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 THE NATIONAL DEBT 
 
 AND PAPER CURRENCY; 
 
 OR, HOW TO SAVE THE TAXPAYERS 
 
 SEVEN MILLIONS A YEAR. 
 
 Qomxi 
 
 - 
 
 BY ARCHIBALD HARPER, GLASGOW, 
 
 G L A S G O W : 
 PRINTED BY JOHN CRAWFORD, 66 MITCHELL STREET. 
 
 1884.
 
 THE NATIONAL DEBT AND PAPER CURRENCY 
 
 Or, Hoiv to Save the Taxpayers Seven Millions a Year. 
 
 JN calling attention to the question of our National Debt, and 
 3K how to pay it off or reduce our expenditure, and also, the 
 "^ present system or basis of our paper currency, or the issue of 
 bank notes, I feel that I am on a very difficult subject, and one I 
 am convinced I cannot do justice to. I wish to show the gross evils 
 connected with the present Act and Laws for Banking (or Sir R. 
 Peel's Act of 1844-45), an d also to bring out in a proper way the 
 great advantage which would result to the country's good, if a 
 proper system of paper currency were adopted, and founded on 
 principles which would deprive no one of what he had a right to ; 
 and founded also on principles on which all commercial trans- 
 actions are conducted and based. For several years prior to the 
 introduction of Sir Robert Peel's Bill of 1844-45, banking, as regards 
 the issue of paper money matters, had reached to a very unsatisfac- 
 tory state ; there being a very large amount of paper money in 
 circulation, and very little bullion in the banks to meet it ; in many 
 cases banks did not hold bullion to the extent of one-third of their 
 paper money which was in circulation. Banks appeared at that 
 time to do very much as they pleased as regards their issue of 
 paper money, and so the public, or noteholders, had little or no 
 security for the paper money. The bank shareholders (who were 
 alone responsible) in many cases were not very substantial, or had 
 little capital to meet the notes, if a panic arose. 
 
 Sir Robert Peel's Bill was brought in to put an end to this state 
 of affairs, and also to place banking on a more sound principle or 
 basis. This he tried to accomplish, by granting authority to the 
 banks to print and put into circulation about 20 or 21 millions of 
 paper money; and, as the banks had no security of their own 
 against this amount of paper money (saving the names of the 
 shareholders), it was equal to a gift to the banks of 20 or 21 
 millions of cash ; as the paper passed as an equivalent for gold ; 
 thus allowing the banks 21 millions or so for the use of the 
 shareholders' names to carry on their business, and make capital 
 out of, and so receive interest for taking the gift of their authorised 
 issue.
 
 This is very clearly seen in connection with the bank of Eng- 
 land. When the Government passed Sir Robert Peel's Bill the 
 Bank of England was to take up 14 millions of National Debt, or 
 consols, on which the Government were to pay interest, and, for 
 which, the Government were to be security. This, at first sight, 
 appears quite a business transaction, but when looked into it turns 
 out a very stupid act on the part of the Government, and a very 
 good transaction for the bank. As the Government allowed the 
 Bank of England to issue 14 millions of paper money against the 
 14 millions invested in consols ; and set down the security of the 
 Government as an equivalent for their 14 millions of paper money, 
 and against the supposed 14 millions given by the bank to the 
 Government. These 14 millions of notes are now in circulation, 
 and are taken as an equivalent for gold by the business community 
 and public in general. The Bank of England also looks on the 
 security of the Government as an equivalent for gold, and has 
 treated it as such in all its reports. Seeing then that the Bank of 
 England has got authority to print or issue 14 millions of notes, 
 and has got the security of the Government for 14 millions, why 
 should the Government pay interest to the bank as the bank notes 
 pass current and equivalent for gold? To put the matter in a 
 proper light : it is equal to the bank doubling 14 millions of its 
 capital, as the bank draws interest on the 14 millions supposed to 
 be invested in National Debt. The bank also derives a profit or 
 interest from the notes issued against the security of the Govern- 
 ment Debt, and with which it carries on its business. This is 
 placing banking in a position which no other business concern can 
 approach ; as no matter what security other concerns may have, they 
 cannot draw against, or on them, free of interest. What would be 
 thought of a man who bought a watch if he asked the watchmaker 
 to allow him interest on the money he gave for the watch ? The 
 position would not be any more absurd ; the man had the watch 
 as value for his money, and the bank has the notes with which it 
 carries on its business, and which are looked upon as good as gold, 
 and on which they make a good profit. 
 
