A PROVINCIAL LAND BANK.

Lyttelton Times, Volume XXV, Issue 1620, 23 February 1866, Page 2

A PROVINCIAL LAND BANK.

TO THE EDITOR OF THE LYTTELTOJi TIMES. Sir,—l should like to say a few words on a letter in your paper of yesterday, in which an inconvertible paper currency for the proving is proposed. The writer proposes that the payment of all salaries. Road Boards, ana Municipalities, should be made in debenture notes ; that these notes should be a legal tender for fourteen years ; that the payment of them at par at the end of that time, and of interest till then at the rate of six per cent, per annum, should be secured by land set apart audlet; and that the payment of principal and interest should be further secured by the guarantee of the Provincial Government. This is the pith of the scheme. Lot us consider what the result would be if it were carried out. Suppose a considerable issue of these notes were made, this would cause a sudden and large increase in the currency, and the undeniable effect of a sudden increase in the currency is to raise the prices of all commodities, Every thing in Canterbury would be dearer, there tore, than before. This fact would, of course, largely stimulate importation, and check the exportation of a' l articles for which a market could be found m the province. Our imports, therefore, would be greater, and our exports less than before; but the imported goods must be P» 11 * for, and as the exports are less, the balance must be paid in coin. Coin, accordingly, would flow outofCanterburytilltheCanterbury price* had gone back to their original level before the issue. The final result of this operation would be that things would remain unaltered except that a paper currency would be substituted for the coin which had been thus withdrawn from circulation. Suppose, now, a further issue of notes, the same ph enol }\ would take place, and more coin would withdrawn, till at last* an inconvertible currency would wholly takethe place of a rn tallic and convertible paper currency. * far, no great injustice would have bee done to any one, but our credit abroad wou have suffered, and the uncertainty the value of the circulating me . dll " would hate caused serious incoovemej itNov, however, suppose further «•»"»"' issues of notes ; it is evident that the m notes are issued, the higher prices n ,

•nd the more the currency is depreciated; a ™und under these conditions will not go so Er m fifteen shillings did before. Every debtor will in reality have less to pay, and every creditor less to receive, and the result it simply confiscation. The only remedy for this is to regulate the issue of notes so that, when the coin has gone out of circulation, the notes bhall remain as nearly as possible at oar ie, that the price of gold calculated in notts shall be the same as the price was in coin before the note issue. An inconvertible note issue, regulated by the price of gold, has doubtless some advantages, but it remains for vour correspondent to show that they would counter-balance the evils resulting from a violent change. lam aware that my argumonts are by no means original or new; those of them that are worth anything will be found in most works on political economy. Yours, &c, JOSHUA STRANGE WILLIAMS.