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herence to them would prescribe. In New Zea-
land I believe that no such interests have yet
grown up, though they would not fail speedily
to do so. It is, therefore, I trust, still possible
in that colony to secure the great advantages
which could not fail to result from the establish-
ment of a paper currency regulated upon the
most correct principfes.

The view which I take
of these principles is as follows: the business of
Barking, or of dealing in money, and that of is-
suing paper money I consider to have not merely
no necessary but no proper connection with each
other. The former is a branch of tommercial
business which should be left, like every other,
to private enterprise; but to issue money, that
is, to furnish the authorized medium of exchange
is one of the peculiar, and not the least impor-
tant functions of the Government. With respect
to the Coinage, this principle has always been
recognised, nor is there any attribute of So-
vereignty which has been more strongly insisted
upon and more rigidly guarded from invasion
by the Supreme authorfty 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 according 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 rendered 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 medium of exchange. The
value of a metallic Currency is not hable to in-
jurious fluctuatious, simply because the amount
in circulation cannot be arbitrarily varied, but
operation is too powerful to be controlled by law.

In order therefore to unite the advantages of
cheapness and convenience which belong to a
paper currency with those of steadiness and uni-
formity of value which belong to a Metallic cur-
rency, 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 pro-
viding that paper money, beyond some fixed
amount, clearly within the wants of the Country
in which it circulates, shall only be issued in ex-
change for the precious metals, and that it shall
always be payable in the same. Under this sys-
tem the circulation can only be increased when
it is the interest of private individuals to import
bullion, which they may exchange 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 established in this
country by the authority of Parliament, is
founded upon this principle, to which it conforins
as nearly as the necessity of having regard to
vested interests would permit at the time that
the arrangement was made. In New Zealand a
simpler and more perfect systein may, I hope, be
adopted. I would suggest that a Law should be
passed authorising the issue of a Colonial Paper
Currency, which should be a legal tender in pay-
ment of all sums exceeding forty shillings, for
sums under forty shillings, British silver coin
should be received as in this country. This Co-
lonial Paper should be made payable either in
gold at the English Mint price, or in silver, re-
ceiving the coins of different nations (excepting
British Silver) at the rated value assigned to
them in the Proclamations from time to time is-
sued under the authority of the Lords Commis-
sioners of the Treasury, all persons should also
have the right, on tendering gold or silver at the
same rates, to receive Colonial paper in exchange.
You are aware that in this country, Gold is
the standard of value, and that the Silver Coins
merely circulate as tokens at a nominal value,
which is considerably higher than their real
worth. By the regulation I have suggested, gold
would also be the standard of value in New Zea-
land; b but considering how largely silver, and
expectatly liver dollars, odraslate in the Goya
tries nearest to New Zealand, and with which it
would be likely to have the most frequent commer-
cial intercourse, it would, I think, be convenient
that such silver coins should be used in common
with gold for the payment of the Colonial paper
money at the value assigned to them by Proclama-
tion with reference to the pound sterling.

Notes
for one pound, but not for any lower amount,
should, I think, be issued. Should you find it
practicable to establish such a Paper Currency,
the mode of bringing it mto circulation would
be a very simple one. An office for the exchange of
paper for gold or silver, should be established at
Wellington, and another at Auckland. To these
offices all money of the description now in cir-
culation received by the Government (except
small silver reserved for minor payments) should
be sent to be exchanged for Colonial Paper Mo-
ney, and private individuals should be invited,
but not required to do the same. The Colonial
Government by not re-issuing specie which came
into its hand, would have no difficulty in speedily
substituting the new Paper Money for the coin
now in circulation. The issue of the New Pa-
per Currency being complete it would be advi-
sable that one fourth of the specie received in
exchange for it should be retained to meet any
produce some return to the Colony, with this
view the best arrangement would probably be
that it should be transmitted to Sydney, and de-
posited (on sufficient security) with one of the
principal banking establishments in that town;
the interest which it would produce should go,
in the first place, towards paying the expences
of managing the Paper Currency, and the sur-
plus, if any, towards the general expences of the
Colony. The same law which established this
Currency should also strictly prohibit the issue
of any other description of Paper payable on de-
mand in New Zealand.

In suggesting to you the creation of a paper
currency thus regulated, I am far from meaning
to prescribe to you that such a measure should be
adopted, if there should exist reasons, with
which I am unacquainted, which would render
it unsafe; for instance, if there should be ground
for apprehending that it would give rise to dif-
ficulties with the Natives, who might not impro-
bably be unwilling to give up the use of the
kind of money to which they are accustomed,
for one which it might not be very easy for them
to understand. Any such difficulty as this might
probably be obviated by making the substitution
of the colonial paper money for specie, more
gradual than I have in the preceding part of this
despatch recommended. It would of course, be
easy to make the process of change from one
system to the other as gradual as might be de-
sired, by allowing a given proportion of the
specie which might be received by the govern-
ment, to be for a time re-issued, so that it might
not entirely be withdrawn from circulation, un-
til the use of the substitute provided for it came