THE EXAMINER. 171

By A niherity. | ‘If the measures which I have thus suggested should |terests could permit, at the time that the arrangement

8 . ‘be adopted by the local Government, it would become was made. In New Zealand, a simpler and mue per- {necessary that no Paper money except Treasury Notes fect system may, | hope, be adopted. I would suggest | should be allowed to be issued or circulated in the Coluny. that a law shouid be passed, authorizing the issue of a

Extract of a Despatch from the Right Honorable Ear]

‘ecollency Si bell, Bart. a Grey to His Excellency Sir Donald Campre oe ‘If Banks should at any future time be established in Colonial paper Currency, which should be a legal tender Downine Srreer, 12th November, 1847. [the [sland, they should only be at liberty to carry on in payment of all sums exceeding forty shillings; for No, 2. |their business with the Currency of the Colony. suuis under forty shillings, British silver coin should be

Sir; ‘In further explanation of ny views on this subject, I received,as in this country. ‘Among the subjects which will require the early ‘enclose for your information an Extract of a Despatch ‘ ‘I'his Colonial paper should be made payable either consideration of yourself and the Legislature of Prince) which | have recently addressed to the Governor of New in gold at the English Mint price, or in silver, receiving | Edward Island, are several of very great importance to) Zealand on the subject of the Currency of those Islands./ the coins of different nations (except British silver) at |

“ ° } ‘ - ; the welfare of that Colony, and to which my attention) + {t will be your duty to impress these views upon the the rated values assigned to them in the Proclamations has been more especially called by the Speaker of the) Legislative Council and Assembly of Prince Edward from time to time issued under the authority of the House of Assembly and Mr. Palmer, in an interview/[sland. Should these bodies contrary to my expectation, Lords Commussioners of the ‘Treasury.

which I lately had with those gentlemen. _ |not think proper to enter upon a reformof the olo nial) ‘All persons should also have the right on tendering 1 ‘ Of these subjects, the state of the Island Currency is_ Currency inthe manner [ have now suggested, | have goldand silver at the same rates to receive Colonial i one of the most pressing. to desire that you refuse your consent to any further paper in exchange. You are aware that in this coun-

