A Paper Currency

in our hands. We find it is essential to the conduct of our business, but unfortunately we find also that owing to its being under the control of private parties, chiefly foreign shareholders of banks, it is not free from risk, and that it is apt to fail us at the very time when we need it most. It is a staggering fact that the public of New Zealand, by accepting the promises to pay of these strangers as currency, are actually lending the bank shareholders one million sterling without interest, while at the same time we have to go to the London market and borrow for our own necessities at 4 per cent, besides paying heavy charges and commissions. Our in- page 14 ternal circulation should now require a million and a half, which should he equivalent to a loan to the State of that amount, instead of an advance to the bank. The fact that stamp duties are payable by the banks on their circulation does not affect the question. If we sell our bills or our gold to the banks we are paid in this paper, and absentee shareholders are enriched with profits which ought to remain in our own pockets. The whole matter is so anomalous and so contrary to the dictates of common sense that I will be greatly surprised if the public, when fully informed on the point, allow themselves to be deluded any longer. It may be argued that banks are a mercantile necessity, but I do not propose to interfere with legitimate banking. I am satisfied there is much room for reform in banking practice, but that will all come in good time. Instead of our commerce being under the thumb of foreign banks, who will make advances from our deposits to foreign mercantile houses by the hundred thousands of pounds and refuse the discounts of a local trader or settler, we may look forward to the development of co-operation, the abolition of middle-men, and the establishment of local banks using our local deposits for the benefit of local commerce and enterprise, and thus rapidly adding to the capital belonging to ourselves, instead of sending it away to swell the profits of those who are strangers to us. This will happen all the sooner if we lay the foundation for a complete change of system. The radical change which I advocate is the resumption of our sovereign right of issuing paper money. This can only be satisfactorily effected by the establishment of