legislators have as it were a mere carte blanche; do the noodles mean to tell us that it ought to be tried in an old country, in preference, where there are all sorts of vested interests and other obstacles to overcome ? Can I not write better on this clean paper than I could on your printed sheet, Mr. Editor ? I need say no more on this head. Secondly, —li does not " limit the currency to the quantity of gold coinage which may happen to ie at any time in the country" inasmuch as it does not necessarily follow that all the gold coinage will be invested in the Bank of Issue, much less the other descriptions of currency spoken of in the Report. Traders and others may introduce as much gold or other currency as they require. Further, the Act provides, I believe, that only one third the gold and silver received by the Bank in exchange for its notes shall be held in the Bank coffers to meet any demands on it for the paper issued. But have we not ample experience that it has not restricted the currency during its operation. The Report itself shows that at Auck: land the notes have been scarcely used, and nevertheless there has been no complaint of a want of currency there, I mean they have had as much currency in circulation as the amount of business done required. At Wellington we find it so convenient that we use it freely, because we know that it is convertible at any time without discount, and it is not forced upon us. The Bank of lisne has no power to put any more of its paper in circulation than we choose, the people of Auckland seem to have been quite aware of this fact, and have acted upon it, and if anything could recommend the continuation of the Bank of Issue, in my mind it -would be the circumstance of the Auckland people having proved that they can limit its circulation to so small an amount and so narrow a circle. Are the Gentlemen of the Committee aware that the most notable objection to paper money of all kinds is its liability to excess, that the monetary system in the old country has been frequently deranged by its redundancy, that the only benefits arising from its use, according to Adam Smith and others are, first, its enabling the trading community to invest the metal or the value of the metal which it represents in the purchase of the materials of manufactures, &c.; secondly its convenience for transit, lightness, and absence of risk and thirdly —the tear and wear it saves in the coin. This last is doubtful, as paper itself is an expensive material. The first advantage cannot arise to us unless the specie displaced by the paper be beneficially invested within the colony. Now the Union Bank of Australia would not advance a greater amount upon commercial transactions, or for other purposes, in consequence of being allowed the privilege of issuing its own notes. Therefore the advantages would all accrue to the parent Banking establishments in New South Wales, England, &c. The third objection, namely, that the " moderate expectations'' which the report says, "Lord Grey had formed of it a* an economic measure have not^ been realized " may be said to be borne out by fact it is true, but it is plain that this is because the field for its opeitf; tion has not yet been suflSsiently large to enable thfr interest of its investments to cover the expense of* management, or more probably that a certain " antago-i

nism " at Auckland and elsewhere has limited that field, perhaps it is not generally known that it is only within the last few months that the notes have been allowed to circulate at Nelson and Canterbury, no doubt the amount issued is much larger in consequence, and of course theinterestsfrom investments will be proportionately increased. Fourth, fifth, and sixth objections are unmeaning verbiage. Mr. Raymond very justly remarks that to comment upon them would be impossible. The truth is our doughty belligerents feel that their irregular system of charging is not very effective against the order and discipline to which they are opposed, and they are leign to retreat and try the war dance again. Let the Committee rest assured that the paper currency of this Colony is sufficiently •• expansive," it has a more valuable feature, it is contractile. The only expansion it reqnires is that it may be extended to the other colonies, so as to serve as a medium of exchange between them as it now does between individuals here, and so save to the traders, and through them to the community, bank exchanges, which are at present rather extortionate. Mr. Raymond agrees with the Report, that the Bank of Issue is an interference with "Free trading in Banking," this is natural, in his position. But the committee fight with the wind; the Bank of Issue is not a bank other than in name, it is merely au office for the issue of an uniform paper money, with a government guarantee for its convertibility, and surely this is better than any private paper, even that of the Union Bank of Australia, and the colonists must recollect we might be open to an inundation of notes of a much less respectable character. The unwary poor man who could least afford it has often suffered at home in England from holding the paper of insolvent banks. But 1 really believe that if the committee had been requested to report upon the Boulder Bank at Nelson, or a boiling-down establishment under the name Bank, they would have done so in similar terms, it is " words j not things " with them. There is however, another view which the Boys playing at parliament in the North would never think of with all their patriotism, and that is, how far it will be desirable to give a government so powerful a check rein upon their subjects as the possession of their cash ? One good effect would, I hope, be to make the constituency pause before they give their votes. X am Sir, Your's respectfully, CENSOR.