Banking

Dominion, Volume 24, Issue 145, 16 March 1931, Page 9

Banking

Sir, —Per medium of "The Dominion” we learn that it is contemplated that the New Zealand Banking Laws be amended, no doubt with the idea of extending the supply of currency and not before time, for to cramped currency can be laid part cause of depression in New Zealand. Low prices of our staples is, of course, the principal cause. With the surplusses of exports over imports during the last ten years the country should not be in its present state of hard-upness. Extended currency on present gold reserves will, by some, be called inflation, but when one views the returns of the Bank of England and the banks in the Australian Commonwealth it must be safe and goo'd finance. The Bank of England returns for the week ending February lb last, published in your paper, disclose that it has notes in circulation amounting to £344 130,524, and coin and bullion is set down at £141,206,663. This shows that the Bank of England issues £2/10/- m notes for every pound value in gold; of course, the bank holds Government bonds more than sufficient to, with the gold, balance the note issue. The banks in the Commonwealth hold 16 millions in gold and issue 32 millions of paper currency. My authority for this statement is the “Sydney Bulletin of August 27, 1930. In New Zealand the note currency scarcely comes up to the gold reserve, which, on December ol last, was £6,352,564. , . , t Now, Sir. would it not brighten up matters very considerably if the note issue in New Zealand was doubled? Of course, it would be absurd to allow the banks six millions of credits and them to have all the benefits. The banking experts and the Government would be able to decide the per centage fair to the people and the banks. Last financial period the Government received note duty, paid by the banks. If..the credits were extended by six millions the note tax ought to be a large item in budget revenue. An increase in credits .‘would not be of any use m paying the overseas interest bill, but for local finance it would be invaluable. 1 am ’ ® tC ” J. SIDDELLS. Wanganui, March 9.