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Bibliographic details
BANKING UNDER DIFFICULTIES., Issue 8007, 9 September 1889
BANKING UNDER DIFFICULTIES.
It will be news to many people to learn that New Zealand once had a State Bank, but it will probably not be altogether a matter of surprise to learn further that the Government made a great mess of it. Some interesting'particulars about the undertaking are contained in a speech delivered by Mr Solanders at a luncheon at Nelson recently to celebrate the opening of now offices for the New Zealand Insurance Company in that town. Mr Selandets, in xeapondvngto the toast I of “ Prosperity to the Town and People of i Nelson and to the Midland Railway,” proi posed by the Bishop of Nelson, said he 1 would give those present an idea how bank--1 ing business was conducted in Nelson in the old days. He then read as follows from a letter received some years ago from Mr David Solanders, who founded the firm of Solanders and Co. in 1842 :—“ Perhaps you are already aware that the Government cf New Zealand passed an Act creating a Bank of Issue, and made their notes a legal tender. I think this was about the year 1847. A more stupid thing was never attempted, and when at length the Act was repealed, the officers of the Government had got the business into such a mess that I was told on good authority at the time that they had to hand over to the Union Bank of Australia the work of withdrawing and cancelling these Government notes. The Government Bank was only a Bank of Issue, and had no provision for effecting remittances or similar banking business. The Act prohibited the issue of any other notes payable ou demand, and this of course compelled the Union Bank of Australia (then the only bank in the colony) to withdraw every note they bad from circulation, and as it was not worth while to continue their branch in a small place like Nelson, they closed it. Now you may imagine what a difficult position we were thrown into, without any means in the place for making remittances, and nothing to constitute a medium of circulation except a very moderate supply of Government notes, and a still more moderate supply of gold. One had to exert all one’s wits to consider how any business was to be done. The first step I took was to buy the Union Bank of Australia’s safe (which the firm has still in use). I believe it was the only safe in Nelson of any practical value, and the Government officer in Nelson, who had charge of the local funds, kept them in that safe for years, for which I gave him the exclusive use of one of the drawers. The Government paid all salaries, wages, etc., in their own notes, and all Customs duties were paid
by importers in Government notes or gold. It was a sort of scramble to gather enough notes and gold for Customs purposes, or these were being continually carried away from the place in the absence of any other way of making remittances. Then arose the necessity for my bank, which I called the Nelson Bank. The Bank of, .Issue Act prohibited the issue by anyone else than the Government of notes payable on demand, and although I issued my notes payable twelve months after date, I paid them all the same whenever presented, A high Government official called and tried to persuade me I was infringing the Act, and I had to argue with him a long time before he could see or would acknowledge that he saw he was wrong. These notes of mine were, of course, mainly made use of in the .Nelson province, and for about eight years they answered all the purposes of a circulating medium, and little of any other money was ever to be seen, and I frequently received the thanks of those who were capable of appreciating their usefulness, acknowledging that without them it would scarcely have been possible to carry on business. The first year or so the notes were printed in Nelson at the ‘Examiner’ newspaper office, but afterwards they were lithographed in London. At first only LI notes were issued, but afterwards L 5 ones also, and also (when even silver became scarce) 5s notes were issued by special request, and were greatly appreciated.”
BANKING UNDER DIFFICULTIES. Issue 8007, 9 September 1889
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