LEGISLATIVE COUNCIL. Tuesday, 17th August, 1847.

New Zealand Spectator and Cook's Strait Guardian, Volume IV, Issue 231, 16 October 1847, Page 3

LEGISLATIVE COUNCIL. Tuesday, 17th August, 1847.

Present — The Governor, and five Members ; absent — Mr. Domett. The. minutes of the last meeting were read and confirmed. Mr. Merriman presented a petition from the principal merchants and storekeepers of Auckland, against the Paper Currency Bill. The learned member said that any number of signatures might have been obtained, but those attached were considered sufficient ?s they represented the mercantile interests of the-capi-tal, and consequently their views should have great weight with the Council, upon the subject of their petition. The Gov rnor asked the learned member whether he had meant that any number of signatures might be obtained to any petition, or to that particular petition ? Mr. Merriman — To the petition now before the Council, of course. The Governor — Perhaps the learned member would move that the petition be read. On the motion of Mr. Merriman, the petition was read, and was as follows i — To His Excellency George Grey, Esquire, the Governor, and the Honorable the Members of the Legislative Counci', the humble - petition of the Undersigned Merchants and Inhabitants of Auckland, Sheweth — That your petitioners view with alarm the provisions of a bill introduced into your honourable Council, for the regulation of the Paper Currency of New Zealand, which they deem to be fraught with many evils, ruinous to the mercantile iuterests of the colony generally, and more especially that clause in the Ordinance, by which it is declared that threefourths of the specie received iv exchange for bank notes, shall be placed out at interest, — provided always that no such investment shall be made iv the colony of New Zealand. That they foresee many and great inconveniences likely to, accrue th rrefrom., *»d impet'iments to the, free intercourse of trade between this and the neighbouding colonies, and that they are unable to perceive any advantages to be derived fjrom the operation of the said Ordinance, sufficient to counter-balance the evils which your Petitioners apprehend, and they therefore pray that this Ordinance may not be suffered to pass the Council. And your Petitioners shall ever pray, &c, (Signed), John Israel Montefiore, and others. The Governor said that it appeared that the 20th clause was the one to which the petitioners objected, and be might state that he himself would be a petitioner against that clause. Mr. Merriman obseived that one of the petitioners only had signed with particular reference to that clause, but that the petition itself objected to the entire principle of the bill.

[From the New Zealander, Aug. 21.] Tuesday, 17th August, 1847. Paper Currency Bill. The Colonial Treasurer rose to move the second reading of this bill, and said that he

