No Preferential Claim.

Indeed they are certain to lose. I notice that page 12 Mr Dargaville has introduced a Bill this session to provide that bank notes shall be a first charge upon the banks assets within the colony. The danger of the present system is thus admitted, but there is only one efficient remedy, which will be afterwards mentioned, When a run takes place on a bank it is the depositors and holders of cash balances who make the earliest and heaviest demands. At this moment a single bank in the colony has mow money at call than the total amount of gold held by all the banks. The only limitation placed on the issue of paper by the banks is that the amount "shall not at any onetime exceed the amount of the coin, bullion, and public securities which shall for the time being be held (by the banks) within the colony, nor shall the proportion of coin he less than one-third part of the amount of the coin, bullion, and public securities so held." Bat the said securities are not ear-marked to protect the issue, and note-holders have no preferential claim thereupon. In competition with other to editors in the event of a run, they are certain to come off second best Banks, in the conduct of their business, is order to be safe, require to keep a certain reserve in gold in proportion to their liabilities. This proportion varies according to the prudence of the management, some having a reserve of 30 per cent., others 20 per cent., and sometimes less. The amount of liabilities against the banks in the colony if 10¾ millions; the amount of gold and Government securities held 2¼ millions. The average reserve is therefore 20 per cent. Government securities would not, however, be realisable in the colony; and specie being taken as the only tangible security, the proportion is only 16½ per cent. The total amount of coin in the colony is £1,775.000, and the amount of the circulation and deposits is 10¾, millions. Deposits not bearing interest, and held at Call amount to nearly 3½ millions. In these circumstances the public are placed in a position of unnecessary risk as regards the present paper-currency which cannot on any pretext be justified. The banks have it in their power page 13 also, on the occasion of a run, to decline payment of their notes in gold except at particular places. By their private Acts the notes are only "payable in specie to bearer on demand at the place of date, and also at the principal banking establishments of the corporation." A bank in Dunedin could therefore refuse payment of a note dated at Auckland, and as a matter of fact the notes in circulation are dated at various principal towns, so that on a crisis the note-holder's chance of obtaining immediate payment in gold, as compared with depositors at call, is rendered still more remote. It is clear, therefore, that whether the present system be considered in the view of the inexpediency of the public currency being under the control of private and irresponsible parties, or in the view of the absolute safety of the public as involuntary creditors, there is an urgent necessity for a thorough change. This is a matter which does not admit of a doubt. We are not discussing any of the vexed questions connected with the currency—such as whether there should be a paper currency at all, or whether it should be convertible or inconvertible—but we have been considering a matter which is fairly within the common-sense judgment of business men. We are not occupying ourselves with vague theories about which financiers are continually puzzling themselves. We have, as a matter of fact,