STATE NOTES.

Nelson Evening Mail, Volume XXX, Issue 235, 5 October 1896, Page 4

STATE NOTES.

To the Editor of "The Evenihq Maii,.' Slit—l join with your correspondent "G.S." to congratulate you on your article of Friday, and trust it will draw public attention to a subject of the utmost importance —a subjeet which affects the whole of the community without. exception. Your article in Tuesday's issue of the "Mail" is irrefutable : it is the stamp on any coin or note which gives it its value, and consequently tho State Note made by law a legal tender will answer the same purpose as gold or the Bank notes now in circulation. Your orresp.ndent" Coin " says :—" You appear to assume that a very largo sum might easily be obtained in the colony for public works and other purposes by the issue of State Notes • that these notes, or at any rate a large proportion of them, would remain in circulation for an indefinite period ; and that tho money so borrowed and paying no interest would cost the colony nothing." Here he assumes the notes to be in circulation for an " indefinite period " this is not the case, as they would be withdrawn from circulation by the annual destruction of say <1 or 5 per cent, which would withdraw them in 20 years, when both tho interest and principal of the issue would be cancelled. He further assumes that the J5965.344 of hank notes now in circulation is all that is uecessary to conduct the business of the country j but is this correct ? Have we not Mr Ward's statement in the House that previous to the banking legislation the Union Bank had witndrawn from the currency of the country an amount equal to this in gold to meet the expected downfall of tho Bank pf Now Zealand? But apart from this, if the sum of .£1,000,000 is sufficient to carry on the business of tho country, why is there such depression in trade and lack of employment ? Why are so many able-bodied men who are willing and anxious to work condemned to forced idleness ? Why is so much energy allowed to be dormant ? Tho answer is plainly that the Government find a difficulty to procure the necessary money to defray the expenses : not that the country is fully occupied and nothing more is required. To obtain tho necessary money under the present absurd system of borrowing on interest is ruination to the country—enslaving tiie people for many generations to come. But this system suits the capitalists, and as they always guide the ship of State, we must not look for anything but opposition in that quarter. Your correspondent further says:—"By no effort on the part of the Banks can this amount he substantially increased." Sir, it would be interesting to know what "efforts'' the Banks employ|to increase the circulation. I will venture to assert none except such as Will augment the incomo of the Bank, i.e., extract interest from thosß|who attempt to develop the country; which acts as a drag on the car of progress. "Coin's " .remarks about keeping in circulation notes in excess of our requirements is mere sophistry. They would only be issned in payment of public works and services performed. And as large quantities would return to the Treaasury in tho shape of taxation, there would be no necessity to issue in excess of our re-iuirements. In fact the colony of Pennsylvania previous to the union with the United States furnishes a complete answer to this .qiigstion. In that colony the system was adopted with marked success and so far from the notes depreciating in value they maintained their full value, and were not refused in London by persons trading with the colony. The notes proposed would be a legal tender in the colony of New Zealand, and could no more fall in value than the gold sovereign, both of which if issued in larger gaunt-ties, would causp prices of labour and all commodities to rise. Yojir correspondent speaks of tho cost of maintaining the issue and a department to look after it, and sayß, "The cost pf tins, plus the loss of tne note tax, presently paid by the banks would be considerable. The people will not be blinded by such reasoning. The cost is calculated to be about per cent or 5s in the .£IOO. Such argument is equivalent tp saying to the Government, " You give ji- tho privilege to legally rob tho people, and in return we will contribute 1 per cent of the amount to tne Treasury." Yours etc. K. W, Flowerday.