The Daily News. MONDAY, JUNE 20. STATE BANK NOTES.

Taranaki Daily News, Volume LIII, Issue 60, 20 June 1910, Page 4

The Daily News. MONDAY, JUNE 20. STATE BANK NOTES.

It is cabled that Mr. Fisher, the Commonwealth Prime Minister, is determined to proceed with his scheme ior the issue of State bank notes, it lias been pointed out that the issue of State Bank j notes will rob the -States of revenue to j the tune of £IOO,OOO a year, that the banks which Jiave notes in circulation | will have to meet tl.cse promissory pap- | ers with gold or by exchange for State notes to be purchased with cash. There arc at the present time abojt three million pounds worth of notes in circulation in the Commonwealth, so that this means that 'banks, which do not always find it convenient to meet the promises to pay in cash, will necessarily have to "draw in their horns." It is also a fact that the Commonwealth Government reserves the right to meet its paper liabilities either with cash or Government consols, the effect being in the latter case that the Government merely renews its promise to pay. The monopoly of paper currency by the Government is probably an attempt to deprive private banks of the profits derived from circulating .paper money which is of no real value and is not worth anything until the promise to pay contained in the document has been carried out. The person who (pays out a debtor in note* * is one of two parties who trust the bank issuing the note to pay in gold. The note, therefore, is merely issued as a convenience to banks to obviate the necessity of carrying-the. cash represented by their note issues; • The Commonwealth cannot make money by making notes, but merely becomes the purveyor of a convenience,, hitherto the monoptly of banks.' Queensland has a State note issue, and it is alleged' that its institution marked an advance in financial methods; The State issued to the banks its own notes, the banks, to show bona fides, depositing only 25 per cent, of the gold represented in the note issue. The Government bought the banks' own note? at their value as printed paper, and stamping them, re-issued them as State paper money. Apart from any possuninjury to banks there are some compensations in regard to the issue of State paper money, for if the State promises to pay, there is no possibility of its not meeting' it? liability, unless the State itself becomes bankrupt. The State, if at anv time it were unable to meet its paper and to pay out in gold, could . pass an Act making its note issue actum legal tender and "as good as goid." The success of the Commonwealth scheme would mean that New Zealand, would be disposed to adopt a similar one, for it is said that Sir Joseph Ward himself was indirectly responsible for the ideal being carried into effect in Queensland, he and Sir Hugh Nelson, once Premier i of the State, having conferred in the matter. The latter, on his return to Queensland; initiated the system which, it is cln v ' il has been a great convenience ' '.? to the people but to the bank- .iJch have the note issue taken out of their hands. Mr. Fisher is probably moved by other considerations than that of the success of the Queensland plan, and, perhaps, holds that the redemption of State notes with Government consols might lead to greater thrift on the part of the people, whose confidence in State guarantee would necessarily be greater than their trust in any private corporation. If New Zealand undertakes a State note issue, the people will approach the scheme basing their views on the success of previous Government schemes. It is only necessary to point to the immense convenience of the Advances to Settlers Department, the Government Life and Fire Insurance, the selling of State coal, and other State benefits to the people, to illustrate the point that the State gives its client a very satisfactory "deal," merely because the idea of profit is not predominant and any profit accruing to the State is shared in by the people who pay it into the Treasury. The entry of the State into pursuits hitherto followed only by private corporations frequently has the effect of lowering the profits of corporations more in keeping with the ability of the masses to pay them.