 This is going on the understanding that the Bank of England 
 took up and paid for with gold 14 millions of consols or National 
 Debt, but the case appears quite different — it looks very like the 
 bank purchasing 14 millions of Government Debt with the notes 
 in circulation at that time, and on which the bank only pays a 
 small tax. It is nothing short of a gift to the bank of 14 millions, 
 and interest for taking it. The Bank of England (as can be seen 
 from their reports for 1844-45) nac * not gold to take up 14 millions 
 of Government Debt. It would take great financial engineering 
 on the part of the bank to show where the gold came from to take 
 up 14 millions. In 1844 and 1845 the bullion, held by the bank, 
 was ^14,466,000 and ^13,742,000 respectively. So, according 
 to their own showing, the bank was not in a position to invest 14 

 
 millions of gold at one time in consols ; it would have cleaned out 
 the whole bullion of the bank. All banks of issue enjoy, to a 
 certain extent, the same privileges as the Bank of England, and have 
 an authorised issue, against which, no real security is held, and, on 
 which, a good interest is made. Banks have only to hold gold in 
 their cellars against an extra issue of notes — that is, if a bank which 
 has an authorised issue of say one million, it can issue two millions 
 of paper money, on condition, that it keeps on hand and locked up 
 in the bank cellar, one million of gold as an asset against the extra 
 million of paper issue ; and, as this gold must remain locked up so 
 long as the notes are in circulation, it is as good as lost, and so 
 becomes in a manner useless, and a dormant treasure. 
 
 Under our present system of paper currency, the country or 
 ratepayers, have lost a sum which would have paid the National 
 Debt several times over; as any one who puts himself to the trouble 
 of going into the history of our paper currency can find out. 
 However, it will do no good to mourn over our losses, but we 
 should take a lesson from them, and, endeavour to improve on the 
 past and be guided by experience. So we should have a change, 
 or new laws for banking, founded on sound business principles, 
 and thus secure a better basis of paper currency. The 
 Government have the control of the metallic currency, on which, 
 through the tear and wear there is large yearly losses, and for 
 which the Government or ratepayers have to provfde. Now, if 
 the Government and taxpayers have to make good the loss on our 
 metallic currency, it does not require strong argument to prove 
 that the Government or ratepayers, should have any profit 
 which is to be derived from the paper currency. I will now 
 endeavour to show how the paper currency could be made of great 
 value to the Government, and effect a large saving to the ratepayers. 
 If the Government were to pass an Act, and make it law that all 
 banks of issue must pass to the credit of the Government, or 
 deposit with the Treasury, and for the use of the Government (free of 
 interest, a sum equal to the amount of the paper issue wanted by the 
 bank; and if the Government were to treat this money as borrowed 
 cash, and pay off so much of the National Debt with it, and allow, 
 or set aside, for buying up consols at 2 ^ per cent, (interest on the 
 compound principle) on this money held in security of the paper 
 issue, the National Debt would be reduced 40 or 50 millions to start 
 with, and reduced also by the interest on this amount every year ; 
 and as interest would be paid on interest on the compound principle, 
 the debt would be reduced by a large sum every year. Then, the 
 Government would become, as it were, the holders of a large portion 
 of our National Debt; and so the ratepayers would derive a benefit 
 in the reduction of taxes, and, at the same time, the National Debt 
 would be getting less. The whole of it would be wiped out in 
 about one hundred and twenty years ; and, if the interest were paid 
 quarterly, this time would be reduced by ten years or so. Under this
 
