MONEY AND ANOMALIES

Wanganui Chronicle, Volume 71, Issue 260, 2 November 1928, Page 3

MONEY AND ANOMALIES

NOTES AND LEGAL TENDER LITTLE-KNOWN REGULATIONS. A man who goes into a bank in Britain—other than the Bank of England—and tenders a £5 note in payment of part-payment of a bill for less than that amount is liable to have it rejected as not being legal tender. By adding a penny to the £5 the tender becomes legal, and he can demand acceptance. On the other hand, no bank has the right to refuse acceptance of two £5 notes in payment of a debt. These curious points in financial transactions were revealed in a lecture at the Drapers’ Chamber of Trade Summer School at Cambridge. Recently when a Press representative drew the attention of an official of a big city bank to them, it was only after a search among formidable looking books that confirmation of these apparent anomalies was discovered in the “Dictionary of Banking.” In this dictionary it is laid down that:— “A Bank of England note is as good as cash, and is legal tender for any sum above £5.”

An official said: “While this regulation is, of course, well-known, the effects of a literal interpretation of it are generally overlooked. It is a customary habit here, for instance, to refuse acceptance of Bank of England notes to all except those of our customers who are well-known to us. But there appears no doubt that we could bo compelled to accept payment of, say, two £5 notes for the sum of £5 0s Id, and to give change, while it would almost seem as if a man wishing to settle a debt of exactly £5 with a Bank of England note could do so by adding a penny to the note. Fortunately, however, these facts are not widely known, and I cannot remember an occasion when we have been challenged.”

Another legal ruling which might prove embarrassing if generally applied is that which entitles a man to demand nothing but gold from the Bank of England in exchange for one of the notes. Strictly speaking, it is illegal to pay anything but gold; but, happily for the Bank of England, it is rarely that the substitution of Treasury notes is objected to. Still another interesting bank-note regulation is this: “If a person loses, say, a £5 note, and has a record of the number, he can, by paying half-a-crown, have the note ‘stopped.’ Should it, however, be presented subsequently at the Bank of England, it must, as a matter of law, bo changed. In a case where the note is believed to have been stolen tho presenter of the note would have to be paid in Treasury notes or silver across the counter, but could then immediately be handed into custody. “A little-known currency regulation is that which gives tho right to refuse all-silver payment of any amount above 40s, and the right to refuse all bronze payment of any amount above Is.”

A post office official pointed out thatthis entitled anyone to insist on the acceptance of 48 farthings in payment of a debt for Is. “On the other hand,’» h 0 added, “there is no law compelling anyone to give change, so that if a person tenders 2d to a shopkeeper in payment for an article which cost IJd, tho latter, if ho has run out of farthings, cannot be compelled to give the customer a halfpenny instead, as has been demanded of them on odd occasions by would-be clever people.”