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The Pamphlet Collection of Sir Robert Stout: Volume 82

A State bank: a paper read before the Auckland Liberal Association ... on May 5th, 1885

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A State Bank.

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A State Bank.

Mr. President and Gentlemen,—

Perhaps the most remarkable peculiarity of the Anglo-Saxon race at the present day is, that with all their vaunted love of freedom and liberalism, they slavishly worship wealth and social position, and systematically disdain to listen to anyone unless he has made his mark in the world, or can lay claim to be a sprig of that aristocracy which has been so long ruling them with a rod of iron.

Let me, however, request you to make an exception for once, in my favour, upon the present occasion, while for a short half-hour I endeavour to explain to you a few stubborn facts about that most practical of all subjects, namely, pounds shillings and pence, or national paper money.

You on your part have of course a perfect right to demand that, whosoever undertakes to address you should corne thoroughly prepared and do his very best; but, on the other hand, comon justice dictates, and I boldly maintain, that whosoever honestly, manfully, and fearlessly does so, has equally an absolute right to command your respect, no matter what his social position or how humble soever his natural abilities may be.

The object which I shall keep steadily in view in the following remarks will he to lay before you, as clearly as possible, the opinions of the greatest authorities that I have met with upon the subject, rather than endeavour to amuse you, and flatter my own vanity, by airing any novel theories of my own, and I must more especially acknowledge my deep and repeated obligation to that very excellent little work entitled "National Paper Money," recently published at Home by Mr. M. J. Boon.

As he justly points out, the first step in approaching this great financial question, is to try and define, as clearly as possible, what money really is, and what purpose it is meant to serve.

As you all know, while men are living in a primitive condition, the only way in which they can dispose of the fruits of their industry is by barter. Thus the husbandman will exchange with the grazier so much agricultural produce for so many head of sheep or cattle, but, as society progresses, it is soon found to be necessary to adopt some article or token which may be agreed upon as a medium of exchange for the whole community to save the waste and inconvenience of the barter system.

Now, to avoid confusion of ideas, it is absolutely essential that we note well, and clearly understand at the outset, that it is quite unnecessary that that token of exchange, that circulating medium which we call money, should possess any intrinsic value whatsoever.

In China, for instance, compressed cubes of tea have been used as money, while throughout the interior of the great Continent of Africa the cowrie shell is the recognised currency, and answers all the purposes of money over that extensive region. And perhaps some of you will be surprised to learn that, from the early part of the eleventh century till so recently as 1694, when the Hank of England was established, British money was made of wood.

As Mr. Boon tells us, up to the time of Henry the First all taxes were paid to the State either in produce or by personal service—thus one brought the King a horse, a sheep, or an ox, and another performed so much labour for him; but that monarch instituted what were called exchange tallies for the payment of all taxes and the purchase of all that the State required.

Those wooden tallies which he issued were rods or staves cut and notched to represent certain sums, thus £1000 was indicated by a notch as wide as the palm of the hand, £100 by one the breadth of the thumb, £20 by that of the little finger, £1 by one the size of a barley corn, for a shilling the very least possible piece was cut out, and a penny was known by a simple incision. Each rod was then split in two, the one portion of it being given to him for whose use it was designed, while the other, called the counter tally, was carefully laid up in the king's treasury to identify its counter part when it should be paid as taxation into the public account.

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The officers who were employed by the king were paid with these staves or billets of wood, from whence we derive the expressions of being taken on to the Government staff, or getting a billet; and when troops on their marches were quartered upon the villagers, as was then the custom, those at whose houses they lodged were paid by them with these billets of wood, and were therefore said to have them billeted upon them; and from these same tallies or billets of wood we also derive the name of our bills of exchange.

Look again at our paper money, which of course has no intrinsic value, but which, as we all know well from our own experience, answers every purpose of exchange admirably, so long as we have confidence in those by whom it is issued.

The late Professor Fawcett, speaking of paper money, says in his excellent work on political economy that "the only result" of its adoption "is that the trade of the country is carried on more aconomically, because these notes which are simply pieces of paper of no intrinsic value whatsoever perform, with equal efficiency, all the purposes which were previously fulfilled by the gold now * * dispensed with. Consequently the economy of this substitution is evident; gold is a valuable commodity requiring much labour and capital to obtain it."