 system of paper currency the Government would require to be 
 security for the notes ; and as the Government security is as good 
 as gold to the Bank of England, and all other banks, the Govern- 
 ment security would be as good as gold to the public. As the 
 notes pass as an equivalent for gold, the banks would not be losing 
 anything they had a right to. To put the present basis of our 
 paper currency in another form (and one that the banks, so far as 
 their authorized issue is concerned, cannot dispute), it is equal to 
 paying to the shareholders for the use of their names a yearly interest 
 or bonus. No bank would ever think of giving a cash credit to a 
 customer if it was known that the securities were to be allowed 
 interest for the use of their names. This would only be doing 
 what the trading community are doing at present for the use of 
 bank shareholders' names, as regards the authorized issue. No 
 company, limited or unlimited, should have anything to do with the 
 currency of the nation; and, as there is not enough of gold to pay all 
 our transactions, paper money, or bank notes, are a necessity for 
 carrying on our trade and commerce, and should not be left to private 
 enterprise or limited companies, which look for large dividends 
 more than the public convenience, and may burst up at any time, 
 and so leave note-holders nothing, or next to nothing, for their notes. 
 The currency should all be under the Government control. And, 
 if at any time the banks were short of capital, and required extra 
 funds to enable them to meet any pressing claims, that might be 
 made on them, the banks could hand over some of their securities 
 to the Government, and by paying interest to the Government the 
 banks could have an extra issue granted them. This would be 
 putting banks on an equal footing with other business men, and 
 treating them as they treat their customers. The Government and 
 ratepayers would then have the profit on the paper currency, which 
 would make up for the loss on the metallic currency. 
 
 The Government has no more right to allow, or keep the banks 
 in a sum of paper money for the purpose of enabling them to 
 carry on their business, than it has to keep a shoemaker in a stock 
 of leather for the purpose of helping him to conduct his business 
 profitably. 
 
 The reduction of taxation, and how to reduce the national 
 expenditure, is a question in which we are all concerned. The 
 proposal in the Budget brought forward by Mr. Childers last 
 session for the reduction of our National Debt, is far too expensive, 
 and will press hard on the already heavy burdened taxpayer. Let 
 us look into the scheme and see how it will come out. Take first 
 the 40 millions of Chancery Stocks for which Mr. Childers arranges 
 with the Lord Chancellor. On these 40 millions interest, somewhere 
 about 3 per cent, will have to be paid. To pay the interest, to pay 
 back the 40 millions to the Chancery funds, and finally, to reduce 
 the National Debt 40 millions in twenty years. Mr. Childers creates 
 annuities equal to nearly 6^ per cent, on the 40 millions Chancery
 
 funds. This is allowing 3^ per cent, or thereby for the annuity, after 
 allowing interest, as 40 millions will double itself in twenty years 
 at 3^ per cent, compound interest; and so all the cash will be 
 paid back to the Chancery Funds, and the National Debt will be 
 reduced 40 millions also, providing that the scheme is carried out. 
 Now, let us see what the result would be if 40 millions, deposited 
 in security of our paper issue, were treated on the annuity principle 
 at 6^ per cent, compound interest. In eleven years and about 
 forty days, the 40 millions would be doubled. But, as I have said, 
 Mr. Childers' scheme is too expensive ; so let us treat 40 millions 
 of the cash deposited for the notes at 2^ per cent, compound 
 interest, and in thirty years the sum will be doubled. This would 
 save the ratepayers ^1,674,000 yearly, or, the Government would 
 have this amount less to pay for the 40 millions, and in thirty 
 years, 40 millions would be taken off the National Debt, and 40 
 millions would be had to take up the 40 millions of paper money 
 if required. Forty millions at 2}4 per cent, interest will give one 
 million yearly. The 30 millions of Saving Bank funds dealt with 
 in the same scheme surprises me very much. The annuities under 
 this head are ,£3,600,000 yearly for twenty years, and are equal to 
 12)4 per cent, interest on the 30 millions, and, as said before, far 
 too expensive a method for reducing our National Debt. The 
 annuities on the 40 millions Chancery Stocks are ^"2,674,000, 
 and on the 30 millions Saving Bank funds ,£3,600,000— in all, 
 ,£6,274,000 yearly for twenty years to come. 
 
 Six millions a year from our pockets to tear, 
 May not go well with the people, I fear. 
 