would not occupy the time of the Council with many observations on it. He would say however, that the measure appeared to him to be just, and one that was necessary to be adopted. There could be nothing objectionable in the issue of paper money, inasmuch as such a currency was issued in nearly all parts of the world, and was found to be a cheap and convenient circulating medium ; and surely if it was admitted that the Governmeut should have the regulation of the coinage and issue oi metallic movey — it was as necessary that they should have the control of the paper currency. Indeed he thought that the principle was incontrovertible. It was much better for the security of the inhabitants of a country that the care and regulation of a currency should be in the hands of government than under the management of private individuals or companies, who had only their own profits in view, and not the general interests of the public. He was not prepared to answer the arguments of the petition which htd just been read, as it had only pome before him now at the eleventh hour — indeed he did not expect any such opposition to the measure as the petition had presented, for he had spoken to several persons out of doors on.tht subject of the bill, and they had given their opinion in favour of it. The honorable member concluded by moving the second reading of the bill. Mr. Brown thought, that the bill now before the Council, was perhaps the most important measure that had yet come before the Legislative Council of this colony. Its object was nothing less than to produce an entire change in the currency or circulating medium of the colony, and could not fail in producing the most important effects, not merely in our own community, but also in our relations with Sydney and the neighbouring colonies. It wai a measure, he contended, founded upon the most abstruse speculations of political economists, which, so far from being generally recognised as true, were still a subject of warm dispute. Under these circumstances, it was not to be expected, perhaps, that any very clear comprehension of the principles of the bill could be entertained here; far less' could it be expected that any new light could be thrown upon the subject. However deficient in the k nowledge of the true principles upon which the measure is based, the honourable member contended, that there 7 could exist but little difficulty in estima_tirigj:ka.rly impracti- ?- cal results on this colony ; which ,-vrould sufficiently enable the Council to form a satisfactory opinion upon the merits of the rne>sur;e _ before the Council. He could not help remarking, that the circumstances under which it was introduced, were very anomalous. Unlike other measures which have been brought before the Council, the present was introduced, not for the purpose of remedying some acknowledged grievance — not for the purpose of supplying some well-known defect in our institutions — but was merely a politico-eco-nomic experiment. He thought, if on that ground alone, the Council might not feel warranted in rejecting it, the more especially, ai it had been so warmly recommended by Earl Grey ; yet the fact of its being such an experiment, would justify the Council in looking the more narrowly into it, and giving due weight, at least, to every objection that might be fairly urged against if. He expected to receive this justice, and that the measure would be permitted to rest upon its own-merits alone, and not forced through the Council by the mere superiority of voting power, possessed by the Government. The despatch from Earl Grey, upon "which the bill was founded, was very specious, but most fallacious, and fully satisfied the honourable member that the noble Earl recommending the measure, had a most superficial and imperfect knowledge, of the subject himself, and seemed tohavefra- . raed the despatch altogether upon the views and opinions of others. On a first perusal of the despatch,' the honourable member admitted having been very favourably impressed with the proposed measur • ; but after mature reflection, he had altogether changed his opinions. It was well known, remarked the honourable member, that the cunency, or circulating medium had been warmly discussed for the last thirty or forty years, and still s-eeraed as far from being settled as ever. While some maintained that it ought to be a metallic currency, so as never to be in excess, or liable to much fluctuation ; others again, thought that paper formed the best circulating medium, both on account of its extreme cheapness, as well as for its great convenience in commercial transactions. Whichever of these views might be the more correct, the tact at least, was, that paper had been adopted in preference to the .other, and had been in use for a great number of years. It had not been adopted merely on the suggestion of theorists ; but had grown up with the commerce of the country, and was essential to its prosperity. At various periods of our history, there had occurred several commercial crises, spreading ruin and devastation over great numbers ot the community. The attention of thinking men had been drawn

to the subject, with the view of discovering the cause of these commercial convulsions ; and parliamentary enquiries bad also been instituted for a similar purpose — the result was, that a pretty general opinion came to be entertained, that the evils sought for, were to be found iv the over issue of paper money by bankers ; and as a natural consequence, that the issues of such paper should be taken out of their hands, and placed under the sole direction of the Government, so that paper and gold might be made to bear an exact relation to each other, by issuing the one only in return for the other. The bill before the Council seemed to have been recommended by Earl Grey, in order to attempt to try the experiment in this colony, thinking perhaps, 1 if it succeeded here, it may safely be tried in other places. It is generally admitted, remarked the honorable member, that in order to prescribe efficiently for any disease, it is necessary to be first thoroughly acquainted with the cause of the complaint ; and it did appear to him, that there were many good reasons for believing that the commercial disasters in question, though certainly connected with, were not to be ascribed to the over-issuing of paper money as the prime cause ; it seemed to him to lie a little deeper in human nature, and might be traced to over speculation ; a result of that sanguine, hopeful disposition, the soul of commerce, leading, well regulated, to the best results ; but too frequently ending in disappointment and disaster. To adopt a practical illustration — a trader or manufacturer supposes that there will arise at the end of a short period, a great increase in the demand for his goods. He accordingly applies to his banker for the loan of £5000 to enable him to augment his stock of goods. When the period arrives, he finds his calculations have been altogether erroneous, and he not oniy is ruined himself, but spreads the disaster over many others connected in business with him. But it is not the over issues of Bank paper that can be charged with the ruin ; it is the mistaken calculations of the speculator alone ; the paper is merely an instrument in his hands, and might, under other circumstances, have been turned to the very best account. For it might be easily supposed that his calculatu ns had been well founded, and if so, not only would he have greatly increased his own property, but would also have greatly added to the happiness and prosperity of others conuected with him. In this case, therefore, the banker's paper had done as much good as in the other case it had done harm — clearly proving it a mere passive instrument in the hands of him who uses it — and certainly not the cause of commercial disasters, as generally supposed. When a commercial crisis does happen, it is to be particularly observed, that it may affect two parties, — Ist. those who borrow the money, along with all those connected with them ; 2ndly. the bankers, or those who lend the money. It may be easily shown that the first class are still as liable to become sufferers under the plan proposed by the Government as under the old system. But it is believed, with some show of reason, that the evils arising from the second class of failures, may thus be entirely prevented by the government becoming the sole issuers of paper n.oney. The risk might be perhaps a little diminished, but certainly not annihilated. Because the bankers, or money dealers, under the new system, would, of course, still lend their money to speculators and people in business, as before, and both parties would therefore be liable to the same disasters. The honourable member further contended, that if it were certain that over speculation and commercial crisis were caused by over-issues of paper money by the bankers, Government could not prevent similar results by taking the complete control of the issues themselves. Because, if the Government issue the full circulation of the country — say 20 millions — and exchange their paper for that amount of gold, the Government cannot, of course, keep that monej lying idle in a box, but would be obliged to lend out that money to responsible parties, on obtaining the requisite security for repayment. This money would find its way into the hands of the bankers, who would just lend it in the same way they did their own notes ; consequently, the circulation would thus be in excess, it would be doubled, and even tripled, if commercial speculation should demand it. But should the speculation under the new system turn out to be bad, the ruin would equally overtake both the borrowers and the bankers or lenders, as under the old system. Nay, there would be the additional disadvantage, that, as all the paper would be issued from the National Bank, and only convertible at th central establishment, it would not be known in what quarter the over-issues and over-spec-ulation was taking place — all which the local banker readi'y detects from his notes being at once returned upon him, and he provides the necessary remedy. This shows that Earl Grey is quite wrong in the statement which be makes in his despatch, that " the issuing of paper money has no proper connexion with banking." It has a very proper and intimate