Coin is comparatively little used in wholesale transactions, or by the rich, who conduct almost all their business by bills and cheques, and as the great authority just quoted tells us "this exchange is daily carried on in London at an establishment called the Clearing House. The amount of bills and cheques thus exchanged is so enormous that it frequently reaches £1,50,000,000 in one week, and no gold whatsoever is required in settling the accounts between the various banks. When a balance remains in favour of, or against a particular Bank, the amount is placed to the credit, or debit, of this Bank in the books of the Bank of England."

Thus we find upon close examination that it is chiefly the poor who have to bear the burden of our costly circulation of the precious metals.

Rare and expensive substances, like gold and silver, answer admirably as a measure of value, but as a circulating medium, simply to assist men in exchanging their labour and the fruits of it with each other, they are far too costly. We are now just in the position of a pack of children playing a game with counters which are so expensive that the poor have to sit down and look enviously on because they cannot afford to procure then to play with.

It is thus not only acknowledged by the greatest authorities but clear to demonstration, that there is no conceivable reason why the money of a community should possess any intrinsic value whatsoever. It is only necessary that it should be a receipt for service performed, an acknowledgement that the person holding it, or someone on his behalf, has done so much work, for which he has a just claim upon society for an equivalent return, and the more easily obtainable such receipt stamps or tokens are, the more speedily and conveniently will men be able to exchange their labour for all they require, and the more rapidly, as a natural consequence, must the progress and wealth of any community be augmented.

Prejudice is so strong, especially among the ignorant, that we are far too apt to regard money as real wealth; but the plain honest truth is, that labour and the fruits of labour are the only real wealth, the substance of that of which money is but the shadow. Thus we too commonly mistake the receipt stamps or tokens of exchange for that for which they are only acknowledgements, or orders payable by society on demand.

To use again the words of the great political economist previously quoted, "It must therefore be borne in mind that it is not essential that money should be composed of the precious metals; whatever substance is adopted by the general consent of society, as its medium of exchange, ought properly to be considered as the money of that community. * * * If in any country some substance is made to perform the functions of money, that substance is as justly entitled to be considered money as our gold and silver coin."

Let us now turn our attention to bank notes, those useful symbols by the aid of which all modern nations carry on the great fabric of civilization, and exchange their labour and the fruits of it in the great industrial whirlpool of trade and commerce.

What is a bank note? It is simply a convenient form by the aid of which a State or private institution makes use of its credit to borrow from a community without paying them any interest whatsoever in return.

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If payable in gold on demand, or what is called convertible, experience proves that one-third of their value in coin is amply sufficient to meet all demands, therefore the banker with £20,000 on fixed deposit, or invested in his business, can safely issue notes to the value of £60,000, thus borrowing from the community the sum of £40,000 without paying one farthing of interest for it, and which it is his trade to lend out to the public again at a high rate of interest by discounting their bills.

Probably very few have the slightest idea of the dangerous and irresponsible power which those wield who have the issue and circulation of our paper money under their control and direction, or how easily they can, at any time, create or allay a commercial panic. If the leading bankers restrict credit, or in other words, withhold a large portion of the usual supply of paper money, a financial famine must speedily ensue, just as inevitably as an ordinary famine must occur if the supply of a nation's food is similarly tampered with.

While private banks have our paper money under their control they can rule us at pleasure with a rod of iron, and dictate their own terms to any government which they can easily undermine if it will not stoop to pander to them, or bribe them at the people's expense. They have simply to put the screw on till trade and industry are almost crushed, and the unthinking multitude, overlooking their crafty tricks, but only recognising the palpable fact that the shoe has certainly pinched them since the change of administration, at once very naturully, but most unjustly, blame the government of the day and hold them responsible for all their troubles.

On the other hand, when a more servile party creep into power, they can just as easily give them a good name by reversing the operation and extending credit, and thus governments are perpetually made and unmade, and election swindles worked before our eyes with the most glaring and shameless impunity in the selfish interests of a few scheming plutocrats.

Many of you must well remember what so flagrantly took place when Sir George Grey's Government came into power, and imposed a trifling and almost nominal laud tax. As was quite notorious at the time, bankers throughout toe colony put the screw on in the most merciless manner, openly assigning as their reason that public confidence was so shaken by the vagaries of the new administration that that were positively instructed by their directors to act with extreme caution, and of course the immediate consequence was that many large employers of labour had to draw in their horns and curtail their expenses to the very utmost, which threw thousands out of employment and, as official reports show, brought ruin and bankruptcy upon a large proportion of our most enterprising settlers, who were before leading the van in industrial pursuits and the march of progress; and this cruel persecution was rigorously continued until the capitalists had obtained their object, and a change of Ministry had been effected. In proof of the literal truth of this statement, we may confidently appeal to the consciences of thousands who had to undergo the painful ordeal of a banker's private parlour upon that occasion.