 These annuities, with others now running, are to reduce our National 
 Debt by ,£172,000,000 in twenty years. These annuities should 
 be set aside altogether and ignored, the result of which would be 
 a yearly saving to the present taxpayers of ^6,274, 000 ; and by 
 adopting the hints for a new basis of paper currency, and, adding 
 the sum of one million which would be equal to 2^ per cent, on the 
 40 millions of paper currency, the saving to the public would be 
 equal to ,£7,274,000 for the first year, and this sum would be 
 increased yearly by the amount of compound interest on the 40 
 millions. And if the principle was carried out for 120 years on 
 the 40 millions deposited in security of the paper currency, the 
 result would be a reduction of the National Debt in that time of 
 640 millions — thus giving an average yearly saving for 120 years to 
 come of ,£5,333,333 6s. 8d., and handing down to posterity a 
 country almost free of debt. 
 
 Mr. Childers' proposal of 1884 for reducing the value of the 
 ten-shilling gold piece by 10 per cent, is equal to the introduction 
 of the thin end of the wedge for the utilizing of the paper currency 
 in the way which I have suggested. The new coin is to become a
 
 8 
 
 token, only value for nine shillings, and is to pass current for ten 
 shillings — 
 
 But a token of brass for gold will not pass, 
 And it may be a dream, if not a farce. 
 
 ■ — the Government being security for the other shilling, or 10 per 
 cent, on this new coin when it comes out. This change is to bring 
 into the treasury about two millions of gold. Now, if the Govern- 
 ment is to be security for 10 per cent, on a new coin, for the purpose 
 of getting the use of two millions of gold, free of interest, on the 
 same principle, the Government could be security for ioo per cent., 
 and so get the use of 40 or 50 millions of gold, free of interest. 
 And, if the security of the Government is good for 10 per cent, it 
 would be good for 100 per cent, and on the same footing should 
 be given. If the one is right, the other could not be wrong. The 
 proposal to reduce our gold coin and make it a token, is not a good 
 idea. All our gold coin should be kept up to the full value which 
 it is supposed to carry. If the paper issue were taken at 50 millions, 
 by paying 2^ per cent, compound interest; in 120 years, all the 
 present National Debt would be paid off, and a good sum left over 
 for carrying out and paying the expenses of working the scheme. 
 ^"800,000,000 would be the result of taking 50 millions at 2^ per 
 cent, compound interest for 120 years; and, as said before, if the 
 interest was paid or invested quarterly in consols, the time would 
 be reduced from 120 years to about no years. I would here 
 suggest that 50 millions of paper money would be sufficient, and 
 that it should be restricted to that amount. The paper circulation 
 at present for the United Kingdom is between 44 and 45 millions, 
 and so the ratepayers are losing about ^1,320,000 or ;£i, 350,000 
 yearly. This is allowing 3 per cent. — which is being paid at present 
 for the use of our borrowed money. The idea of having our paper 
 currency under State control, and allowing the ratepayers to have 
 the benefit of the profit arising therefrom, is not a new one ; neither 
 is the annuity principle of reducing debt. What I claim credit for 
 is calling attention to the loss that the ratepayers are making through 
 not claiming their rights, and of pointing out some of the evils of 
 our present banking laws, and also of showing the saving which 
 would be effected if our paper currency was properly wrought and 
 in the hands of the Government. It is admitted by many Members 
 in the House of Commons, as well as by a great portion of business 
 men, that our present basis of paper currency is absurd; and, I think, 
 any one who looks into the matter can come to no other conclusion. 
 I have been told by a Member of Parliament that no scheme or 
 plan but Sir Robert Peel's will be listened to in the House of 
 Commons, and that the banking influence is too strong to pass a 
 proper measure, such as I have suggested. Now, if the banking 
 influence in the House of Commons is too strong to pass just and 
 proper laws, I would say that the House of Commons should be
 
 9 
 
 reformed, and that the people should see that the banking influence 
 in the House is kept within proper limits, and that we have men 
 sent there to represent the interests of the community and not 
 their own. 
 
 If the hankers there, their business air, 
 
 (Jive them cold shoulder and a seat elsewhere. 
 
