THE OTAGO DAILY TIMES WEDNESDAY, AUGUST 1, 1934. THE RESERVE BANK

Otago Daily Times, Issue 22329, 1 August 1934, Page 6

THE OTAGO DAILY TIMES WEDNESDAY, AUGUST 1, 1934. THE RESERVE BANK

This morning a new era in the banking history of the Dominion will be inaugurated in the opening of the Reserve Bank of New Zealand. To most people the only visible sign that the Reserve Bank has commenced business will be the appearance of a new paper currency. The notes issued by the trading banks that are operating in New Zealand will be withdrawn as they reach the banks and will not again go into circulation. A bank-note is but a scrap of paper, but one so rich in promise and so potent in appeasement that no sane person would dream of tearing it up. Though creased and soiled, and stained and torn, as befits an active participant in the battle of life, it has a beauty of its own of which its vicissitudes and adventures cannot rob it. Its very scars are eloquent. The crisp crackle of its cleanly youth may have long departed, and but a limp and grimy shadow of its former self may pass to eager from reluctant hands, but in its dingy frailty it is but the more an object of tender solicitude. Its power remains. It is a very breast-plate to its fortunate possessor, and its absence makes the heart grow fonder. If money be the root of all evil, as some aver, all this may be passing strange. But man must take the world as he finds it, and must take, also, as much as he may of what it offers. And to him the magic of the token that opens almost all doors is, if only through force of circumstances, supreme. These fragile notes, how confidence-inspiring they are in a wad, how infinitely powerful in multiplication! And to a majority of people they represent practically all they really know about the banking system and its ramifications. The sources and repositories of these notes cannot fail in their outward evidence to impress the imagination. To the burglar may come a thought not unworthy of a poet —“ how sweet the moonlight sleeps upon this bank! ” To moralise upon a bank-note there is no doubt a special temptation when the moment for parting with it has come. Hence the pathetic little adieus sometimes scribbled on its back. Time was when we could blithely exchange a note at will for jingling gold, but it is not so now, and part of the activities of the commercial banks in New Zealand will consist from to-day in gathering in the notes that are in circulation and issuing nice new Reserve Bank notes in their place. These will serve just as well to make ends meet or for the offer of hostages to fortune. But there may at first seem something missing when variety of design gives place to uniforniity, and one issue replaces several. The notes of the trading banks, familiarised for so many years in their distinctive characteristics, will gradually fade from the scene, and though the wrench may not be severe, to the sensitive and faithful heart the effect may be akin to that of parting with old and well-tried friends. It may be permissible to add that in respect of these notes any such pangs of regret may be tempered for many by the consolation of the thought that they did not see them as frequently, or as' many of them as they could have wished, and that when they did come their way they bore too often evidence in unjustifiable measure of the ravages of service. There can be no further need, however, of any notepurifying campaign as affecting the trading banks, for the Reserve Bank assumes sole right of issue. By virtue of the powers conferred upon it it opens its doors -with dignity and authority. It is a national institution. It represents —and the very thought must be a solemn one for some folk the art of central banking. In modern times the control of credit and currency has become so fundamental, we have been assured, to the welfare and prosperity of the people, that it has been recognised that such matters should not be left in the hands of the. commercial banks. The Reserve Bank;has been set up to maintain the stability of the currency and carry into effect the monetary policy as determined by Parliament. The test of its usefulness is to come. The uniform note issue is to be a commercial convenience, but apart from that the general public will not have much cognisance of the bank’s existence, or of the transactions carried on by the small staff in the small office at Wellington represented respectively as adequate for its immediate requirements.