The Government of New South Wales has been driven to
the creation of paper-money. There are nearly four millions of current accounts—not deposits in the technical sense— locked up by the Bank reconstructions, and of course, there- fore, business-men are at their wits' end. The Government accordingly offers to issue paper for the locked-up money to the extent of two millions, each customer receiving half his current account. The plan is sensible enough if the reconstructions succeed, for the Government will get good interest for five years, and then its money back;, but if they do not succeed, the Government is simply the biggest deposit-holder, and must share the fate of the rest. We suppose the risk was unavoidable if business was not to stop ; but we cannot in principle approve any mixing- up of State credit with the credit of private firms. If the Australian Colonies want to have the power of suddenly pro- viding currency, let them either issue notes on their own credit—the right plan if democracy were not so extrava- gant in its eagerness to raise wages—or imitate the English plan which has survived so many dangerous panics.
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