UNPRESENTED NOTES

Evening Star, Issue 21931, 18 January 1935, Page 8

UNPRESENTED NOTES

BURDEN ON TRADING BANKS NOTE TAX CONTINUES [From Ooa Correspondent.] WELLINGTON, January Is. When the notes of the trading banks ceased to be legal tender many people became concerned for fear that they bad lost the value of these paper tokens, “ promises to pay,” but this doubt • has been officially removed, because any trading baak will honour its notes at full face value, and • replace them with Reserve Bank notes, today’s legal tender. The public discussion of the matter last week had the good result of producing from their Biding places somethousands of trading bank notes, and it is quite surprising how large is the amount of the original note issue still in private hands. After Reserve Bank notes had been available to the public, and had been constantly issued by the trading banks for four months, the returns showed that there was still a total of £1,846,000 outstanding. It has been reduced through the temporary public alarm oyer their value, but the banks are waiting for more of their “paper,’ ’and they are carrying quite a heavy liability to the State in respect to the total outstanding. They contribute in taxation 4J per cent, of the face value of notes issued to the public, and it was in 1930, when the tax was raised from 3 per cent., that the charge for keeping customers’ accounts was doubled. According to the Monetary Committee .the banks have intimated that when the note tax is reduced they will be pleased to revert to the old charge of 10s per annum for keeping accounts. But meanwhile they continue paying taxation on a considerable sum of unpresented notes. Complete relief from this burden will not come for nearly two years, when, under the provisions of the Reserve Bank Act, the trading hanks will pay to that institution the amount of their outstanding notes, and the Reserve Bank will take the liability. After a further period, probably a lengthy one, the Reserve Bank will secure authority to write off the whole liability, and any unclaimed money will then be placed to the credit of the Crown.