We may therefore know before hand precisely what to anticipate should any government have the honesty and courage to listen to our petition and impose a land tax, or introduce any liberal measure to relieve the people by compelling some powerful monopoly—if not to disgorge their illgotton plunder—at least to bear a just share of the burden of taxation. Upon every such occasion a most determined and resolute attempt will certainly be made by the land ring to crush them by the same tyrannical and unconstitutional dodge, a banker's panic.

The uninitiated wonder at what they consider as the marvellous foresight and sagacity of bankers, who proudly tell their admiring shareholders, at their periodical meetings after such manœuvres, that they clearly foresaw a tightness of money and consequently restricted credit to check over speculation, and thus saved them enormous loss. Those, however, pulling the wires behind the scenes must know full well in their inmost hearts that they themselves and their clique, have, for some sinister object, really created those commercial panics and industrial depressions by instructing their agents throughout the colony to deny their customers the usual accommodation.

Thus the progress of the State is not only seriously retarded, but often brought abruptly to a standstill for an indefinite period, trade and industry utterly paralysed, and ruin, famine, and premature death, deliberately and systematically carried to the page 6 homes of tens of thousands of our industrious struggling settlers, simply to suit the whim of a clique, for the crafty or nefarious purposes of a gigantic and grasping monopoly.*

Some may imagine that it would not pay bankers to thus restrict the circulation of their notes occasionally, but the truth is that it invariably pays them remarkably well, since the tightness of money caused thereby enables them to charge an excessive rate of discount, which clearly accounts for the splendid dividends which they usually pay their shareholders when all other companies are helplessly collapsing.

To illustrate what I mean, and show the close connection that exists between the issue of paper money and industrial depressions, let us look back at the last three, great commercial panics in England. Those of 1848, 1857, and 1866. Those dark gloomy seasons when the British nation was in perfect dismay, when old long-established houses of business were going helplessly to ruin in every direction, and trade and industry throughout the Empire had so completely collapsed that the masses were literally starving for want of employment.

And what, gentlemen, what I ask, was the great panacea that at once acted like a charm as soon as adopted, and, by restoring public confidence, instantly set all the wheels of production in motion once more?

Was it the importation of boundless supplies—of a few shiploads of gold and silver from foreign shores, to feed the hungry people and find them employment? No, nothing of the kind was needed, and their rulers knew it well.

Parliament upon each occasion merely repealed for a time The Bank Charter Act (which most absurdly restricts the issue of paper money just in the same proportion as it is more and more needed, namely, as gold is more and more scarce), and sanctioned the production of an unlimited number of bank notes; and no sooner was that shortsighted Act repealed than the gloomy cloud instantly dispersed, and the terrible crisis was happily at an end.

And just as a rumour that a famine is near may create one for a time, by inducing people to buy up provisions and hold them for famine prices, so it was clearly demonstrated upon all those occasions that it was the mere rumour—the mere dread that money was about to be scarce—which created those financial panics and crushed the industry of the nation, for strange to say upon two of those occasions not a single extra note was really issued, and even in 1857 when £1,000,000 more than usual were placed upon the market by the Bank of England they were almost all thrown back upon it in a few days.

The mere knowledge that paper money was available in any required quantity proved amply sufficient for every purpose, and upon the last two occasions reduced the bank rate of discount like magic from 10 to 4 per cent., proving clearly that there would have been no scarcity of money had it not been locked up by rings and monopolists either from nervousness or for speculative purposes.

I appeal then to any disinterested and intelligent man in the colony to say whether the liberties of the people are safe while such a monstrous and unconstitutional power us the issue of paper money is left to the mercy of a clique—in the hands of a gigantic ring of greedy monopolists.

Let us now go a step further and endeavour to trace the effects of that paper money which has been issued by States for public purposes.

