Banking under Difficulties.

Poverty Bay Herald, Volume XVI, Issue 5574, 20 September 1889, Page 4

Banking under Difficulties.

— ♦ i If will be now* to m»nv p-topla to Ujirn j that New ouce hud h State Bank, but it will probably nut bo altogether a matter of Htivprise to leavn further that tho Govornmeuntmade a great mess of it. Some interesting particulars about tho undertaking are contained in a speech delivered by Mr Sclanders at a luncheon afc Nelson vo • cently to celebrate the opening of new offices for the New Zealand Insurance Co. in that town. Mr Sclanders, in responding to the t last of "Prosperity to the town and people of Nelson and to the Midland Railway," proposed by the Bishop of Nelson, said he would give those present an idea how b inking business was conducted in Nelson in the old days. He then read as follows from a letter received some years ajo from Mr David Sclanders, who founded the firm of Sclanders and Co. in IHB2 :— " Perhaps you are already aware that the Government of New Zealand p issed an Act creating a Bank of Issue, nid made their notes n legal tender. I think this was about the year 1847. A more stupid thing was never attempted, and when at length the Act was repealed the officers of the Government had got the b isine.ss into such a mess that I was told 0 i good authority at the time that they h.-uf to hand over to the Union Bank of Australia the work of withdrawing and cancelling these Government notes. The Government Bank was only a Bank of I^sue, and had no provision for effecting remittances or similar banking business. The Act prohibited the issue of any other notes payable on demand, and this of course compelled the Union Bank of Australia (then the only bank in the colony) to withdraw every note they had from circulation, and as it was not worth while to continue their branch in a small place like Nelson, they closed it. Now you may imagine what a difKcult position we were thrown into, without any means in the place for making remittances, and nothing to constitute a medium of circulation except a very moderate supply of Government notes, and a still more moderate supply of gold. One had to exert all one's wits to consider how any business was to be done. The first step 1 took was to buy the Union Bank of Australia's safe (which the firm has still in use). I believe it was the only safe in Nelson of any practical value, and the Government officer in Nelson, who had charge of tlie local funds, kept them in that safe for years, for which I gave him the exclusive use of one of the drawers. The Government paid all salaries, wages, etc., in their own notes.and all Cusfonisdutieswerepaid by importers in Government notes and gold. It was a sort of a scramble to gather enough notes and gold for Customs purposes, for these were being continually carried away from the place in the absence of any other way of making remittances. Then arose the necessity for my bank, which I called the Nelson bank. Tho Bank of Issue Act prohibited the issue by anyone else than the Government of notes payable on demand, and although I issued my notes payable twelve months after date, I paid them all the same whenever presented. A high Government official called and tried to persuade me I was infringingtheAct, and I had toargue with him a long time before he could see or would acknowledge that he saw he was wrong. These notes of mine were, of course, mainly made use of in the Nelson province, and for about eight years they answered all the purposes of a circulating medium, and little of any otlier money was ever to be seen, and I frequently received the thanks of those who were callable of appreciating their usefulness* acknowledging that without them it would scarcely have been possible to carry on business. The first year or s*> the notes were printed in Nelson at the * Examiner ' newspaper oflice, but afterwards they were lithographed in London. At hist only Ll notes were issued, but afterwards L 5 ones also, and also (when even silver became scarce) os notes were issued by special request, and were greatly appreciated."