DEBENTURES.

Nelson Examiner and New Zealand Chronicle, Volume IV, Issue 180, 16 August 1845, Page 95

DEBENTURES.

.\3 the excessive issue of . debentures by the Governor is everywhere exciting con - sid :rable apprehension, the following article fro r. the New Zealander of July 26, which * gives.v es. an. account . pf the.lbose 'and slovenly ma met in which they are put in circulation, ant furnishes some data of the amount acti ially issued, will be read with interest : — . r "To refrain from interfering or tampering. witTji the circulating medium or currency, has bee*j, throughout all history, the careful precaution of all statesmen, more especially in commer|cial countries, whose prosperity is dependant km the purity and probity of the national faith and character. Nothing but uncontrollable circumstances or urgent exigencies of the state h*v<i evfer prevailed on the Commons of England to allow or sanction any prime minister to issue even Exchequer bills; and when they are

: issued, there is a specified time for their with- ! drawal, at which it is Optional with the holder eitheir to receive the amount in sterling coin or to take a new bill in exchange. " The Bank of England — acting as a private Bank, with subscribed capital, and also as the agents of the Government, in paying dividends on the immense loans raised during the war, commencing in the year 1792 — issued notes; but bound themselves to pay, on demand, in the current coin of the realm : however, in 1797, specie was drained from England to such an extent, by the wants of the belligerent powers on the continent, that the English Government were compelled to support the national credit by restricting their agent, the Bank of England, from paying their notes in specie, and at the same time passed an act of Parliament making Bank notes a legal tender. This, to a certain extent, prevented much mischief; but it could not alter the real relative value of a paper issue and a metallic currency; and although the notes of the Bank of England were received in legal payment of all debts and other monetary transactions, yet it very soon came to pass that a person with a guinea could purchase as much corn for which another possessing only Bank notes would have to pay the nominal amount of twenty-seven shillings ; or, in other words, twenty-seven Bank notes, of one pound each, could be purchased for twenty guineas. " However, as soon as peace was concluded, no time was lost by the English Government in returning to the proper legitimate state of sound currency; and so well understood are the dangerous, fallacious, and ruinous principles and effects of a paper currency, even to a limited extent, that the English Legislature now regulate and restrict the issues of every local bank in Great Britain.

"Wherever foreign despotic Governments have issued and attempted to fix a certain value on a paper currency, similar disastrous results have followed. Not to mention the well-known French assionats: in Russia, the old silver rouble was equivalent in value, as specie, to the English coin of half-a-crpwn. When the first issue, about forty years since, of paper roubles was made by the Russian Government, there was but slight difference in the current value of the silver and paper rouble ; but the Russian Government continuing, from year to year, t6 pay their troops and all their civil establishments, in paper roubles, the comparative difference in value became consequently greater and greater, until at length, on the continent, about twenty years since, to our certain knowledge, a paper rouble, nominally half-a-crown, was valued at sevenpence; and at the present day, we believe, its currency is about ninepence.