It is well-known that Frederick the Great raised Prussia from the deplorable condition in which he found her by the assistance of paper money, and that kingdom, the most progressive upon the Continent of Europe, has been steadily issuing State paper money for the last 40 years, and, although it is not convertible, it yet holds its own in the market aud remains at par with the precious metals.

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It is quite notorious that during their great wars, when nations have to put forth all their energies to the utmost, State paper money in one form or another is now found essential to success.

Thus when the great Napoleon seemed to have almost all Europe at his feet, and the precious metals could not be obtained in sufficient quantities by his opponents, since the military expenditure during that mighty and protracted struggle had concentrated the bulk of their gold and silver in Germany, how was that great contest carried on, and brought to a speedy and glorious termination?

Was not that disturber of nations instantly checked in his road career, brought like an incensed lion to bay, and ultimately crushed, by the paper money issued on September 30th, 1813, at Peterswalden in Germany under the united guarantee of Ruasia, Prussia, and England.

We often hear men speak with contempt of what they vulgarly call American greenbacks, but American paper money enabled the North to keep half a million of men in the field, at a cost of £400,000 a day till rebellion was stamped out and that gigantic contest triumphantly and gloriously concluded. Ay, and caused the President at its close to have occasion to congratulate their Congress upon the notorious fact that that wonderful nation had made marvellous progress, even during those four terrible years when anarchy and the sword were literally deluging the length and breadth of that fair continent in blood.

Some idea may be formed of the rate at which they issued their paper money during the great war when we reflect upon the fact that from 1861 to 1865 they increased their national debt from fifty to £600,000,000, or at the rate of nearly £150,000,000 a year, and though their paper once fell so low as a discount of 30 per cent. when the market was flooded with it, and almost all their gold and silver had been sent to Europe to purchase war material, yet it instantly rose to par when the war was concluded and it was announced that it would be gradually redeemed by the State.

David Hume, the great historian, tells us that in Pensylvania the settlers who purchased land were advanced Government notes to the amount of half its value with which to improve it, and which they repaid to the State by equal annual instalments in 10 years; whereupon they could go again to the public treasury and obtain upon the same terms half the value of their homesteads with all their improvements.

Speaking of these States the great Adam Smith says in "Wealth of Nations"—"The colony governments find it to their interest to supply the people with such a quantity of paper money as is fully sufficient, and generally more than sufficient, for their domestic business. Some of those governments, that of Pensylvania particularly, derive a revenue from lending this paper money to their subjects at an interest of so much per cent. * * * It suits the conveniency of planters to save the expense of employing gold and silver money in their domestic transactions. * * * The redundancy of paper money necessarily banishes gold and silver from the domestic transactions of the colonics for the same reason that it has banished those metals from the greater part of the domestic transactions in Scotland, and in both countries it is not from the poverty, hut the enterprising and projecting spirit of the people, their desire of employing all the stock which they can get as active and productive stock, which has occasioned this redundancy of paper money."

And what was the result of their adopting what that great authority so justly calls that enterprising and projecting policy of issuing State paper money?

As the great Edmund Burke truly said in the House of Commons in 1774—"Nothing in the history of mankind was like their progress."

They were not only contented, prosperous, and happy, but, like the Australian colonists at present, they were loyal to England to the backbone.

As Dr. Franklin said in 1776, before a committee of the same House—"They had not only a regard but an affection for Great Britain, fur its laws, its customs, and its manners."

However, in an evil hour, to enable her to carry on her wasteful European wars, the British Government in 1773 imperatively commanded that they should at once relinquish their system of employing State paper money and in future pay all taxes in hard silver, which presumptuous and over-bearing mandate at once threatened page 8 to put an immediate and paralysing clog upon all the wheels of their progress and speedily over whelm that thriving, enterprising, and progressive people, in the terrible quagmire of bankruptcy and disaster—that fatal mudpool of stagnation which has been the grave of so many once promising nations, and from which they were then so happily emerging.

And what were the consequences? We all know the result alas only too well. As was perfectly natural under the circumstances, when wholesale ruin was thus staring them in the face, and blundering, shortsighted British statesmen scornfully turned a deaf ear to their cry for relief, their little scattered settlements, of hardy backwoodsmen and sturdy pioneers, at once rose equal to the great occasion, and speedily displayed the far-famed courage, manliness, and spirit of that land whence they came and that race from which they sprung.

