ESTABLISHMENT OF A MINT FOR SILVER AND COPPER COINAGE, (CORRESPONDENCE RELATIVE TO).

Appendix to the Journals of the House of Representatives, 1873 Session I, H-20a

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ESTABLISHMENT OF A MINT FOR SILVER AND COPPER COINAGE, (CORRESPONDENCE RELATIVE TO).

In Continuation of Papers presented on the Bth September.

Presented to both Souses of the General Assembly by Command of Sis Excellency. Dr. Featherston to the Hon. the Colonial Secretart. 7, Westminster Chambers, Victoria Street, Westminster, SW., Sib,— Hth July, 1873. Eeferring to your letter of March 19th, I have the honor to forward you a memorandum by Mr. Sargeaunt on silver and copper coinage, and also the three reports issued by Mr. Freemantle, the Deputy Master of the Mint.* Having been placed by the Lords of the Treasury in official communication with Mr. Freemantle, I have the honor to report that I was received most cordially by him, and by Mr. Hill, the superintendent of the operative department. They not only gave me the fullest information on the questions raised by you in your Despatch of March 19th—which appear to be to be fully answered in Mr. Sar_;eaunt's memorandum and Mr. Freemantle's official report—but took me over the Mint, exhibited and explained the machinery and the various processes by which coinage of gold, silver, and copper money is carried on. Mr. Hill expressed his opinion that some £5,000 should be added to Mr. Sargeaunt's estimate of the cost of the necessary apparatus, as it would be absolutely essential to have duplicates of many parts of it, and as some parts of the machinery were omitted. Mr. Freemantle and Mr. Hill both concurred in opinion that the Mint buildings would involve an expenditure of from £20,000 to £30,000, and this they seemingly gave as a low estimate ; but you can readily test their estimate by reference to the cost of the buildings of the Sydney and Melbourne Mints. The massive foundations, tunnelling, &c, constitute a great portion of the expense of the building. They pointed out that they were unable to state what staff would be required; but they very plainly showed that, without reference to the extent of coinage operations, it would be necessary to have always at hand a staff of skilled artisans thoroughly conversant with every one of the processes of coinage, even though you could not give them employment one day in a week. It will be perceived that, while the profit ou silver coinage is stated to be from 9 to 10 per cent., this profit is materially reduced by defaced coins being taken at their nominal value. It will further be observed that there is an enormous profit on bronze coinage, but this would scarcely constitute a source of much profit, having regard to the small amount of this coin in circulation in New Zealand. I think that it is quite clear that the establishment would entail a heavy pecuniary loss upon the Colony. I regret to say that no answer has yet been received from the Treasury to the applications of Victoria and New Zealand; but I have reason to believe that permission to coin silver and copper money will be refused. I have, &c, I. E. Featherston, The Hon. the Colonial Secretary, Wellington. Agent-General.

Enclosure. Memobandt/m on New Zealand Government Letter, dated Auckland, the 19th March, 1873, relative to the Establishment of a Mint in that Colony. 1. There is, I believe, no profit, but absolute cost to the Government of this country, in the coinage of gold; but as it is not in contemplation to provide for such a coinage iv New Zealand, however interesting the subject may be, any discussion as to whether the course pursued in this country is politic or not, or whether that followed by other countries is preferable, would be out of place here. * Annual Report of the Deputy Master of the Mint, for 1870,1871, and 1872.