 This question is of great importance to the people, and should 
 be pressed along with other reforms ; and, as all reforms are to a 
 great extent the outcome of pressure on the Government, the 
 public have the matter very much in their own hands. 
 
 So electors arise, with extended franchise, 
 
 And in the House of Commons have no disguise. 
 
 Financial and banking reform is quite as much needed as land 
 reform ; it is a very important matter in which all are interested. 
 I have been told that any change would upset all the present 
 banking arrangements. Any one can understand that, but it is no 
 argument for carrying on a most unjust system. All reform changes 
 old things, as did Sir R. Peel's Bill of 1844-45 upset the arrange- 
 ments of the banks at that time. So did the extension of the 
 franchise, and so will the extension of the franchise upset our 
 present arrangements. Changes founded on sound principles 
 should do good, and w r e are not expected to go always on the same 
 lines. We must open up new fields now and again ; and as the 
 banks have now enjoyed Sir R. Peel's gift long enough, it is time we 
 had a change, and only get what the ratepayers have a right to, 
 and what they have been losing since the banks took or got into 
 their own hands the paper currency. I have also been told that 
 my idea of paper currency would not do, as banks must hold gold 
 against any panic that might arise, and to meet our international 
 balances. As for panic, if the Government were security for the 
 notes or paper money, note-holders would not be liable to get into 
 a panic. And as for our international balances, seeing that the 
 gold held against a paper issue cannot be used for any other 
 purpose than to pay off the paper money, and must remain in the 
 cellar of the bank so long as the paper or notes are in circulation, 
 our international balances could not be affected in any way by the 
 adoption of this scheme of paper issue. Banks should do as other 
 merchants have to do — viz., keep a stock to supply the wants of 
 their customers. 
 
 Mr. Fleming, President of the Institute of Bankers for Scotland, 
 has stated in his lecture in January, 1883, to the Bankers of 
 London, that there was in Scotland five or six millions of gold 
 useless, and all that is wanted is a bank note properly secured. I 
 would look upon the security of the Government as the best that could 
 be had, and would consider note-holders quite safe with the Govern- 
 ment security. A more easy way of paying off our National Debt,
 
 10 
 
 and of reducing the taxation, cannot readily be found than by 
 taking the paper currency and treating it as a borrowed sum ; 
 it would be equal to 40 or 50 millions to the Government free of 
 interest. 
 
 If the Government were to adopt State control of the paper 
 currency, the Treasury or Stamp Departments could supply the 
 banks with the note forms, having the words " secured by Govern- 
 ment " on them, and on these forms the banks could print their 
 own designs, and have their own style of notes as at present. 
 Having stated that the Bank of England is gainer to a very large 
 extent by our present system of paper currency, I will here give an 
 extract from the weekly report of the note issue department for the 
 week ending 18th July, 1883, in which you will find the following 
 to be the results : — Note issue, ^"37,012,290. The assets against 
 this are — Government Debt, ^11,015,100; other securities, 
 ^4,734,9°°; Bullion, ^21,262,290— thus giving, ^"15,750,000 
 of a gift, or authority to the bank to print this amount of notes 
 and put them into circulation, and so gain double interest on the 
 ^£"15,750^000 — viz., interest from the Government and interest from 
 the notes which pass current for gold. This is taking it for 
 granted that the bank gave to the Government or took up Govern- 
 ment debt to the extent of the Government security with gold. 
 But, as already stated, it looks as if the Government took from the 
 bank paper money, and that secured by the Government, and at 
 the same time the Government is paying interest to the bank on 
 these notes — in other words, a gift to the bank, and interest for 
 taking it. Any printer would be glad to print any quantity of 
 notes on these terms. 
 