| ‘From the Report of the Commissioners appointed by |jssue either of ‘Treasury Notes or ‘l'reasury Warrants.’ (try gold is the standard of value, and that the silver y Sir Henry es ge eer gr ‘Sth Pelee a ae ‘colns merely Circulate as tokens at a nominal value, rency of the Island, dated the Yth February last, it is) _ ees ies ote ie 2 5 which is considerabiy higher than tieir real worth. By ain that a most erroneous system has hitherto been eRe RALS OF A DEST AR FROM EARL GREY TO tie regulation I have diemmeaai gold would also be the pursued by the local Government on this subject, and) GOVERNOR GRAY, Dated Downing Srreer, 2d Fe- standard of value in New Zealand, But considering that a reform of the Currency is most urgently required,| bruary, 1847.—No so. how largely silver dollars circulate in the countries ‘It appears to have been the practice of tue local ‘Amongst these subjects, there is one which seeins Nearest to New Zealand, and with which it would be . Government, up to a very recent period, to Issue Prea-| to me to require very eaily attention ; I allude to that of likely to have the most frequent commercial intercourse, sury Warrants for small suims of money, and ‘Treasury | the regulation of the Currency of the Colony. ‘it would, I think, be convenient that such silver coin Notes, for still smaller sums, for the purpose of meeting} ‘Since the recall of the Debentures which were is- Siould be used in common with gold for the payment of the ordinary expenditure of the Colony. The necessary sued by Captain Fitzroy, Iam not aware that any the Tolonial paper money, at the value assigned to them consequence of this practice has been greatly to depre-| doscription of paper money has been in circulation in PY Proclamauon with reference to the pound Sterling. ciate the Currency below its nominal! value. Ithe Colony, but judging from what kas taken place in Notes for £1, but not for any lower amount, should, | ‘In ascertaining the proper remedy for this state of| other British Colonies, I can entertain no doubt that think, be issued. Should you find it practicable to es- things, two courses present themselves for consideration. | with the increase of trade, a demand for sucha cheap tablish such a paper Currency, the mode of bringing it First—Whether it would be proper to endeavor to re-| and convenient medium of exchance will speedily arise; 12to circulation would be a very simple one. An office store this depreciated Currency to its original value : or, | nor dol see any objection to the creation of a paper for the exchange of paper for gold or silver should be Secondly —W hether it would not be better to fix ItS'Currency. On the contrary, provided it is properly established at Wellington, and another at Auckland, value at its present rate, taking the necessary measures, regulated, I am of opinion, that such a mode of econom-| ‘lo these offices all money of the description now for preventing its further depreciation. izing capital, where capital is so greatly wanted, must 12 Circulation received by the Government (except ‘Upon the whole I incline to think the latter course) pe exceedingly advantareous. i small silver reseryed for minor paymeuts) should be the most desirable to be adopted, and I would nee) “The distumigns ehink have taken place of late | Sent, to be exchanged for Colonial paper money, and mend it to the consideration of yourselfand of the Legis-| years, and more especially the proceedings of Parlia- private individuals should be invited, but not required, lature of Prince Edward {sland for the following st bees upon fhe occasion of the Jast renewal of the Bank t do the same. The Colonial Government, by not / sons: e Charter, have, I apprehend, in the judement of those '€-issuing specie which caine into its hands, would ‘The restoration of the Island Currency to its original whose authority is of most weight on this subject, finally have no difficulty in speedily substituting the new pa- value would not be accomplished without a severe pres-| settled the principles upon which a paper Currency per money for the coin now in circulation. The issue sure upon the Finances of the Colony. It must further) ouchtto be regulated. of the next paper currency being complete, it would be considered, that inall monetary transactions between | * Although “ regard for existing interests has pre- be advisable that one fourth of the sp2cie received in individuals, of recent date, debts, and engagements have! yented these principles from being | acted upon in this exchange for it,should be retained to meet any demands been contracted with reference to the present, and not to}country to their full extent, there is no longer much for payment which might be made, and that the re- the original value ofthe Currency. If, therefore, the) difference of opinion as to the general nature of the ™ainder should be invested so as to produce some re- Currency should now be raised above its actual value|system, which an adherence to them would prescribe, ‘urn tothe Colony. With this view, ihe best arrange- at the time when such debts and engagements were con-|{n New Zealand, I believe that no such interests haye “ent would probably be, that it should be transmitted tracted, injustice would be done to all those parties who yet grown up, though they would not fail speedily to|to Sydney, and deposited on sufficient security, with would have money to pry under sch Contracts, and as! do so; it is therefore, [ trust, still possible in that Colony One of the principal Banking establishments in that in practice it is found,that among the unsettled accounts to secure the great advantages which could not fail to (°WN3 the interest which it would produce, should go, of individuals, a large proportion are generally of no|result from the establishment of paper Currency, regu- /! the first place, towards paying the expenses of long standing, it follows that more injustice is usually | lated upon the most correct principles. ‘I'he view which| Managing the paper Currency, and the surplus, if . done by restoring a depreciated Currency to its original) { take of these principles is as follows. The business |@0y, towards the general expences of the Colony. | value, than by fixing it at the value which it may ac- of banking, or of dealing in money, and that of issuing, _* le same law which established this Currency, should . tually bear : | paper money, I consider to have not merely no neces-|2/S0 strictly prohibit the issue of any other description ‘Assuming this latter course to be adopted, the mea-| sary, but no proper connexion with each other. The f paper, payable on demand in New Zealand. sures by which the Currency of Prince Edward [sland | foriner is a branch of commercial business. which) ‘!n suggesting to you the creation ofa paper Cur- may be protected against any further depreciation ap-| should be left like every other private enterprise; but ‘ency, thus regulated, { am far from meaning to prescribe pear tome by no means difficult. All that would ap-|to issue money—that is, to furnish the authorised t© You, that such a measure should be adopted, if there pear to be necessary is, that