46

the Government. With respect to the Coimage this
principle has always been recognized; nor is there
any attribute of Sovereignty which has been more
strongly insisted upon and more rigidly guarded
from Invasion by the Supreme Authority of almost
every State, whether of ancient or modern times,
than the exclusive right of coining money for the
use of its own subjects. As to the Issue of Paper
Money, a different rule has generally been followed,
but as experience has proved with the very worst
results. By allowing the issue of paper money to
become a commercial speculation, the amount issued
from time to time has been made to vary, not ac-
cording to the real wants of the community, but
according to the interests of the issuers. Thus the
value of this description of currency has been ren-
dered uncertain, and all the evils have been entailed
upon the community which result from the want of
uniformity in the measure of value and general me-
dium of exchange. The value of a metallic cur-
ency is not liable to injurious fluctuations, simply
because the amount in circulation cannot be arbi-
trarily varied, but is self-regulated by the exchanges,
of which the operation is too powerful to be con-
trolled by Law. In order, therefore, to unite the
advantages of cheapness and convenience which be-
long to paper currency with those of steadiness
and uniformity of value which belong to a metallic
currency, one of the former description ought to be
so regulated that the amount in circulation should
vary according to the same laws which govern the
latter. This is to be accomplished by providing
that paper money, beyond some fixed amount clearly
within the wants of the country in which it cir-
culates shall only be issued in exchange for the pre-
cious metals, and that it shall always be payable in
the same. Under this system the circulation can
only be increased when it is the interest of private
individuals to import Bullion which they may ex-
change for paper, and can only be contracted in like
manner, when it is their interest to demand Bullion
in exchange for paper. The system now estab-
lished in this Country by the authority of Parlia-
ment is founded upon this principle, to which it conforms
as nearly as the necessity of having regard to vested
interests would permit. At the time that the ar-
rangement was made in New Zealand, a simpler
and more perfect system may I hope be adopted.

"All I wish earnestly to press upon your attention
is the importance of occupying if possible the
ground by some Government paper before private
Banking Companies shall have taken possession of
it. If this is neglected I am persuaded that it will
practically be impossible to prevent such Compa-
nies from being formed, and from issuing Notes for
circulation. It will be equally impossible to con-
fine the privilege to any single private Company. Such
a monopoly would be sure to create too much dis-
satisfaction amongst all excluded from sharing in its
profits to be long maintained. The consequence
would be that rival Banks of Issue would be estab-
lished, and that in seasons of commercial pros-
perity, the competition of these Banks would unduly
extend the amount of paper in circulation, thus
raising prices and stimulating, precisely when it
ought to be moderated, the spirit of speculation,
thereby ensuring whenever the reaction came, as
come it must, a more than corresponding depression
and wide spreading ruin and distress."

(Signed) GREY.

EXTRACT FROM THE PAPER CURRENCY
ORDINANCE.

4. No person so to be appointed as aforesaid,

shall be capable of holding the office of Manager,
or of being an officer of the said Bank, unless such
person shall have first taken and subscribed the
following Oath before a Justice of the Peace, which
Oath every such Justice shall, on application to
that effect, administer accordingly:

I, A. B., do solemnly swear that I will not
issue nor re-issue any of the Bank Notes
of the "Colonial Bank of Issue," except in
exchange for cash, and that I will constantly
retain and keep within my control and cus-
tody, for the use and accommodation of the
public, not less than one-fourth part of the
cash so received in exchange, and that I
will not part with the control or custody of
the residue of such cash, except under the
authority of a warrant to me for that pur-
pose, directed under the hand of the Gover-
nor for the time being; and that I will in
all other respects duly and faithfully dis-
charge the duties of my office as Manager
of the said "Colonial Bank of Issue," So
help me God!

(Signed)

(Security to be given.)

5. Each Manager and officer shall, before enter-
   ing on the duties of his office, and from time to
   time give security for good behaviour in his office,
   by bond to Her Majesty and Her Successors, with
   two sufficient securities, in the sum of One Thou-
   sand Pounds, or in such other reasonable sum as
   Her Majesty, or Her Successors, may from time to
   time think fit to require.

(Business of the Bank.)

7. The business of the "Colonial Bank of Issue,"
   shall be confined to the Issuing of Bank Notes in
   exchange for cash, and to the payment of such
   Notes in cash on demand.

(Notes to be payable in cash.)

10. Every Note of the said Bank shall be ex-
    pressed to be payable in pounds sterling and in
    cash.

(Notes not to be issued except in exchange
for cash.)

11. No Note of the said Bank shall be issued or
    re-issued therefrom except in exchange for cash.

(Nor except from certain offices.)

12. No such Note shall be issued for circulation
    except from some one of the offices to be for that
    purpose established as aforesaid.

(Notes to be Legal Tender for sums above
Two Pounds.)

15. A Tender of any such Note or Notes shall
    be a Legal Tender to the amount expressed in such
    Note or Notes, and shall be taken to be valid as a
    Tender to such amount for all sums above Two
    Pounds, on all occasions on which any Tender of
    money may be legally made.

(Bearer entitled to cash for Notes on demand.)

16. The Bearer of any such Note or Notes shall
    be entitled immediately on demand to be made at
    any of the Offices of the said "Colonial Bank of
    Issue," and during the hours of business thereof,
    to receive payment in cash for such Notes, at the
    rate herein provided; and the Manager of every
    such Office is hereby required to pay the same ac-
    cordingly.