The Temuka Leader TUESDAY, AUGUST 25, 1885. NEW PAPER MONEY SCHEME.

Temuka Leader, Issue 1383, 25 August 1885, Page 2

The Temuka Leader TUESDAY, AUGUST 25, 1885. NEW PAPER MONEY SCHEME.

" Necessity is the mother of inven lion." Kvery one now recognises the deplorable state ff depression to which we are reduced in this colony, and a good many persons are trying their li3iid at inventing a remedy. The latest addition to tlie many suggestions before the country is a Bill entitle! the " New Zealand Note Currency Bill," introduced by Mr J. 0. Brown, the member for Tuapeka. This Bill provides that the Colonial Treasurer shall issue " notes of various denominations, but not r.f less value than one pound sterling, in payment of salaries, wages, and oilier debts due, and payable by the Government in the colony in terms of any Appropriation Act, or in exchange for uncoined gold, whether assayed or not." The notes must be signed and countersigned by persons authorised by the Colonial Treasurer, and shall bear interest at .the rate of 5 per cent, per annum, the said interest to be payable half-yearly. The total number of notes in circulation shall not exceed the amount of one year's revenue, which is set clown at four millions sterling. The notes are to be a legal tender fur sums over £2, ami payable on demand at staled places throughout thv colony. The Governor jtay appoint places at which the notes shall be issued and made payable, and also agents fo> - purchasing gold, and the ultimate payment in cash of all these nr.tes is to be made a charge on the consolidated revenue of the colony, lhe price of the gold which is to be purchased with these notes shall not exceed the price given by the Bank of England for standard gold. The gold thus purchased shall be made up in " ingots of convenient size and value," and a sufficient sum of this shall be kept nn hand to pay any holders of notes who may demand cash ; the balance may be either sold in the colony or elsewhere, and the proceeds of the sale shall form a part of the consolidated revenue. These are the leading features of the bill. It contains much worthy of commendation, but it is spoiled by the clause, which makes the notes bear interest. i hat renders the scheme practically useless. I'o put this in a common-sense torn, we have only to point out that if the Government issued £4,000,000 of these notes it would be equal to obtaining a loan of that sum during their currency. But the Government would have to pay 5 per cent, interest for these notes, and as it can raise money at less than that it would loose more than it would gain by them. Besides, there would be the cost of printing the notes, and the persons empowered to sign and countersign t'lem would have to be paid. There nould thusbeßome farther expense, and this wouid have to be added to tha interest, so that in reality the rate would exceed considerably 5 per cent. There is to be furlhei added the interest on the gold which would have to bo kept in reserve to pay the holders of notes when they demanded cash. The interest in th'end would be pretty considerable. When Government can borrow money at less than 5 pT cent, we cannot s> e the a'-lyantage it would gain by this transaction. Ihere is one word which can be said in its favor : the notes would circulate only in the colony, and the interest would therefore be kept in the colony instead of being sent to London if I bo money had been raised there, but the Government could derive no hem fit from it. But setting this consideration apart we cannot a e what good the scheme would do. Supposing, for instance, a Government contractor was paid in these notes, what would he do with them? He would simply place them to his credit in the bank, and the bank would demand payment in cash for them at once. Or, supposing all civil servants were paid in these notes, would they not pay them over to storekeepers, etc., who would pay thprn into the bank, when cash would be demanded for them within a few days of their issue. They would therefore be less handy, but not more useful, than the Government cheque system at present in existence. The scheme is on a par nith Sir Julius Vogel's Mortgage Debentures Bill—both are useless. There is this difference between the two : Mr Brown's scheme has been honestly conceived, th? other has not. Sir Julius Vogel knows, as well as anyone can tell him, that his bill is useless, but Mr Brown honestly believes some good might be done by his own scheme. It is not because we do not appreciate the good intentions of Mr Brown that we thus criticise his scheme, but because we desire to point out to him its weak points, in the hope that he may eventually come round to grasp the substance instead of the shadow. Mr Brown made a good be ginning. To issue notes with which to pay the domestic liabi'ities of the U<-Tf-rnment and purchase gold is a correct idea, but it must be bucked up by a

National Bank to make it practica 1 . If Mr Brown grafted his idea on thoso of the Uon. Mr Bathgate and Mr James Macandrew, the result would he a measure that wouM make this colony, depressed as it is at present, " a land flowing with milk and honey." Mr Bathgate proposes to establish a Clearing House, <md reserve to the State the power of issuing paper money ; Mr Macandrew proposes to establish a Land Bank, to lend money to farmers at a reasonable rate ; and Mr Brown proposes to buy the gold with paper money. These time schemes condensed into one come exactly to the same thing as the National Bank Scheme which had its origin in these columns, and which we have advocated for the past few years. We have carefully considered all schemes and suggestions put forward for the past two years, and the conclusion we have arrived at is that they must all come 'o a National Bank that will transact the business of the Government, local bodies, and landowners. We shall rcf. r to this subject again soon.