 Having endeavoured to show the value of a State control of 
 our paper currency, I would also say that there is very little if 
 anything to prevent it being carried out, if the ratepayers will only 
 take up the matter. If these suggestions were carried out, we do 
 not require to bind ourselves hard and fast to 2^ per cent, on the 
 cash credited in security of the paper issue. The interest could be 
 regulated to suit the financial condition of the country, and pay- 
 ment of the interest, or the purchasing of consols therewith, could 
 be suspended for a time without putting the arrangements very 
 much out of gear. As the banks have made a change and are now 
 nearly all limited companies, and the responsibility of the share- 
 holders very much lessened, and the risk thrown on the public or 
 business community, banks could not object to the Government 
 making a change also, and so take up the right it has allowed the 
 banks to usurp so long, and paid them for so doing. Banks should 
 not be allowed more privileges than other limited companies, and 
 banking should be a free trade. 
 
 The subject of our National Debt has perplexed many a one — 
 Chancellors of the Exchequer and statesmen of all shades of 
 politics. It has been said to constitute the wealth of the country ;
 
 11 
 
 it may be so. If we go on the understanding that where money 
 lenders have their cash invested, there will they have all their 
 energies concentrated. This does not always follow. It may be 
 wealth to the holders of the debt or consols, but I cannot see how 
 an immense debt can be a source of wealth to any nation. A 
 source of wealth, or debt, which is the proper term, may show that 
 we are in good credit ; but then we are very much handicapped in 
 our competing with other countries, and our burden acts as a 
 drag on our national commerce. 
 
 Several schemes have been brought forward for reducing our 
 National Debt— most of them very complicated and unworkable, 
 and have not been carried out. The latest scheme having been 
 brought forward by Mr. Childers, now Chancellor of the Exchequer, 
 is far too expensive, and should not be acted upon but set aside. 
 And if the basis for a paper currency, such as I have suggested, 
 and which were suggested to the Chancellor of the Exchequer in 
 November, 1882, were carried out, paper money would in all 
 likelihood reach to 50 millions, as the more paper money used the 
 more debt would be paid off. It would be an advantage to the 
 ratepayers to use the paper currency, seeing that it passes current 
 or equivalent for gold, and would help to keep down the taxes. If 
 5 per cent, compound interest were paid on the cash credited the 
 Government in security of the paper issue, 40 millions would reach 
 the sum of 640 millions in sixty years, and 50 millions in sixty 
 years would give 800 millions at 5 per cent, compound interest. 
 The basis of a paper currency here suggested is quite different from 
 any system now being wrought in any other country. The American 
 system is quite as bad as our own. The National Banks, or banks 
 under the control of the United States Government, must first of 
 all buy up State or National Debt Bonds to the extent of 10 per 
 cent, over the amount of the paper issue wanted by the banks 
 before the banks can put out a single note. These bonds bear 
 interest from 3 per cent, upwards to 6 per cent, according to the 
 time these bonds have to run or be redeemed by the States Govern- 
 ment, so the American banks are drawing double interest for the 
 money sunk in State Bonds, in so far as the banks draw interest 
 on the bonds, and have authority to issue against these bonds 
 paper money with which the banks conduct their business, these 
 notes being taken as legal tender and equivalent for gold, and on 
 which the banks make a good profit or have double interest for 
 their capital thus invested. 
 
 The paper circulation of America, including all sorts of legal 
 tender and treasury notes, is somewhere about 832,000,000 dollars. 
 Now, this should be worth 2^ per cent, to the United States 
 Government, if properly utilised, and 2*^ per cent, would give 
 20,800,000 dollars yearly of a saving to the people of America; 
 but, under the present system of American banking, the ratepayers 
 are losing 20,800,000 dollars every year, and are paying bank
 