Within two short years the first American Congress assembled in Philadelphia, and in the following season, 1776, England paid, ay, paid indeed for her folly with the brightest jewel of the British Crown, Her children, that infant giant Empire, which she had thus so wantonly dared to insult and trample upon, flung off in self-defence her yoke forever, and proudly proclaimed to an admiring world, for the first time with truth in the annals of history, the birth of a free nation.

I am not ignorant of the fact, but know perfectly well, that some of those States acted most dishonourably as pointed out by Adam Smith in "Wealth of Nations," by first deluging the market with their paper and then buying it in at a nominal price. However, the abuse of a system by dishonourable men cannot invalidate for an instant the great principle involved.

The momentous question then that at once naturally suggests itself is this:—If States find it essential to employ paper money so largely in their gigantic wars, and can by the same means assist their settlers to convert a wilderness into smiling homesteads with such marvellous rapidity, why should they not adopt the same enlightened policy to improve the public estate by opening up the country with reproductive works, and adorning our cities with the aid of that labour which is now going to waste and literally clamouring for employment in our streets?

Is such an idea within the scope of practical politics or is it not? Has such an experiment ever been tried, and if so, what has been the result?

The time at my disposal to-night will only allow me to give one example as an illustration, selected from the works of Mr. Boon, but one which is so plain, practical, and simple, that I feel convinced that it will be quite sufficient to satisfy all intelligent and disinterested men, and it is utterly useless to multiply examples in the vain attempt to persuade those who are not open to conviction.

Like ourselves, the people of Guernsey urgently required a commodious market-house, but, as in our own case, no funds were available. Their Governor, Daniel le Brock, being an honourable man, and not feeling justified in entailing a burden of debt upon the inhabitants of that little island forever by borrowing the money at 5 per cent., as more shortsighted or less scrupulous rulers do, issued with the consent of his subjects 4,000 one pound notes guaranteed by the whole community, just as our bankers everywhere issue theirs upon the personal guarantee of a few private shareholders.

Those notes went freely into circulation as they were paid out to all those who were employed in supplying material and erecting the building, for the security of a community is much better than that of those banks which are conducted by a few private gentlemen for their own selfish and speculative purposes.

Thus things went pleasantly on, and while no single individual was impoverished one iota. the whole of that little community on the contrary was immensely benefitted by the great impetus given to trade and industry—and many who were in urgent need of it found useful employment.

Well, upon completion, the market contained 80 shops or stalls, which were rented to tradespeople at £5 each per annum, bringing in a yearly rental of £400 which was sacredly devoted to redeeming the notes issued for its construction, and as they came in 400 of them were annually burnt in the market-house in the presence of the magistrates and the assembled people.

Thus the islanders not only had their prosperity greatly enhanced by the page 9 demand for labour and material during its construction, and the advantage on its completion of a capacious public building which had not cost them one shilling, but at the end of ten years when all those notes had been redeemed by the rent and destroyed they had the whole returns, namely, four hundred pounds a year to the good, to lighten the burden of taxation and reward them for their enterprise and public spirit. Whereas if that market had been erected like our own public works on money borrowed at 5 per cent., they would have been burdened with a debt of £4,000 upon which the weary taxpayer would have had to pay £200 a year interest forever, or at least, till that obligation was liquidated by increased taxation.

Now, I ask, can any gentleman in this room give us one valid reason why, if sanctioned by Parliament, we could not find employment for our people, and embellish our city, by building a market, a town-hall, or any other public edifice upon the same principle—and if one public work could be so constructed, why not others throughout the length and breadth of the colony just as fast as willing hands could be found to execute them?

The great law of selfishness, or the natural and praiseworthy desire of the individual units of which the vast human family is composed, to rise in the social scale and improve the condition of themselves, and those dependent upon them, is now acknowledged by all deep thinkers to be the real lever or motive power in the untiring and ceaseless march of human progress. Therefore the great problem upon which the prosperity of every family, great or small, depends is really nothing more or less than this, namely, how can its various members have such security afforded them, that all who are able and willing to work may cheerfully do so, with the full assurance that while enriching the community as a whole, each individual will be sacredly secured the full reward of his industry.

Can it possibly be necessary that, in order to enable an infant nation to commence operations and exert their muscles to supply their wants, a large proportion of their number should be compelled to waste their time quarrying in every mountain and valley, with vast labour, to extract the most rare and uncommon metals from the bowels of the earth, to take to their rulers to stamp with some image that they may be used as simple tokens of exchange for labour and the fruits of industry?

