TRADING BANK NOTES

Otago Daily Times, Issue 22568, 11 May 1935, Page 24

TRADING BANK NOTES

MANY STILL OUT HOARDING PRESUMED Although trading bank notes ceased to be legal tender three months ago, there are still over £BOOO worth unaccounted for. and it is presumed that a large number are held by note hoarders. In July, 1934, the trading banks had notes to the value of £6,400,133 in circulation, and this amount has steadily decreased since the Reserve Bank assumed responsibility for the note issue in August, 1934. On January 7 of the present year £1.447,655 was still out, but by April 15 this had been reduced to £817,500. The trading banks are still exchanging their former notes for Reserve Bank notes, but on August 1, 1936, their responsibility in this direction will cease, as they will then pay to the Reserve Bank an amount equai to the notes outstanding and the Reserve Bank will assume full responsibility for the redemption of the notes for a further 40 years. After the expiration of that time it will be presumed that outstanding notes are no longer in circulation, and the balance, if any, will be transferred to the Consolidated Fund as an asset. ' _ " In view of the facts that all trading bank notes which have been paid into any bank since August, 1934, have been withdrawn from circulation, and trading bank notes ceased to be legal tender over three months ago, the amount of £817,800 represented by such notes outstanding on April 15 is somewhat surprising," states the Government Statistician, in a review of the position. "A substantial sum is obviously represented by hoardings of the old notes which have not been exchanged for new, and some trading bank notes are probably still in active circulation. But, over tlie lon<r period during which notes have been issued in New Zealand, notes which have been irretrievably lost or have been destroyed by fire, shipwreck, or other accident, must have amounted to a considerable sum. Notes still in circulation or put away for safe-keeping will gradually be paid into the banks, but in many cases hoarded notes may not be brought to light till after the death of the holder, so that it will probably be many years before it will be possible to assess accurately the extent to which notes have been permanently lost or destroyed." The actual number of notes in circulation at the present time is small when compared with the circulation of five years or more ago. Between 1925 and 1930 the value of notes in circulation was between six and seven million pounds, and in 1920 it reached the peak of £7,890,418, backed by coin and bullion to the value of £7,728,942. At the present time there is £1,009,479 in circulation, the value of the coin, and bullion held being £745.326.