MONEY AND ANOMALIES.

New Zealand Herald, Volume LXV, Issue 20088, 27 October 1928, Page 2 (Supplement)

MONEY AND ANOMALIES.

NOTES AND LEGAL TENDER.

IMPORTANT RULINGS.

LITTLE-KNOWN REGULATIONS. A man who goes into a bank in Britain —other than the Bank of England—and tenders a £5 note in payment of partpayment of a bill for less than that amount is liable to have it rejected as not being legal tender. By adding a penny to tho £5 the tender becomes legal, and ho can demand acceptance. On the other hand, no bank has tho right to refuso acceptance of two £5 notes in payment of a debt.

These curious points in financial .transactions wero rovealed in a lecture at the Drapers' Chamber of Trade Summer School at Cambridge. Recently when a Press representative drew tho attention of an official of a big City bank to them, it was only after a search among formidable looking books that confirmation of these apparent anomalies was discovered in tho " Dictionary of Banking." In this dictionary, it is laid down that:— "A Bank of England note is as good as cash,. and is legal tender for any sum abovo £5."

An official said: " Whilo this regulation is, of course, well-known, the effects of a literal interpretation it are generally overlooked. It is a customary habit here, for instance, to refuse acceptance of Bank of England notes to all except those of our customers who are well-known to us. But there appears no doubt that we could be compelled to accept - payment of, say, two £5 notes for the sum of £5 Os Id, and to give change, whilo it would almost seem as if a man, wishing to settle a debt of exactly £5 with a Bank of England note could do so by adding a penny to tho note. Fortunately, however, these facts are not widely known, and I cannot remember an occasion when wo havo been challenged." Another legal ruling which might prove embarrassing if generally applied is that which entitles a man to demand nothing but gold from tho Bank of England in exchango for one of the notes. _ Strictly speaking, it is illegal to pay anything but gold; but, happily for tho Bank of_ England,' it is rarely that the substitution of Treasury notes "is objected to. Still another interesting bank-note regulation is this: "If a person loses, say, a £5 note, and has a record of the number, ho can, by paying half-a-crown, have tho note 'stopped."' Should it, however, be

presented subsequently at tho Bank of England it must, as a matter of law, bo changed. In a case whore the note is believed to have boon stolen tho presenter of the note would have to bo paid in Treasury notes or silver across the counter, but could thon immediately be handed into custody. "A little-known currency regulation is that which gives tho right to refuse allsilver payment of any amount abovo 4Qs, and the right to refuse all bronze payment of any amount above Is." A post offico official pointed out that this entitled anyone to insist on the acceptance of 40 farthings in payment of a debt for Is. "On tho other hand," ho uddod, "there is no law compelling anyone to give change, so that if a person tenders 2d to a shopkeepor in payment for an article which cost ljd, tho latter, if he has run out of farthings, cannot bo compelled to give tho customer a halfpenny instead, as has been demanded of them on odd occasions by would-bo clover people."