THE Temuka Leader. THURSDAY, SEPTEMBER 7, 1893. BANKING LEGISLATION.

Temuka Leader, Issue 2552, 7 September 1893, Page 2

THE Temuka Leader. THURSDAY, SEPTEMBER 7, 1893. BANKING LEGISLATION.

The unreasonable and unreasoning run on the Auckland Savings Bank has given the people of this colony an idea of the reed on which they lean. Banks are as safe as need be so long as people repose confidence in them, but not one of them can stand longer than people are disposed to trust them. The Auckland Savings Bank was evidently in a very strong position ; there was nothing said against it, and those who had their money in it slept soundly on the previous night, believing in its stability. A rumour was sot afloat that it was connected with a fallen monetary institution, and it was immediately rushed. The manager addressed the people as follows :

“ We have deposited the following sums : —With the Bank of New Zealand, £16,994 ; Bank of Australasia, £10,5)44; National Bank of New Zealand, £10,913; Colonial Bank of New -Zealahd, £10,944; Union Bank of Australia, £10,942; Bank of New South Wales, £10,994 ; and o ir own working' account at the Bank of New Zealand to-day stands at £57,000. There i-also on deposit with the Government £100,009.” There was nearly a quarter of a million of money available at a moment’s notice, yet the depositors persisted in getting paid in gold, until the Government declared their willingness to guarantee payment. The moment this was made known the people were satisfied, and they commenced to put their money back into the bank again. It is useless to direct attention to the lesson this teaches; we have done so often before without effect. It is, however, interesting to note the action taken by the Government and our representatives in Parliament. Fearing evidently that the run on the Auckland Savings Bank might lead to a general onslaught on other banks, they passed a Bill in one night making bank notes a first charge on the assets of a bank, and also giving the Governor power to declare bank notes a legal tender. Political economists are deadly opposed to making paper money a legal tender, but under such circumstances as are contemplated—that is, an unreasonable run on a bank, —wo cannot see that any great objection can be raised to it. A gold sovereign is a legal tender now; silver to the value of forty-three shillings is a legal tender, aud any one must accept coined gold to any amount in payment of his debts. The meaning of a “legal tender” is that whatever is made so must be accepted in payment of a debt. Now if anyone presented a piece of gold of the same weight and value as a sovereign in payment of a debt, the creditor would not accept it, and he would not be bound to do so because it has not the stamp of the mint on it. It is the stamp of the mint that makes it a legal tender aud gives it its value During the crisis of 1847 in London it was found impossible to raise oven a single sixpence on £60,000 of silver, aud in 1804 in Calcutta £20,000 in gold had not the slightest value. The reason was that silver was not a legal tender in England, and gold was nqt a legal tender in Calcutta. If the £60,000 of silver had been in Calcutta they would have had their full value, aud so with the gold in England. It was the law that made them a legal tender that gave them their value. Now that is what Parliament has given the Governor the power to do. It has given him power to make bank notes a legal tender. This power will not be exercised unless a run takes place, when the Governor can step in, aud declare bank notes a legal tender. That will settle the run at once. When the people find they can get nothing but paper, aud when the ban k can supply as much as they want of it, the run will cease. Under existing circumstances, it must be admitted that this is very good for the banks, at any rate, and unless the power is abused in backing up bankrupt institutions it will be to the advantage of the colony. In America at one time paper money was made a legal tender, and it worked well until the Government refused to take it. . The moment the Government discredited its value,- the vhole country did so, and of course paper money became useless. This was the cause of the depreciated greenbacks in America, and this has ever since frightened people respecting paper money, but there is no danger of such a thing occurring in this colony, ftu.d consequently the power given to the jGoyejL>nor is not likely to lead to anything bpt satisfactory results. THE SILVER QUESTION. Thb&b U nothing against which people ought to guard a/> ranch as the creation of monopolies, as they gre baneful to the public well-being, and very difficult to abolish once they are permitted to get a firm held. This can be inferred from the silver .question in America. Cableerram after cablegram informs that the Sherman laW is to be abolished, and that the silver question is to be dealt v/itfi, and as some of our readers may not understand the bearing of all this it may 7»ot be inappropriate to give an idea of what it means. The Sherman law means that the Government shall purchase 4,500,000 dollars worth of silver per month, for the purpose of making the price of silver so high that it will pay* to work the mines. There are several states in America in j <eh silver mining is the chief industry, , . •'Msoed up by this law. The which is pi - „ •, + j. ia |. there are aow eliect ot this law is .... ■ ’Ole in the 300,000,000 silver dollars lying - cellars of the treasury at Washington, and millions upon millions of dollars worth in the shape of uncoined silver bars, and still the country must find the means to buy, mouth after month, more silver. It is absolutely useless ; there is no market for it, and as in settling up accounts with foreign countries gold must bo found it is valueless as a medium of exchange. President Cleveland at the present time proposes to repeal, this law, so as to relieve the nation of its burden, but the silver mining states are up in arms against it. They see that if it is repealed the price of silver most come down and ruin the industry, and they are determined to resist the repeal of the Sherman law with all thoir force. Colorado, Nevada, Utah, Wyoming, Montana, Arizona, and so on, are holding monster meetings to protest against any iuterfei’ence with the existing state of affairs. They are great silver-producing states; they get gold for silver from the Government, and they mean to keep the Shearman law in operation as long as they can. The beauty of it is that they blame England for it all, but on what ground does not appear very plain, unless it is that England does not give them her gold

for their silver. One excited Californian congressman says : _ “I tell you, Great Britain is behind this silver question, and this great nation permits the price of its own commodities like silver to be fixed in London. Great Britain buys silver at her own price, coins it, and makes 35 per cent, out of the operation: and this nation servilely submits to the indignity. It is shameful.” This is very good, but might not the British farmers reply : ££ I tell you, America is behind these cheap prices. The grain imported from America has reduced the price of our grain by 35 per cent., and yet this nation servilely submits to the indignity.” It is is obvious that the Californian orator’s rhetoric is nonsense. The price of silver is regulated by the law of supply and demand. This Sherman law has resulted in more silver being produced than the world wants, and hence the reason that it is so cheap. But the silver miners apparently do not care much about political economy; they mean to fight for what they deem their right. The Governor of Colorado says;— ‘‘ If the money power shall attempt to sustain its usurpation by a strong hand, we will meet that issue when it is forced upon us,for it is infinitely better that blood should flow to the horse’s bridles rather than that our national liberties should be destroyed. If it is true that the United States is unable to carry out its Governmental policy without dictate or consent of foreign powers : if we are a province of a European monarchy, then we need another revolution, another appeal to arms, and we have won that battle. If war is forced upon us, we will send to Halifax a far greater army of British Tories, according to our population, than our forefathers sent there after the revolutionary war War has begun. It is the sained war which must always be waged against oppression and tyranny to preserve the liberties of man.” This is beautiful. The ££ oppression and tyranny” is the suggestion that the nation cannot continue to purchase useless dross, and “ to preserve the liberties of man” is to insist on the nation buying what is useless. The Mojave Comity Miner, a famous local paper, lays down the duties of mining men tersely and forcibly as follows : “ Study the anatomy of the gold bug, and lay your blows at his weakest point. The more you sniffle the tighter the hands of the devil-fish grips. No compromise; up and at them ; war to the knife hilt; silver men, never surrender; give them h , and commence at home.” This gives an idea of the silver question in America. It is a monopoly created by an Act of Parliament, which is weighing down with crushing force on the whole nation, and . this is the way men interested in its maintenance talk. Let us take a lesson from this, and let us on all occasions guard against allowing monopolies to spring up in our midst.