" In the Bank of, England, there is a regular department of issue, the head of which is reresponsible for every note therein engraved and signed ; and an account is opened for every individual note, so that the date, to what office in the Bank, or to any other person, when issued, is recorded ; and when the note comes back, in the course of time, defaced and worn, to be exchanged, it is afterwards cancelled, and the date of its destruction is also registered. " But in this colony quite a different plan is adopted ; and instead of the manufacture and place of issue being confined to one department, and one person being made responsible for their proper safe keeping until circulated, these debentures, in their progress to completion, pass through many offices, without either check or responsibility attached to any individual. The plan is, so far as we have been able to understand it, thus :— they take their rise under the auspices of the Government printer, who, we presume, in order that he may with certainty recognize any improper fraudulent imitation of the Government type, has, at the commencement of the debenture, imprinted a Roman c, in the word " the" preceding " Colonial Treasurer, &c." It would be imagined that when the debentures have been thus most cleverly put into form, they would be carried forthwith to some proper officer in the Colonial Secretary's office ; but no— they are then transmitted to the chief clerk at the audit office, to be numbered. What the audit office can have to do with the issue of debentures, we have in vain attempted to discover ; and we can only ascribe the ridiculous performance of such puerile automatous duty of making figures, by the chief clerk of the audit department, to that general interference with almost every department, under the egotistical assumption of universal knowledge in every matter respecting the machinery of a Government. After being thus magically numbered, the debentures are sent to the office of Colonial Secretary, afterwards to the Governor, and then to the Colonial Treasurer. Now we should like to know whether, during this round of manufacturing circulation, any vouchers of receipt or transfer pass between the different departments; if not,' who can tell how many books may have been lost, or how many forged debentures, may yet be jn circulation ? We most truly believe, as none have been made responsible, and many most ridiculously have been concerned.in preparing them for circulation, that most perfect ignorance prevails as to the real position or state of the debenture issues. So much for the manufacture, and now as to .the amount qf issue.

" If the highest number of the debentures of each amount .could be ascertained, there would be no difficulty in arriving at the total amount, of issue ; but that, as our readers must be awaVe,, considering that great quantities have been transmitted to 'the southern settlements for circulation, is almost impossible. However, we shall show some little calculation on what numbers we have seen, and then proceed to elucidate, in a different manner, how the actual facts and amount may be very fairly calculated, and be considered as approximating to the truth.

" We now give the numbers and date of issue, of some of which we have seen, and presuming

those to 'be the .highest, which it is quite clear they are not, the following will be the result : —

"This rough calculation shows an issue above £30,000; but as we are quite sure such mode is liable to cavil, as being .without any correct information of the amount of debentures that may have been withdrawn and replaced by higher numbers, we therefore pass on to another and more satisfactory manner of showing, indisputably, the true amount of the issue of these debentures. " On the arrival of Captain > Fitzßoy, in December, 1843, it is very well known that the Local Government was in debt to its officers and other persons, far.beyond £20,000, which desperate position determined his Excellency, some little time afterwards, to pass the Debenture Ordinance; which states in the second clause — " Provided that the amount of debentures which shall be outstanding at any one time shall not exceed the sum of £15,000." The Governor has been allowed by Lord Stanley to draw bills on England for the amount of £7,565, annually voted.by Parliament. The debentures being payable for duties, all the revenue received by the Government has therefore been paid with their own notes. " Now, to elucidate the subject, let us refer to figures, which cannot err: — i 1

"The Government at the present time have paid up all their arrears of outstanding debts and salaries; therefore, this sum of £80,000, if not more, has been actually disbursed in the last eighteen months. Now, whence have been the sources for such funds but as follows ?—? — Bills on the Home Government.

These figures prove incontrovertibly that if, as we before observed, the Government have paid off all outstanding claims as. well as salaries, to the 20th June, 1845, they could only have done so by debentures. But to pursue the calculation a little further, placing the figures in a different form. " During the year 1844, from the Ist January to the 31st December, the Colonial Treasurer disbursed the actual amount of £37,823 153., towards the following: —

This account plainly shows that during the last year, 1844, the Government paid old debts due prior to the Ist January, 1844, to the amount of £17,104 08. lid.; and it conveys also the fact, that on the Ist January, 1845, they were as much in debt for the expenditure of 1844, as they had been twelve months antecedently for 1843, and previous years; for the expenses of 1844 no doubt exceeded £40,000, towards which the sum £20,719 148. Id. had only been paid. Putting the account as it must have stood on the let January, 1845,' we shall have the following figures' showing similar results,to the former calculation: —

w We consider we have thus very plainly shown that notwithstanding the Debenture Ordinance expressly provides that at any one time the issue shall never exceed the sum of £15,000^ that there must be iv circulation at the present time Government debentures more than thrice thai amount. ' . ' " In England, the Chancellor of the Exchequer, ■ when the revenue falls, short of the expenditure,' is obliged to go to the Commons for an Act of Parliament to authorize any issue of Exchequer, bills, or to raise funds by loan to be converted into permanent stock; but in this'antipodean colony all ordinary customs are disregarded; * See Appendix A. to Minutes of Council, tCMioa 5, on lit April, 1845.