connexion with it. In addition to these objections to the general principles of the bill, the lion, member stated, that there were some special and peculiar objections to its introduction into this colony : Ist. By sending away the gold obtained for the Government paper, out of' the country for investment in a neighbouring colony, as contemplated, the credit of the Government could be destroyed at any time, either by the natural cause of a sudden demand for gold to export for goods, or by a combination of a few individuals for the same purpose. This would certainly be the result, should fresh disturbances arise among' the native population, as many people would at once demand their gold, in order that they might at least be prepared to leave the country by the first opportunity: 2ndly. The state of the native population would alone afford a good ground of objection to the bill, inasmuch as they entertain the greatest dislike to such paper money ; it is altogether unsuitable for them ; it would be very unfair and impolitic to force it upon them, and they could not be specially exempted from the operation of the measure : 3rdly. Perhaps the strongest objection which the community here entertain to the measure arises from the tendency which it will certainly have of preventing a proper banking establishment from coming to this settlement. It is well known that such an establishment was on the eve of coming, and if they have hitherto refrained on account of the small amount of business to be done here, it is not likely they will come now, when the one half of their profits would be at once cut off by the proposed measure. The want of a bank is most severely felt in this community ; its commerce is completely languishing ; such an establishment is justly deemed a matter of the very greatest importance, and any measure that would prevent it, deeply to be regretted ; 4thly. Earl Grey in his despatch states his belief that there are already no vested interests here to prevent the introduction of the proposed measure, and appears therefore most unaccountably to have overlooked the existence of banks both in Wellington and Nelson, having vested interests to a large extent, which he ,(Mr. Brown) thought it would be most unjust to sweep away. The settlers moreover had the strongest interests in supporting these banks, and we should not be justified in passing the present bill so deeply to their injury, without consulting them or permitting them to be heard on the subject : sthly. There exists no present grievance to remedy an anticipated evil to counteract by the present bill; and seeing that it involves such important consequences, it ought not to be thrust upon the community, by way of mere experiment alone. Seeing that the measure was therefore wrong in principle, and being quite unsuited to the circumstances of the colony : not wanted, altogether experimental, and involving as it does the commercial prosperity of the colony, it ought at once to be abandoned. The hon. member concluded, by moving as an amendment, that the bill be lead a second time this day six months. The Colonial Secretary said that he could not quite agree with the opinion of his hon. friend opposite, that the measare was an experiment. It had been tried in England as far as tbe circumstances of the country would admit, and its adoption to the fullest extent there had been prevented, only by the existence of vested interests. Such interests hardly exist in this colony, and if they do in the case of the branch of the bank at the southward, of which he had some doubts, they would be met on the same terms as they had been in similar cases in England. The present moment therefore must be the most favorable on that account for introducing the measure into this colony. In order to appreciate fully the necessity or propriety of the measure itself, it would be requisite to advert to the causes which had led to its adoption in England. Two great evils had risen up in consequence of the use of paper money issued by companies and individuals which have been freely acknowledged by all parties and much complained of. The first was tbe excessive and iv some cases forced issues of paper money during times of apparent prosperity, thereby encouraging undue speculation, and then again its sudden withdrawal during times of difficulty, when the accommodation it afforded was most wanted. This affected almost entirely the mercantile interest which thus suffered from two operations of opposite kinds hut arising from the same system. The second evil was the failure of banks entailing often great loss and misery to tbe lower classes, in consequence of their holding the notes of banks stopping payment, not like merchants when in pursuit of speculation when such losses might have entered into the calculation of the holder, but in trusting to their being a representation of so much property or specie. This last class of sufferers were entitled to the most especial care and protection of Government that could be af- | forded them. With a view therefore chiefly I to prevent these evils, such a measure as this