Or, if such metals are not indigenous, must they blight all their future prospects, and sacrifice their freedom, by mortgaging not only their home and country but the labour of themselves and their descendants to strangers, to purchase such precious trinkets at a ruinous price, and pay them a humiliating and crushing tribute in the shape of interest, for an indefinite period, for such a mysterious and totally imaginary boon.

No I not for a moment. Common sense indignantly revolts at the very idea of such an utter absurdity. Reason distinctly tells us that any inexpensive symbol or receipt, like the tallies previously mentioned, or printed paper, will answer precisely the same purpose equally well. The substance of which a nation's currency is composed is perfectly immaterial—its real value, for the purpose of exchange, is the public stamp—the guarantee from the proper authorities to all those who obtain possession of it, by performing some service for the common good, that they will be suitably rewarded for their work of brain or muscle when the public harvest is reaped. All may then press eagerly on with a will, and create wealth just as fast as they please, with the full assurance that they and their families will be duly protected in the peaceful enjoyment of the fruits of their industry.

Should we not justly conclude that Henry the First must have been a fool, or a madman, had he cut up the most costly cedars and expensive woods procurable to issue as tokens of exchange for his people instead of the plain material which he employed, yet that is precisely the ridiculous folly of which our rulers are now guilty upon a gigantic scale.

Theory therefore clearly dictates, what experience fully proves, namely, that such a guarantee as State paper money would provide the most simple and rational means possible for finding constant and unlimited employment for all who are willing to exert themselves, and enormously enrich any community that has the wisdom to adopt that admirable system—one that would effectually save the incalculable loss which States now everywhere suffer from the enforced idleness, or partial idleness, of such a large proportion of their most industrious and enterprising citizens.

Since "the State is the people," whatever enriches the people must necessarily page 10 enrich the State, and that must indeed be unproductive work which would be as unprofitable and demoralising as doing nothing.

Under such a system all labourers would receive the just reward of their toil, but that remuneration need not cost the rest of the community one cent, for with such a certificate for the value of work performed, made a legal tender in the form of State paper money, their wages, and ample wages too, would be speedily created for themselves by the sweat of the brow—the labour of the hand or head.

If asked how such Government money could reach those now unemployed, we reply, through the authorities calling for tenders for all necessary public works, and paying the contractors with their own notes.

Such paper money, like public bonds, would be simply a guarantee that at some future day the Government would take so much by taxation from the common fund—the fruits of the industry of the whole community, which their labour had been steadily augmenting, to give to those in whose possession it might then be.

The essential difference, however, and it is a vast one indeed, between Government bank notes and State bonds is simply this, that while the former would cost literally nothing, but the price of the paper and the expense of printing, the weary taxpayer has to be mercilessly fleeced and crushed helplessly down into the awful hell of poverty to pay the enormous burden of interest perpetually accruing upon State debentures.

Can any man in this room, in this community, or in this colony, show by any logical process, the equity, or expediency, of allowing private banks to deluge the market with their notes, and charge our business men extortionate interest for discounting their bills as a favour with them, while at the very same time our shortsighted rulers are paying interest upon borrowed money to the amount of a million and a half a year, some £4,109 every day of the week, Sundays included, or £3 per head per annum for every man, woman, and child in the colony. Wealth absolutely cast into the sea, a wholesale sacrifice 'o too egregious blunder committed by successive Parliaments, in absurdly borrowing from usurers money manufactured by others in distant lands, instead of prudently creating their own.

If instead of borrowing foreign fictitious capital at five per cent interest to make our railways, our representatives had made them entirely with paper money issued expressly for that purpose, we should have had no interest whatsoever to pay, and, in twenty years after each line was made, the notes issued for the purpose would have been entirely redeemed and liquidated by the amount we now pay for interest alone.

All our public loans are now raised by the issue of State paper, but those bonds or debentures, not being made a legal tender, or in convenient sums to pass as money, have to he converted into coin or bank notes before they can be used in circulation, and to thus exchange our Government paper, of which the security is absolute, for metal tokens, or risky and precarious bank notes which may be utterly valueless, we are now paying such an enormous sum annually in the shape of interest, as in utterly paralysing every branch of industry, and reducing [unclear: waves] throughout the colony to starvation point.

