SILVER COINS

Evening Post, Volume CXVIII, Issue 58, 6 September 1934, Page 14

SILVER COINS

PROFIT TO DOMINION

COULD HAVE BEEN LARGER

AUDITOR'S OPINION

The opinion that New Zealand could have made a much larger profit out of the adoption of its own silver coinage if the Government had arranged to repatriate the whole of the Imperial and Australian coin circulating in New Zealand at its face value, was expressed by the Controller and Auditor-General (Colonel G. F. C. Campbell) in his annual report, presented to Parliament yesterday.

}' Colonel Campbell stated that during l' the year steps were taken to replace i£ the British silver coin which' had for 0 many years been recognised as legal „ currency in New Zealand, and the jj Australian silver coin which had in ~ recent years also been in circulation iji j." New Zealand though apparently it was .^ not legal tender in the Dominion. t Under the authority of section 8 of 1 the 'Finance Act, 1932-33 (No. 2), and , of tlie Coinage Act, 1933, arrange- '" ments were made under "Vhich the Eoyal Mint agreed to remint free of •, charge the Imperial and Australian coin ' circulating in the Dominion, replacing r it with New. Zealand coin of distinctive design, and to allow the New Zealand Government the bullion value 0 of the coin not used in making such replacement. "The transactions have been recorded in the silver and bronze coin account, which .was formerly used to record the importation of tho Government of British silver and bronze coin on behalf of the banks," the AuditorGeneral stated. "In recording the transactions the Treasury has shown the nominal value as well as the cash transactions. This has afforded valuable information, which would not have been available had only the cash entries been, shown owing to the fact that the bulk of the transactions arc being carried out on a bullion or barter basis. The transactions were not complete at the end of the year, and the result of the replacement will not be disclosed until all the relative entries have been brought into account. QUESTION OF PROFIT. "It was at one time estimated that tho profit arising to the New Zealand Government from the recoinage on this basis would be in the neighbourhood of £180,000, but this will depend on the amount of coin actually replaced, and the relative fineness of such coin. The profit arises from the - fact that the Australian coinage and a proportion of the British coinage hitherto in circulation in New Zealand contained a larger proportion of silver than is required in the new coin under the standard set out in the Schedule to the Coinage Act, 1933, which is also the standard governing the present production of Imperial silver coin. "A much larger profit would have been obtained had the New Zealand Government hcon able to arrange to repatriate the whole of the Imperial and Australian coin circulating in New Zealand at its face value (which was the value at which New Zealand actully purchased such coin) instead of receiving merely tho recoined silver without cost, plus the bullion value of the surplus not required for such rocoinage, as actually arranged. The cost of producing new silver coin of tho standard fineness depends largely on the prico of silver, but at the average price ruling at the present time would be about 4s for each £1 of silver coin minted. This would have given a profit in the neighbourhood of £750,000 for each £1,000,000 of new coin after allowing for freight and other costs. "If arrangements could have been made to repatriate at its face value, the surplus coin over and above what was required for reminting, a much greater profit would have accrued to New Zealand than will actually be obtained under the arrangement with the Royal Mint. The Commonwealth Government has, I understand, however, agreed to repatriate a small proportion of the Australian coin circulating in New Zealand at itß face value, thus giving New Zealand the full benefit of that repatriated portion. AN EVENTUAL LOSS. "The profit on the original coinage now withdrawn accrued to the Eoyal Mint and the Commonwealth' Government, so that the New Zealand Government now receives only the differonce between the value of the silver content in tho new and old coins, but in the case of any additional coinage being necessary to cover future increases in silver currency in the Dominion it is understood the New Zealand Government will receive the profit. In the case ,of Imperial coinage the Mint undertakes the replacement of this coin when worn, and this must be set off against the immediate profit to the Mint in minting that coin. In the case of New Zealand coinage the immediate profit which will be obtained by the Dominion from the recoinage is comparatively small, and if the renewal of this coin from time to time when worn is undertaken by the Dominion, it seems possible that an eventual loss and not a profit may arise in relation thereto. In this connection it is to be noted that the Eoyal Mint and ho Commonwealth Government have been relieved of any liability for the further replacements of the Imperial and Australian coin which has circulated in New Zealand, and which has been rcminted for the New Zealand Government, and nearly 'the full profit arising from tho original minting of this coin has thus been assured to them. " Reports from other countries which have replaced Imperial silver coinage with a domestic silver currency—for example, South Africa—indicate that tho whole or a considerable proportion of the Imperial coin was repatriated at its face value, thus ensuring a large profit to the country making the change.'' v