was introduced into the Imperial Parliament, and although the experience of its operation has been but short, yet so far as it goes it has been favorable. The principles of banking and finance are not easily understood, and the most acute and experienced men, have confessed themselves deceived in their calculations respecting changes and the operatiou of new measures in these matters, but it would be equally wrong to trust to no result that has appeared to be confirmed by experience as to receive every plausible theory as well founded. The principles on which this measure is founded appear to have been supported by the great majority of practical men at home, and therefore may be received with more confidence here. Besides the benefits the public will derive from this measure by placing the paper currency under the control of Government, and the security it will give to the holders of notes ; there are other advantages such as the profits to be deiived from the investment of three- fourths of the specie exchanged for the notes. This may be fairly estimated at not less than four per cent., and it is much more reasonable that this advantage should be enjoyed by the public as a whole, than by private individuals. — It has always been considered the duty of a Government, and has been generally the practice to provide a metallic currency as a circulating medium, and when a currency assumes the form of paper, there appears no good reason why it should follow a different rule. Paper money has done much we all know for the prosperity of the colonies as well as for England herself, and in introducing it into this colony, certainly the mode which has ieceived the sanction of the wisdom and experience of the Imperial Parliament, should be preferred. The Governor said that perhaps he might be allowed to say a word or two, by way of explanation, at that early stage of the debate, without going into any arguments upon the general principle of the bill. It appeared to him that the opposition which had been given to the bill was chiefly directed against the 20th clause, and against the disturbance of vested interests already existing in the colony. With regard to the 20th clause he would say that he himself was entirely guiltless of any such intention as was set forth in the proviso appended to that clause ; — his learned friend the Attorney General had introduced that very objectionable proviso, perhaps unwittingly, but as his learned friend was opposed to the bill, one might almost imagine that he had done so in order to make an unfavorable impression against it — and so render it the more unpopular, — however it happened, he had certainly transmuted that which was a mere suggestion into durable metal by a certain alchymy of his own. The proviso at the end of the 20th clause stated " that no such investment shall be made in the colony of New Zealand." Now he (the Governor) was of opinion that the funds of the bank could be much more profitably invested within New Zealand than elsewhere, and consequently he was totally guiltless of the introduction of that proviso — indeed, were he not Governor of the Colony, he should himself be a petitioner against such a regulation. He quite agreed with the honourable member Mr. Brown, that vested interests in the South should be respected ; he bad prepared a resolution which he had intended to submit to the Council when they were in committee on this bill, to the effect that Government bank notes, bearing small interest, should be issued to the bank at We.lington, which should be substituted for their own notes, and circulated in their stead. By such means he had hoped to save the bank at Wellington from inconveniences arising out of this bill. Having shown to the Council that a mistake had crept into the bill, relative to sending the gold out of the colony ; — and also that there was no intention to interfere with vested interests in the colony, he now trusted that the Council would neither hurriedly adopt the measure, nor hastily throw it out ; but that they would discuss its merits in committee and give the public time to express their views upon it, and then, if the Council thought fit, they might reject it on its third reading.

