STATE NOTE ISSUE.

Otago Witness, Issue 3005, 18 October 1911, Page 9

STATE NOTE ISSUE.

TO COMMENCE IN 1913. LIMITED TO £3,000,000. GOLD RESERVE OF 25 PER CENT. (From- Our Own Correspondent.) WELLINGTON, October 10. The issue of bank notes by the Government of New Zealand is proposed in a bill introduced in the House of Representatives this afternoon. The bill- will be advanced to the second reading stage this session, and further consideration will then be potponed until next session in order that all interested persons may have ample opportunity of considering the scheme. The essential features of the measure were explained by the Minister of Financr (Sir Joseph Ward). H)a said that it was intended that the sole issue of bank notes in New Zealand by the Government should commence on January 1, i 913. There would-be no time limit for the return of the notes now in circulation, and the banks will be responsible for the payment of the face value of these at any time. By delaying the operation of the act till 1913 the Government was providing sufficient time for arrangements to be made for the change without friction or inconvenience to trade or commerce. The notes are to be issued by the Minister of Finance at any time and in any amount, and they are to be legal tender except. in payment of any claim or demand against the Crown, the latter provision being intended to prevent the. possibility of anything in the shape of a paper currency. They will be payable on demand in gold at the Treasury in Wellington. The notes will be of the denominational values that the Minister of Finance directs, and as the present values have, been found convenient, no change in denomination is contemplated. The proceeds from the sale of notes to the banks are to form part of the Consolidated Fund. All expenses incurred in connection with the administration of the Note Department are to be appropriated by Parliament in the ordinary way, and the Minister of Finance is to hold at all times a reserve in gold amounting to not less than one-fourth of the amount of New Zealand notes issued and outstanding up to ±13,000,000, and of an amount equal to the value of the notes outstanding in-ex-cess of £3,000,000. The intention is to limit the issue to £3,000,000, but if occasion demands an issue beyond that amount the excess shall be secured by a gold reserve of £1 for £l. Mr Wilford : What is the value of the notes now in circulation?

Sir Joseph Ward : About £1,600,000. The reserve, he continued, would be held solely for the redemption of New Zealand notes, and would not be used for any other purpose. The custody and administration of the reserve would be provided for by regulations, and the reserve would be maintained at the required amount by payments from or into the Consolidated Fund. A monthly return would be prepared by the Secretary of the Treasury, countersigned by the Minister of Finance, and published ir the Gazette, showing the number and the amount of New Zealand notes outstanding and the amount of gold held as reserve. There would be provisions that any bank issuing or circulating other than State notes after the act came into operation would be liable a fine of £5 for each note, and that all the provisions of the Crimes Act relating to bank notes would apply to State* notes. Mr Masßey suggested that the bill should be referred to the Public Accounts Committee.

Sir Joseph Ward replied that his intention was that the bilf should pass its second reading this session, and if necessary it could be referred to the committee next session.

In reply to questions, Sir Joseph Ward said that the reserve would be kept in gold ingots, and would not be utilised in any way. The remaining 75 per cent, of the proceeds would be used probably for advances to farmers and workers. The bill was read a first time.