 12 
 
 stock-holders a very handsome sum for the use of their names, 
 which is quite as bad as subsidizing shipbuilders. "Another evil in 
 the American banking system, as regards the paper issue, is that 
 these State Bonds which are held in security for the paper issue are 
 redeemable by the Government at fixed dates, and, under the 
 present laws must be called in ; so when the bonds are redeemed 
 all the paper issue against these bonds will require to be taken out 
 of circulation." This will be equal to a very large reduction of the 
 trading capital in America, and may very much hamper and keep 
 back all kinds of enterprise, and so retard the progress of the 
 country for some time to come. There is not sufficient gold 
 either in our own country or America to pay all our transactions 
 with, so that a medium of exchange apart from gold is necessary 
 for carrying on business in all countries. Seeing, then, that it is 
 necessary to have a paper currency for commercial purposes, it 
 should be founded on the best possible basis, and I think that no 
 better security could be had for the paper currency than the 
 security of a Government ; and, as mentioned before, if at any time 
 the banks found that they required extra capital, this could be had 
 by the banks handing over to the Treasury some of their good 
 securities, against which an extra issue could be had on condition 
 that the banks paid to the Treasury 2^ or 3 per cent, on the sum 
 wanted. This would be treating the banks as the banks treat their 
 customers. No bank will give money free of interest, not even to 
 one of their own shareholders, and banks should not look for what 
 they cannot give and should not object to pay interest for a paper 
 issue, seeing that it passes current for gold. Bank shareholders 
 may not like to be told that they are being paid for the use of their 
 names, nevertheless it is a fact which they cannot get over, and a 
 thing that should not be. What would any business man or 
 banker think of a company which paid their directors for the use 
 of their names ? This has been done, but when found out there 
 was a noise made over it. There is no use in us crying out over 
 sugar bounties, and subsidies to shipbuilders, when we are paying 
 our bank shareholders so handsomely for conducting a very re- 
 munerative business. 
 
 Once more I would say that the ratepayers should see that this 
 sort of thing is put an end to, and have banks put on equal footing 
 with other business concerns or limited companies. So, set aside 
 all present banking laws and have new ones; let all have equal rights 
 and no monopolies. And, as already shown, by making a proper use 
 of our paper currency and dormant treasures, we can found a 
 scheme for paying off our National Debt free of cost, and save 
 between 5 and 6 millions a year for one hundred and twenty years 
 to come, as by that time, if the scheme was carried out, all our 
 National Debt would be paid off by only paying interest, and that 
 ata^ per cent, less than is being paid at present, and no one would 
 be deprived of their just and legal rights ; and if the New Zealander
 
 13 
 
 should ever come to sketch our ruins he might be able to inscribe 
 on his cloth the words, "This country died free of debt." 
 
 Bank shareholders may tell us that their names are quite good 
 for their authorised issue, and that any business man in a good 
 position can get credit or raise money on security of his name. 
 This is granted, but the business man has to pay interest for any 
 cash he may borrow, whereas the bank shareholders are having the 
 use of money free of interest, and are making a good profit on it so 
 far as the authorised issue is concerned. 
 
 It is the duty of a Government to govern a country on the most 
 economic principles, consistent with the requirements of the 
 nation and the freedom of the subject. 
 
 The principles of banking herein suggested would not interfere 
 in any way with banking, so far as making a trade of it by the 
 Government, excepting the supplying of the note forms. 
 
 The right of a paper currency should never have been in the 
 hands of limited or joint-stock companies, and limited or joint-stock 
 companies would not have anything to do with it if there was not 
 a good profit to be derived therefrom. Joint-stock or limited 
 companies would not be a success or a paying concern if they were 
 to adopt the manufacture of a metallic currency, and keep it up to 
 the full value. It would pay no company to make soverigns at 
 twenty shillings and put twenty shillings worth of metal into them, 
 and also keep the tear and wear thereon. This applies to all sorts 
 of metallic currency, and would mean ruin to any company that 
 might attempt the manufacture of coin. There may be a chance of 
 doing some good with the new coin, if ever it comes out and gets 
 into circulation. 10 per cent, would be an inducement and a fair 
 profit on a good turnover for some speculative adventurer who 
 wished to go in for a good job at little risk. 
 
 I will now bring these remarks to a close by another recapitu- 
 lation, and also give another illustration. Under the present method 
 of banking, as regards paper currency here suggested, a large portion 
 of the cash to pay off the National Debt would be had, as it were, 
 at 2^ per cent, interest, and this sum would be increasing yearly 
 by the amount of interest and compound interest. Thus, a saving 
 of a y 2 per cent, would be made on a considerable amount of 
 consols, and no one could object to it. 
 