Timber : sawn plank, per per 100 feet .... 010 0 .. 012 Scantling do 0 8 0 .. 010 Furniture wood do 015 0 .. 1 10 Staves: N. Z. per 1200 2 0 0 ..' 2 10 Shingles: N.Z. per 1000 0 8 0 .. 0 W Whalebone : per ton .. 0 0 0 ..140 0 Finners 40 0 0 .. 50 0 Wheat: per bushel .... 050.. 06 Wool: N.Z.perlb... 0 0 8.. 01 Do. Lambs' .-.'. 0 0 10 .. 0* 1 0 0 0 0 0 0 0 0 0 0 IMPORTS. Ale: p.hhd.Whitbreads' 0 0 0 /. 6 0 0 per doz 011 0 .. 015 0 Arrack : per gallon .. 0 3 6.. 040 Blocks: each, 0 0 6.. 013 6 Beef: Sydney, per tierce 3 0 0 .. 310 0 Prime India, do. 410 0. . 5 .0 0 Blankets : per pair . . • 1 0 0.. 200 Brandy: First quality, per imperial gal. ..0 12 0 .. 0.14 0 Martell's 0 15 0 .. 0 18 0 Brown Stout: per hh<L 610 0.. 9 0 0 per barrel 5 0 0 .. 0 0 0 Blacking : per doz. 45., Bs., and I2s. Cigars : Manilla, No. 3, perlOOO 0 0 0.. 300 N0.4 0 0 0.. 000 No. 5 0 0 0.. 000 Coffee: per lb 0 0 7 .. 0 0 0 Candles: Sperm, per lb. 0 2 3.. 0 0 O % Mould 0 0 0.. 007 Dips 0 0 0.. 006 Flour: per ton '.. 14 0 0 .. 16 0 0 Gin : Hollands, in cask pergallon 0 5 0 .. 0 6 0 Case, 2 gal 1-8 .. 0 0 0.. 011 0 Ditto 4 gall. 1-4.. 0 0 0 .. 3 4 0 Mustard: Per dozen.. 015 0 .. 1 6 0 Oil: Linseed, per gal... 0 6 0 .. 0 7 6 Pork : Irish, per barrel 0 0 0 . . • 0 0 0 Porter: Byass', inbot. per doz Oil 0.. 0 13 0 Pickles : Assoited, per I doz.. quarts ..000.. 150 Prints . per piece 0 12 0.. 0 16 0 Pitch : coal, per barrel 0 0 0.. 100 Paints: white lead, per cwt 1 15 0 .. 2 2 0 Black, 1 8 0.. 1 12 0 RicE:Percwt 018 0 .. 14 0 Rum: B. P., per gal. ..0 5 6 .. vO' 8 6 Sugar; Mauritius per ton 30 0 0 .. 32 0 0 Refined loaf, per lb 0 0 0 .. 0 0 7 Manilla per cwt. 1 8 0 .. 1 12 6 Salt: Liverpool, per ton 4 0 Q .. 5,0 0 Coarse 0 0 0.. 3 10 0 Slates: per 1000, according to size .... 3 15 0 .. 6 15 0 Soap : Hawes'sLondony , per cwt 0 0 0, .. 0 0 0 Liverpool 0 0 0. . 0, 0 0 Sydney 1 5 Q .. 1 8 0 Sacks : Corn and Flour, each «... 0 2 0.. 0 0 0 Istarch : Per lb 0 0 0. . 0 0 7 Sheet Lead : per ton . . 28 0 0. . 30 0 0 Tar. Coal, per barrel.. 1 0 0 ... 0 0 0 Stockholm, .... 1 15 0 .. 2 0 0 Tea : Hyson skin, per chest 3 10 0 .. 4 10- o Congou 4 10 0.. 6 00 Tobacco : Negrohead, , perlb 0 0 3 .. 0 0 8 Turpentine: per gal... 0 0 0.. 070 Vinegar: per gal 0 1 6 .. 0 3 6 Wine: Sherry, per doz. 015 0.. 2 0 0 Port, per doz. .. 018 0 .. 2 0 0 Whiskey: 010 0 .. 0 15 0 Cordage: English, pcx cwt 2 10 0 .. 3 10 0 Canvass: per bolt .... 2 10 0 .. 2 15 0 Iron : English bar, per ton 18 0 0 .. 20 0 0 Hoop, per ton .. 0 0 0 . . 20 0 0 Oil Butts: Gordon's or Mills' per imp. / . tun 0 0 0.. 350 Cows: Milch 8 0 0 .. 12 0 O Mares: Brood 25 0 0 .. 35 0 0 Working Bullocks: per pair 16 0 0 .. 22 0 0 Sheep: Each 0 17 0 .. 1 0 0