It has been suggested that Government notes should be printed in the form of "We promise to receive," so that the merchant who accepted them from his customers to-day, could pay them back to the State, through the Customhouse, as taxation to-morrow. And since governments collect with one hand as fast as they disburse with the other, it stands clearly to reason that State paper would always be in keen demand to meet taxation, and that it therefore could not possibly fall below par, or its nominal value in gold and silver, unless issued in the most reckless manner, and far in excess of our public levenue, which under such a system would at once be enormously augumented.

It will probably be said, by those who have only looked at the question superficially, that such State paper would seriously interfere with our foreign trade, as it could not be exported to purchase supplies; but such an objection, although it sounds formidable, is really only imaginary, since all those who know anything of the subject must he well aware that, unless under very exceptional circumstances as in time of war, international trade is simply an interchange of products and manufactures carried on almost exclusively by bills of exchange. If any State took to exporting page 11 only gold and silver to purchase all its requirements, it world inevitably be speedily bankrupt, since the amount of any nation's coin is a mere bagatelle when compared with its commercial transactions. This is clearly seen by the disturbance of the circulation where nations bate had to send away considerable supplies of the precious metals to pay their troops when fighting in foreign lands.

It may however be enquired—How could the Government get the precious metals to meet their foreign expenditure, and the interest on our present loans, if all taxes could be paid in their own paper? But just as merchants, regarded as a whole, send away one cargo of merchandize to purchase another, so the railway material, and public stores of every description, are in reality exchanged in the same way for colonial products, and even the interest on money borrowed from foreign countries is transmitted by means of bills of exchange, as is clearly pointed out in the works of Fawcett and other political economists, by an excess of exports of the fruits of industry over those imported. Thus although we nominally pay interest in gold, it is really shipped away in the form of kauri gum, wool, and countless other articles—the harvest reaped by the sweat of the brow of our industrious people from one end of the colony to the other.

Such matters could, therefore, be as easily managed by means of bills of exchange on the foreign branches of our State bank, as they are now performed by the existing private institutions, or even without such branches they could be easily arranged with other banks at a nominal cost.

Travellers have often justly complained of the great inconvenience which they Buffered from such paper money while journeying through the German and American States, which, of course, would not recognise that which was issued outside their own jurisdiction, but no such annoyance could possibly occur in a united colony like this under a single Legislature.

If it should be asked what security the holder of such State paper money would have, the reply is obvious, namely, precisely the same that the bondholder has at present—that of the whole colony, which would be pledged to accept it as taxation, and redeem it at a certain rate per annum. The only difference would be that he would have the security of a highly prosperous and thriving community, instead of that of one in a chronic state of impecuniosity, whose wealth was being perpetually drained away to pay enormous sums of interest.

We must always bear in mind that there is a vast difference between a nation borrowing from its own subjects as Great Britain does, when the whole of the interest is paid to its own people, and one like ours, borrowing recklessly from every quarter of the globe, and scattering wholesale the fruits of the industry of an infant nation, to enrich absentees—the citizens of other lands.

Those foreign usurers who are now sucking the very life blood out of every branch of industry must of course receive their stipulated reward to the uttermost farthing, for every fraction of our present crushing burden of interest must be honestly paid; but if the electors now do their duty to themselves and their country, they will instantly put a final stop to that viciously suicidal policy for the future, by taking very good care indeed that every public man who, under any plea or pretext whatsoever is mad enough to suggest increasing that burden one iota, shall be, there and then, politically tarred and feathered.

Those deeply interested in our present banking institutions may ridicule the idea of establishing a national bank of issue as a novel, visionary, and theoretical innovation, which could never stand the crucial test of practical experience in such a community as this, but they simply expose thereby their own selfishness and ignorance, since we have the stubbon fact, brought prominently before our eyes in official records, that Sir George Grey, then Governor of the colony, established a State Bank of Issue here under a statute called "Paper Currency Ordinance," passed the 16th day of May, 1847, the thirty-sixth clause of which strictly prohibited the use of private paper money, and thus secured to the public treasury the whole amount of interest saved by our note circulation.

This Statute was duly confirmed by Earl Grey, and it is a well-known fact that McCulloch, the famous political economist, then immediately wrote to congratulate our Governor upon the adoption of such a just, far-seeing, and states man like measure.