1873. NEW ZEALAND.

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2. I would confine the few remarks I have to offer, then, to the subject of the coinage of silver and copper, but first briefly furnishing information on the points specially alluded to in Mr. Vogel's letter to you of the 19th March last. 3. The apparatus and machinery for a mint for coining silver and bronze, capable of turning out 50,000 pieces per diem, could be purchased in this country for about £10,000. 4. This would include steam engine and boiler, rolling mills, cutting-out machine, marking and milling machine, two coining presses, ironwork for melting furnaces and annealing muffles, the shafting, &c, for driving the various machines, also large press for reproduction of dies, lathe, and the necessary tools to carry on the work, such as trying press for fillets, shears, stoking tools, ingot moulds, &c. 5. The above is exclusive of freight, insurance, and shipping charges, and the necessary outlay for brickwork and buildings in the Colony. 6. The cost of working such a mint, judging by the expenditure on the Sydney Mint, would be about £ per annum. 7. I pass over that part of Mr. Vogel's letter which refers to the views of Her Majesty's Government on this subject, which you will readily ascertain for yourself. 8. The silver coinage of Great Britain is composed of -nfoo pure silver and tMo copper ; the bronze coinage is composed of tij\j copper, too tin, and tto zinc. Pure silver is w-orth about ss. 6d. per ounce; copper, at present price, about £93 per ton; tin, about £135 ; and zinc, about £28 per ton. 9. One pound of standard silver {i.e. alloyed as above) is divided into sixty-six shillings ; one pound of bronze is divided into forty-eight pence, eighty half-pence, or 160 farthings. 10. Silver is coined in Great Britain exclusively at the Eoyal Mint, and any profit from that coinage goes to the benefit of tho public. When silver is worth ss. per ounce, the seignorage, or profit, amounts to 10 per cent. 11. I have seen it stated, but I cannot remember where, that the cost of coining silver may be taken at about 2 per cent. If so, there is obviously a considerable profit on the first operation ; but since, in this country, the Eoyal Mint exchange new coin for old, i.e. when its silver coinage has become worn it makes good the loss, and as in course of years the exchange has to be repeated, the first profit must be swallowed up, and the arrangement eventually entail a serious charge on the public. 12. There are doubtless advantages in having a silver currency sufficient to facilitate all retail transactions ; and it appears to me not only justifiable, but necessary, that silver coins should circulate at a rate beyond their intrinsic value, otherwise, when silver was scarce and consequently dear, silver coins would be withdrawn from circulation, melted down, and sold as.bullion, to the manifest inconvenience of the people. 13. Great injustice would arise from such an arrangement, however, if people could pay their debts to an unlimited amount in tokens—and our depreciated silver currency is nothing else. .For instance, suppose a builder had undertaken to do a certain work for £100, it would be obviously unjust to him if the person for whom he has worked could compel him to accept in payment 2,000 shillings intrinsically worth only £90. In order to prevent such an injustice, and the consequences which would certainly arise from such a state of things, Parliament has limited the legal tender of silver to 40s. 14. Of course the circulation of a depreciated silver currency is for the most part limited to the country where it is exchangeable at a rate beyond its intrinsic value for gold. Out of Great Britain, and those Colonies which retain her currency, the shilling is worth only the value of the silver it is made of: supposing standard silver to be worth ss. the ounce, the shilling is worth 10_d. 15. For this reason, British silver is never found in circulation in France, Germany, or neighbouring States, nor is the silver of those States found in circulation in Great Britain. 16. The profit on bronze is very considerable : one ton of metal is divided into pence of the nominal value of £448. Allowing for metal and cost of coinage, say £130 per ton, there is a gain of £318 on each ton issued. 17. I cannot now enter more fully into the various questions raised by Mr. Vogel's letter to you, and must only notice one other point touched upon by him. He says, to cover the cost of establishing a silver currency, and tho certainty that the coin would be largely exported to different groups of islands in the Pacific, it would be necessary that there should be a considerable margin allowed between the actual and the current values of such a coinage. He adds, that he has not been able to investigate the question, but that it appears to him that a margin of 50 per cent, would be hardly too large to cover the risk of ultimate loss. 18. I cannot understand this, and it appears to me, on the contrary, that the prospect of a large demand for silver coinage in the Pacific Islands might justify the establishment of a mint in New Zealand in a financial point of view, when, without such outside demand, the consumption, so to say, would not be sufficient to pay for the cost of the mint. 19. Suppose the Government of New Zealand to give £3 per lb. for standard silver, for every 36 lbs. the cost would be £108 ; but these 36 lbs. of silver, when converted into shillings, would be exchange for £118 16s. I conclude that in the Colony, as in this country, the legal tender of silver is limited to 405.; if so, the metal purchased with £108 would realize £118 165., or a profit of £10 16s. less cost of coining. It appears to me, then, the greater the demand for silver coinage, from whatever source it may arise, the greater the certainty of satisfactory financial results. W. C. Sargeaunt. Spring Gardens, 30th June, 1873. By Authority : Geobge Didsbvby, Government Printer, Wellington.—lB73. Price 3d.]