BANKS AND THE CURRENCY.

Otago Daily Times, Issue 1167, 28 September 1865, Page 5

BANKS AND THE CURRENCY.

(To the Editor of the Daily Times.)

Sie—ln connection with your leader to-day, on the above subject, permit me to enquire whether deposit receipts■ (oh demand), current account balances and bills payable, are not ,as much an r immediate liability as note 3, in . circulation ; and, whether the' coin reserve is njt held against all liabilities, notes included ? -I also wish to know whether the amount of such reserve is not left very much to the discretion of the Bank , authorities. Looking to the aspect of;the times, and bearing in'mind the wise regulation that the Manager must be prepared to settle each week the balance due ' by.;his Bank, which I take it, is determined by the course of trade, and the confidence, or otherwise, of his customers. : ■

■ That Scotch and English Bankers have not to keep in treasury a coin reserve pro-, portioriate with that of their. Colonial brethren is apparent'; because, they can, and d 6, invest* it in securities, namely, Exchequer Bills,- Consols, &c.; we must therefore have a Bank o( England, a Mint,' .aonvertible.Crov.ernnient Securities, and'a'j less fluctuating prosperity, before the home system can bs Adopted with 'safety to the public ; and I have little hesitation in affirming that while the plan mooted at a recent meeting of the Chamber of Commerce, mi^ht add materially to the profits of Bank shareholders, and relieve Government of imsaletible securities —it-would,* on any sudden emergency, be very unsatisfactory to depositors,; and disastrous to the Colony •generally. - ' I ' '■- Why the Banks should bs permitted to invesVthe funds of their cuatooiers, in se'cttrities wliich, becaua? of their uncertain value, are avoided by the public, ia ye.t to Be satisfactorily explained. A legitimate coin reserve w& m\ist have, and in the absericex>fsconyertibl& securitfea surely there is nothing better tlmn ; , : Hard Gash., { Duncdin, 27th September, ISG3. "