All went well while its author remained in the colony, but, upon his removal, his back was no sooner turned than that Act was repealed, and the careful, anxious work of years upset, with indecent haste in a day, by those scheming capitalists who page 12 had been eagerly watching For his departure, that they might seize and enjoy their accustomed prey, and enrich themselves unjustly at the expense of the people by plundering, as usual, the public treasury.

To change the subject for a moment, allow me to say that though I yield to no man living in my admiration for the great ability, and many manly and stirling characteristics of our present Premier, I must candidly confess, at the risk of giving offence tu some of you, that it was with sincere and deep regret that I listened to him deliberately advocating before you in his recent speech that most dangerous and pernicious doctrine of sacrificing principle to expediency by compromising with the ne (an evident attempt to justify the composition of the present heterogeneous Cabinet), saying that if your representatives could not get what you wanted they should try for the next best, and if still unsuccessful, make the best terms they could.

Alas! how widely different from those truly noble and states man like sentiments so lately expounded to you, from that very same platform, by that well-tried and grand old veteran liberal, Sir George Grey. Full well many of you must remember how the vast audience applauded each sentence to the echo as he then assured you, so forcibly and emphatically, that it was the clear and unmistakable duty of your representatives, to go fearlessly to the Legislature—the Parliament of the land—and simply demand impartial justice for you and nothing more or less—and if that were denied them, rather than cover you and themselves with humiliation and shame, by stooping to compromise with a deceitful foe, to come honestly back with clean hands (that was, I believe, the very expression which he used), and so bring the whole question at issue clearly and directly before the bar of an injured and insulted people, and leave it for them to settle upon the first appeal to the ballot box

Heaven forbid that the colonists of New Zealand may ever sink so low, that one such honest, straightforward, manly protest, to arouse a slumbering nation and bring it abruptly to its senses, could be weighed by them, even for a moment, in the same balance, with wretched compromises for miserable crumbs—the unclean wages of unholy compacts.

The servile, cringing, time-serving policy of expediency may sometimes apparently prosper for a while, but the men who have moulded our civilisation, purchased our freedom, and been the bright guiding stars in the social firmament, have invaribly been those who have scorned to tarnish their honour by stooping to parley with the enemy, and disdained to trample, even for an instant, upon that broad and uncompromising line which must forever separate right from wrong—men who would far rather sink loyally and manfully, at the post of duty, surrounded by their trusty and faithful comrades, with their colours yet unsullied and nailed firmly to the mast, than barter their honour with the foe though craftily tempted by the offer of the nominal command of the hostile ship, with its foreign motley crew.

I will only add, in conclusion, that I firmly and conscientiously believe that the real and only reason why the battle of life is so cruelly hard for the masses, the vast majority of our race, is because through simplicity and negligence they foolishly allow themselves to be plundered, insulted, and trampled upon by gigantic and insolent monopolies.

When will the royal people (as they have been well called in a land of freedom, under manhood suffrage and constitutional government)—when, I ask, will the royal people be sufficiently enlightened to select as their representatives those, and those only, who have the honesty, independence, and courage to break down every vile monopoly, and scorn to listen, even for a moment, to any compromise short of firmly establishing our whole social system upon the only equitable and solid foundation possible, namely, the laws of eternal justice and the equal rights of man? Then, but not before, we may confidently hope that human industry, guided by heaven's torch, the light of reason, will speedily transform this much abused planet into a veritable paradise, and nobly vindicate the justice and wisdom of the Great Creator by demonstrating that squalid, cheerless poverty, with all its heart-sickening train of misery and woe—so far from being natural—the result of some cruel and inexorable Divine law—is simply the awful tribute which humanity pays to the tyranny, cruelty, and bungling legislation of little, selfish, and presumptuous man.

May we each and all of us be speedily aroused to a full sense of our duty, and animated by a noble, fearless, and patriotic determination to expose those blunders, and relieve mankind from that galling yoke.

William Atkin, General Printer, High Street, Auckland.

* Since this address was delivered, I notice that the Dunedin "Herald" clearly and justly traces our present alarming condition of commercial stagnation, and industrial depression, to the true source, saying, "At this moment there is more money in the colony than there has ever been, there being 9½ millions of deposits in the banks, an amount exceeding that of 1879 by 1¼ millions, and that of 1880, when the iron grip of contraction was first placed upon us, by 2 millions. How is it that with so much money in the colony business is not more brisk? Just because the banks are chary of discounts. The amount of discounts is only 4¼, boing 2½ millions below the amount in 1879."