 The sum of ^7, 2 74,000 of a yearly saving for twenty years to 
 come, besides a ^ per cent, on a large sum of money, and an 
 average making or saving of between 5 and 6 millions yearly spread 
 over the period of one hundred and twenty years, is not to be lost 
 sight of, and is worthy of an effort being made for carrying out the 
 scheme, keeping in mind at the same time that this can be effected 
 and the large National Debt be paid off by only paying what would 
 require to be paid as interest on borrowed money, and that on the 
 most favourable terms, or a ^ per cent, less than we are paying at 
 present. If the principle I have advocated were carried out, it
 
 14 
 
 might be the means of sending into circulation an extra amount of 
 money. This should do no harm, as the more money is in cir- 
 culation the better for trade. 
 
 Again, our present financing as a nation is like a merchant who 
 has a good amount at his credit in the bank, discounting his bills 
 and paying the bank 3 or 4 per cent, for the purpose of having a 
 fair balance at his name, on which the bank pays him 1 or 1^ 
 per cent. This is equal to borrowing money at 3 or 4 per cent, 
 and lending it out at 1 or 1^ per cent, and is seldom done by a 
 good business man unless he has an object in view. We are at 
 present allowing to lie idle, and remain in a manner useless, several 
 millions of gold, and are paying a good interest for cash to meet 
 our national expenses. This is an evil as great as perpetual pensions, 
 and should be put an end to, and so have our affairs conducted on 
 sound financial principals. It is not to be supposed that I object 
 to the banks setting down the Government security as an asset ; 
 this is quite right as the banks must show something for their money 
 invested. What I object to is the double interest that the banks 
 are getting, in so far as the banks draw interest for the cash 
 invested in Government Stocks and issue notes against this, and 
 on these notes interest is made also. 
 
 Some arrangements would also require to be made as to the 
 disposal of unclaimed money, which is accumulating in the hands 
 of the bankers ; this is a considerable sum, and might do much 
 good if a proper understanding was come to regarding it. Might 
 I here ask upon what grounds the bankers found their claim to 
 the position which they have occupied so long, and also why they 
 should enjoy favours, and be allowed a bonus, for carrying on their 
 business that no other companies can enjoy? And seeing that 
 nearly all the banks have changed their position, for the purpose of 
 reducing any risk the shareholders were under to a small minimum 
 by departing from their original charter, why should they object 
 to the laws on banking being changed and founded on a proper 
 basis, and allow the public their just rights as the public are now 
 taking the risk should a bank smash take place ? The public have 
 now a good claim for an alteration and reform in the laws on banking. 
 The question of our National Debt, and also the subject of our paper 
 currency would fill a good sized book to do them anything like 
 justice. I will leave them for the consideration of the parties most 
 interested — viz., the ratepayers. My object when commencing 
 this essay was only to try and bring out and show some of the evils 
 connected with the present system or basis of paper money, and 
 the benefits to be derived from a paper currency founded on sound 
 and business like principles — no one being deprived of their just 
 or legal rights. 
 
 To finish up, I am compelled to give another illustration of the 
 absurdity of our present basis of paper currency. It is like an 
 individual taking to the Bank of England one hundred sovereigns
 
 15 
 
 for which he asks to be supplied with jQioo note, and at the same 
 time demands to be allowed interest on his sovereigns. In making 
 this very foolish demand, he is only doing what the Bank of 
 England has done with the Government, with the exception, that 
 the bank refuses to allow the foolish man interest seeing that he got 
 what passes as an equivalent for his gold, viz., a ;£ioo note. Now, 
 as the Bank of England was allowed to issue notes which pass as an 
 equivalent for the supposed 14 millions given to take up part of 
 our National Debt, why should the bank be allowed interest on 
 this sum ? And to put the bank on equal footing with the person 
 who changes his gold for paper money, the Government should 
 not allow interest to the bank, or pay the shareholders for the use 
 of their names. 
 
 The illustrations which have been already given, 
 Show how we may reach to a taxless haven ; 
 The voyage, it may be of long duration, 
 Kach knot is a march in a right direction. 
 The way it is clear, and the ship will steer 
 To reach each port in her stalely career ; 
 The course is well marked, dangers are few, 
 Captain and crew should be men just and true.
 
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