the Legislature should pass' medium of exchange—is one of the peculiar, and not Should exist reasons with which | am unacquainted,which a Law, enacting that the existing ‘Treasury Warrants|the Jeast important functions of the Government. With “uld render it unsafe; for instance, if there should be ehould be exchanged for Treasury Notes to the same|respect to the coinage, this principle has always beey|ground for apprehending that it would give rise to diffi- amount, and that these Notes should be declared « Le-| recognized, nor is there any attribute of sovereigaty culties with the natives, who might not improbably be «gal Tender; that it should not be lawful to make any! which has been more strongly insisted upon, and more | U"Wuling to give up the use of the kind of money to further issue of Treasury Notes except in exchange for| rigidly guarded from invasion by the supreme author- 'which they are accustomed, for one which it might not the precious metals, the coins of different Countries be-| ity of almost every State, whether of ancient or modern ¥€ very easy for them to understand. Any such diffi- ing taken at the valne they now actually bear in circu- times, than the exclusive right of coining money for the Culty as this might probably be obviated by making the lation and that the Treasury Notes should be made ex-|use of its own subjects, - ” Substitution of the Colonial paper money for specie more changeable at the pleasure of the holders, for Coin at! * Asto the issue of paper money, a different rule has ¢adual, than | have in the preceding part of this Des- the same rate. In order to enable the Colonial Trea-| generally been followed, butas experience has proved, P#tch recommended. Jt would of course be easy to surer or such other Public Officer as might be charged} with the very worst jeaniibit ’ inake the process of change from one system to the other with the management of the Currency Account (which| § By allowing the issue of paper money to become a 2S gradual as might be desired, by allowing a given pro- I think should be kept entirely distinct from the ordinary | commercial speculation, the amount issued from time to Portion of the specie which might be received by the Treasury Accounts,) to meet any demands which might! time has been made to vary, not according to the real, Government, to be for a time re-issued, so that it might be made upon him for Coin in exchange for Treasury | wants of the community, but according to the interest/ ot entirely be withdrawn from circulation, until the use Notes, it would be probably necessary to raise a mode-| of the issuers : the value of this description of currency of the substitute provided for it can be understood, rate sum by loan, or otherwise, to place in his hand for has been vendered uncertain ; and all the evils have, ‘These are, however, points which I may with the this purpose. As it would be desirable that such Trea-| been entailed upon the community which result from Utmost confidence leave to your own judgment. Alll sury Notes should continue to circulate in the Colony,|the want of uniformity in the mesure of value, and ge-| ish earnestly to press upon you is, the importance of and that coin should only be required in exchange for! pera) medium of exchange. © joccupying, if possible, the ground by some Government Notes when wanted for remittance to other countries, 1) ‘The value of metallic Currency is not liable to in-| paper, before private Banking Companies shall have see no objection to a restriction being placed upon the |jutious fluctuations, simply because the amount in taken possession of it. holders of such Notes from demanding specie in any less {circulation cannot be arbitrarily varied, but is self-| . ‘Ifthis is neglected, I am persuaded that it will prac- amount than £50. , ££ ‘regulated by the exchanges, of which the operation tically be impossible to prevent such companies from ‘The effect of adopting such a measure as I have in-|is too powerful to be controlled by law. In order being formed, and from issuing Notes for circulation, it dicated, would be, that the Colony would retain che ful! therefore to unite the advantages of cheapness and con- Will be equally impossible to confine the privilege to any benefit of the cheapness of a Paper Currency 4s a me-| venience which belong to a paper Currency with those |5!ngle private company. Such a monopoly would be sure dium of exchange, while at the same time it oo have | of steadiness and uniformity of value, which belong to a ‘© Create too mnch dissatisfaction amongst all excluded the same uniformity of value which distinguishes ame-| retallic Currency, one of the former description ought ‘rom sharing in its profits, to be long maintained; the tallic circulation. The amount of Paper (furrency in|tobe so regulated that the amount in circulation should Consequence would be that rural Banks of Issue would circulation (and which amount really degermines its\vary according to the same laws which govern the be established, and that in seasons of commercial pros- value, ) would fluctuate precisely in the sange manner as latter, This is to be accomplished by providing, that perity the competition of these Banks would unduly the amount of Specie Currency. If the advance of the! paper money beyond some fixed amount nearly within the €Xtend the amount of paper in circulation, thus raising Colony in wealth and population and the ronsequent in-lroants ofthe country in which it circulates, shall only be prices and stimulating precisely when it ought to be crease of its Commercial transactions showld require an issued in exchange for the precious metals, and that it moderated, the spirit of speculation; thereby ensuring extension of the Currency, it would be the interest of sha!l always be payable in the same. Under this system, Whenever the reaction came, as come it must, a more Individuals to import Coin into the Colony; and to obtain circulation can only be increased, when it is in the than corresponding depression, and wide spreading ruin Paper in exchange. If on theother hand it should hap-/ interest of private individuals to import bullion, which and distress, by, nat times, that the Currency in circul:tion should be they may exchange for paper, and can only be contract-| ‘ This is the course of events which has been witness- in excess of the wants of the Colony, St to be| ed in like manner, when it is their interest to demand ed in the last few years in Australia, in the United contracted, such contraction would be ackomplished by bullien in exchange for paper. Thesystem now estab- States, and, though with Jess severity, in this country. the Holders of Treasury Notes presentingithem for pa y- lished ia this country by the authority of Parliament is Like causes would infallibly produce like results in New ment, and thus obtaining Specie which would then founded upon this principle, to which it conforms as Zealand, and those causes, therefore, while there is yet become profitable to export to other Countries. nearly as the necessity of having regard to vested in-|time, I wish you to remove.’

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