instructions from the Home Government are forgotten; ordinances are unheeded : and cqmplete annihilation 1 of revenue is of no consequence. ' The Local Government is imperiumin tmperio, and manufactures money, wholesale; and not only that, but it does 'so ftj anqn a bungling, incautious, irresponsible manner^ that the abstraction of imperfect docuMents and T the forgery of signatures, necessary" tp giye'ttiena currency, take place with impunity*/ / "'•>,'". "What probable results and, consequences may be anticipated from such heedless, unlimited, excessive paper issue, m'us'tbe ijiibject for grave, serious reflection, and for remark ifl an early future number." ■ ".."','' ."".'>• We mentioned last week ttiat the^perr chants of Wellington, b.ad Wild, a rn'eetjrig and passed resolutions condemning; tile Q^e,r issue of debentures. The meeting, was r h^el4 on the 2d of July, Mr. Hickson in the chair; and the following are the resolutions that were adopted :-— > > .'•:■.; ■ 1. Moved by Mr. Hort, seconded by Mn Levin : " That this meeting views with: much, alarm the increased and daily increasing circulation of debentures, apparently far exceeding in amount the issue authorised by' the, colonial ordinance ; such issue being continued riiiriul; taneously with, find not replaced 1 by, t the'£S6 debentures sanctioned by Lord Stanley in his despatch of the 27th October, 1844; to^his Excellency Governor Fitaßoy : and that' such alarm has become greatly augmented by/a reteolutidft passed in the Legislative Council; at Auckland on the 10th April last, against which there' was only one dissenting vote, and which resolution gives unlimited power to the Governor to issue whatever amount of debentures he majriequire for the purposes of his government; a measure more dangerous to the prosperity of the trade of this colony than which could not.by'an^ possibility have been devisecL"' , : ■*' 2. Moved by Mr. FxtzherbSrt, seconded by Mr. P. M. Hervey : " That in consequence of the extreme difficulty that exists in the'negotiation of debentures, arising from these' causes, it is the opinion of this meeting; that a memorial be presented to his Excellency <xovernor<Fitz Roy, praying to be informed of the amount already issued, distinguishing those issued 1 up to the 10th April last from those issued since that date; and whether it' is his Excellency's intention to apply the specie on board H.M.S; Daedalus to the payment of any portion of them J and further, to protest against an' issue* of a greater amount of 'debentures than that authorized by Lord Stanley and by the Debenture Ordinance passed by the Legislative Council in May, 1844; and that a copy of the memorial be forwarded to Lord Stanley. That the following gentlemen do form a committee for drawing up the memorial, viz., 'Messrs. Hoft, Stokes, Partridge, Moore, Hickßon,>and Fitz^ herbert." i ' ■•< il-i l -- .' . •• ■ 3. Moved by Mr. Moobe, seconded by Mr. Waitt: " Considering that the? Union Bank of Australia in this town has for some time past refused to receive debentures 'for any purpose whatever, and consequently that > no 'goods 'or produce imported from the neighbouring colonies, or bills of exchange uponrany part of the world, can be purchased with them,- it ift'theYe* fore desirable that, pending his : Excellency's reply to the memorial,' debentures: 'should- be received with the greatest possible cautibn." - ' Previous to the last resolution being put, Mr. M'Donald made some rerriarks "worth extracting. ' ' ' ",•"' '* " \ " Mr. M'Donald said that, before ,ttie reso^ lution was put to the meeting, he thought, it only fair, as the representative . of : the .Union Bank of Australia here, to give the reason' for the policy that had been adopted. He had latelY perceived a considerable increase of debentures in this place, and being aware that the mode, adopted by the Government for meeting' all engagements was simply to create; a fresh batch", he conceived it high time not only td' protect the bank, but also to warn the public (who bad engagements to meet) of the fearful result .that would inevitably ensue from' bejng inundated with an inconvertible paper cifrtency; and the" most effectual mode of' doingf ad was to decline receiving such paper altogether J He'.ha,d no wish to depreciate debentures; the bant 'held a large share; all that he wished vrse to' be. allowed to start fair. He ; would receive debenV tures on the ' same principle 'that they 'did! namely, to pay them out Again; but wduldHhjit place the public in a bettef positf6n,or cure'tr^ti evil ? What' would they thinky-bh presefitUig m check at the bank for cash, or' a*biH<oF 'exchange, to be handed over d'ebe'irtnres ?' Bui such must be -the case, otherwise the whTole'^Bstre 1 would' fall upon 1 the bank. It'foad'alstfb&tf inferred from Lord Stanley's ■defepatcnVtfitft tf the; bank had been more liberal}'- Captain Ktz Ray would not have been driven^tofbrce opoa us such a circulation.! But what wertftbe facts of the case? Vfhy,..the.ibank had freelyidu* counted all bills offered- by ttwQaoemnmtsaad toould, have taken anygmouht Jduty authorikeri (the funds for which might have been conv>ej&r to Auckland by the GpverpmeQt i: bfjg'ft-afQr tirae within a few days); and at this present time a. large amount of, these hij^isjpHja.tf. nding ih the books' of the banlki.' the /ate, jo'f .\jrhichf.i_s, as yet .unknown. Instead of .>h[ere qeing .'ap|L deficiency in a circulating niediup),, .tjnW-bankj here held much .larger amounts pjf fpecie^tfjqa, could have beeq /required, . ,' T^woifjd juvejo^nmore honest on the partbf ,tiie(jiavernorjta|lpav»f stated,' to Lord Stanley, jit they: had, only, a local ian^wiJha^nite^c^p^atwtD.! were" unable to sup^^Bis amount of population^ co'in^eree^a^te^w, was in the Company's qetUe'menfe'a^^ and NeIJBon 4 ■where they hap,a qan|| w^tntintjgjjr, of means; but that he did not find lt-cofl^n^ntij to apply in that quarter.**'

