"A WIZARD IN FINANCE."

Hawke's Bay Herald, Volume XXX, Issue 9895, 23 January 1895, Page 4

"A WIZARD IN FINANCE."

Sik,— -Mr Hsggen has at last pinned himself down by three admissions. The colonists must pay their foreign creditors ; "ourrency" must; not ba need for that pnrpose ; bat all taxea must be paid in •• enrreucy." How, then, will the Government convert annually some two millions of "ourrency," collected by taxation, lota the wherewithal to pay its foreign creditors, who are entitled to demand gold, interest on tbe public debt? Apparently Mr Haggen, also, believes that our Colonial Treasurer is " a wizard in finance," whose magic wand rivals the philosopher's stone. By no other means can we imagine "currency" converted into gold at its face value. Bnt even the feat, if practicable, would not prevent the depreciation of "currency." Ordinary men are not magicians, and when they require gold they must prooure it by other means. They may have to make remittances in gold to relatives or creditors in England ; and if they are not exporters they must exchange "currenoy " for gold in the colony. Again, many importers are not exporters. Take Mr Hogpen, for Instance. All his receipts would be in "ourrenoy," but he wonld have to pay gold for bis Imported paper. If he purchased from an Importer, paying "onrrenoy," the Importer would make the price sufficient to cover " currency " depreciation. Mr Baggen apparently fails to perceive that, although a piece of paper may be deolared legal tender for tk certain value, holders of gold cannot be compelled to give that value in gold for it. Here 1 may observe that I apply the term gold, to the existing currency, beoause any paper which is not convertible into gold on demand or on maturity would immediately disappear from circulation. Mr' Haggen's " currency," on tbe other hand, would remain in circulation, whether depredated or not. It matters not what percentage of gold is need in commercial transactions, provided there is sufficient for conversion' of paper on demand or on maturity at short) dates. In a former letter Mr Haggen implied that Bank of England notes to the amount of £15,000,000 maintained their face value by being legal tender. That is simply nonsense ; their immediate convertibility into gold or foreign money maintains their face value. It is a very wise and necessary provision that bank notes daring a commercinl crisis should be made legal tender, bat if payment in gold were suspended for any considerable time, bank notes would inevitably obey the law which ensures tbe depreciation of inconvertible paper. If controversy is to be continued, your readers might find it more satisfactory to pernse the opinions of living political economists acquainted with the existing financial condition of New Zealand, than to have placed before them passages selected by Mr Haggen. If Mr Haggen carries out his intention of republishtng this in pamphlet form, such opinions would surely carry more weight.— l am., &c, H. Ellison. January 22, 1895.