The Taranaki Herald. PUBLISHED DAILY MONDAY, SEPTEMBER 24, 1888.

Taranaki Herald, Volume XXXVII, Issue 8276, 24 September 1888, Page 2

The Taranaki Herald. PUBLISHED DAILY MONDAY, SEPTEMBER 24, 1888.

The fasoinatiou wbioh Government paper ourrenoy seems to exorcise over the imagination of some people is a curious feature in colonial politics, and Mr Verrall, the latest addition to the House of Representatives, is very much exercised on the subject. Like Mr. Dick, so graphically depicted by Charles Dickens, who represented him in David Copperfield as being unable to keep Charles the First out of his memorial; so we feel sure Mr Verrall must be much troubled in his endeavor to keep the subject of <c State Banks " from every apeeoh he delivers, but is unable to do so. The late numbers of Hansard are fall of the " State Bank," for Mr Verrall brings in the subjeot on every occasion he hacLJip speak. Such a project, it needs but the smallest investigation to prove, has been exploded amongst financiers for ages, and a very Blight exeroiao of the reasoning faculty is enough to show why. Neither logic nor authority, however, will shake Mr Verrall's faith in Government paper. In his eyes it is truly a sovereign remedy for all finanoial troubles; nor can he bo made to understand why there need be any taxation when money could be so easily manufactured by a printing press. What could be easier than to pass a law enaoting that the 3overriment notes should be aooepted as legal tender for the payment of all debts, public and private, and that any refraotory person who should refuse so to aosept them should be liable to line and imprisonment. Here is a simple process for meeting defioits whioh we are told is absolutely without a flaw. The whole business oan be done with a turn of the crank. Other Governraents have adopted this means for meeting a financial crisis. The United States issued a paper currenoy during the Civil War, and the " greenbacks " saved the Union. France resorted to a similar expedient in order to meet the war indemnity imposed by Germany. Other instanoes of the same kind could no doubt be easily added ; but the examples of two suoh nations as Franoe and the United States are considered by suoh advocates as Mr Verrall, more than enough to settle the question. Not the least ourious fact about this very plausible line of argument is the absolute and almost unlimited power whioh the advocates of State banks propose to place in the hands of Government— a Government whioh may be changed at any time by the will of the majority of the House. It is exactly the sort of power to which arbitrary and despotic Governments^, in which the voice of the people is never heard or even allowed to be heard, are frequently tempted to resort for the purpose of meeting a finanoial crisis ; but it is not exaotly the power a free oountry, where the people are acoustomed to exercise their judgment in all matters of public policy, would have recourse to. Travellers in Russia tell us that the abuse of the arbitrary paper currency is one of the worst symptoms in the national life of that country. The inconvertible Government notes are forced into currency by the exercise of a purely despotic power. There is no redress, no remedy for the depreciation into whioh they invariably fall, and whioh means nothing more or less than pnblio robbery. Inconvertible paper currenoy is naturally one of the first expedients to which a bankrupt Government would resort to for the purpose of raising money. So well is this understood, that the issue of a paper ourrency nowadays is generally associated with bankrupt Governments or Governments of very low standing on the London Stock exchange. The circumstances under which the United States and France established suoh currencies were so entirely exceptional that no argument can be drawn from them. The existence of a great national crisis gives rise to a state of things in which it often becomes necessary to substitute inconvertible paper notes for ourrent coin of the realm ; but the <( greenbaoks " of the American civil war, like the notes issued by France during the French revolution, the paper roubles of the Russian Empire, and other ourrenoy of the Bame kind, soon Buffered the natural and inevitable fate of all Government money. The very name became a byword among the people. The only means of maintaining a paper currency at par is by making it convertible itito gold coin or bullion. If it is not co convertible, no law that can be made will prevent it from depreciating in value, and the amount of depreciation will depend entirely on the quantity of the paper in the market. This proposition is so universal and incontestable that it might be called a fundamental law of finance. Nor is there any expedient by whioh this depredation oould be averted. We are surprised that Mr. Verrull, who, except on this subjeot, seems to be a practical man, cannot see the matter in the light we have put it. Anyhow, we are certain the members of the House are not likely to be led away by Mr Verrall's eloquence on tho subject, and there will, therefore, be no issue of State notes in New Zealand, it is to be hoped.