lOlt ........ *>|,UUil , 1845 ' 7,565 £15,130 Revenue for 1 8 montJis (paid in debentures). Customs. 1844, (ten months) . . . £11,000 1845, from April 22d, to June 30th 1,500 12,500 Property Rate. First quarter, actual receipt . £958 Second ditto, supposed ditto 1,042 2,000 Total receipts from Ist Jan., 1844, to 30th June, 1845 .... 29,630 Debenture issue 50,370 1 £80,000

iinount. jeioo £50 £5 £1 10*. sa. No. . liaued. £ s. 28 . 22d May, 1844 ' 2,800 0 31 „ 1,550 0 3,379 16th July, 1845 ' 16,895 0 6,481 „ 6,481 0 4,853 Ist May, 1845 2,426 10 5,555 9th Dec, 1844 1,388 15 £31,540 5

.844, .845, , Jan. 1 * ii Jane3o Government in debt Government expenditure not less than . . . Ditto for six months £20,000 £40,000 £20,000 £80,000

Outstanding claims for 1840 — 41 „ 1842 1843 la part of estimated expenditure for 1844 397 16 8 465 10 6 16,240 13 9 20,719 14 1 £37,823 15 0

* *• ♦Disbursements from Ist Jan. to 31st Dec, 1844 37,823 15 1845, Jan. 1. Doe on estimated expenditure for 1844 . 20,000 0 June 30. 6 months' expenditure. 20,000 0 i £77*823 15 Deduct revenue .received during 18 . montns „./.,. . .. .' . . 29,630 0 , ', ' .£48,193 15