THE GOLD STANDARD

Ashburton Guardian, Volume XLV, Issue 10384, 1 May 1925, Page 5

THE GOLD STANDARD

EFFECT OF RESUMPTION,

AUSTRALIAN EXCHANGE RATE.

QUESTION OF BUYING POWER,

(Per Press Association—Copyright.) (Received This Day, 9 a.m.) LONDON, April 30. The probable effects of the return to the gold standard on Australian exchange is arousing considerable interest in banking circles. Among several leading Australian bankers interviewed, the general opinion seems to be that the exchangerate on Australia will become easier. One declared that it should result in lowering the premium either way to the cost of shipping the gold and about seven weeks’ interest. Bankers consider that the easing of exchange will not greatly influence Australian trade, as the volume depends chiefly on the ability of the public to purchase goods, and the question of exchange does not arise. But the resumption of the gold standard and the reduction of the income-tax are likely to improve world trade and increase the public spending power. Australian shares should benefit. PROVISIONS OF THE BILL. LONDON, April 29. The Gold Standard Bill repeals the sub-section of the previous Act, under which the holder of a currency note is entitled to obtain gold in payment _ at face value. It repeals the regulations under which any person is entitled to have gold bullion minted, but makes an exception in the case of-, the Bank of England. Nevertheless, it enforces on the Bank of England the responsibility of redeeming its legal tender on request in the form of bars of gold bullion of approximately 400 oz. Finally it empowers the Treasury on any conditions it thinks fit to raise any money necessary to facilitate exchange operations provided such loans or credits are redeemable within two years.

THE EXCHANGE PROBLEM.

AUSTRALIA AND NEW ZEALAND.

(Received This Day, 12.35 p.m.) SYDNEY, This Day. The “Sydney Morning Herald,” referring to the high exchange rates between Australia and New Zealand, says that if gold is procurable in the Dominion it will cost not less than 2 per cent, to transfer it to Australia, In such case a return to a rate of exchange approaching that between Sydney and Western Australia would be probable. The “Herald” gives as the reason for the high exchange between the Commonwealth and the Dominion the fact that goods taken to New Zealand from Australia far exceeded thoße taken to Australia from New Zealand. Practically we sent twice as much .as we received. The paper adds that some' adjustment has been made through: London, but it is not sufficient to cor-; rect the exchange.

CURRENCY IN AUSTRALIA. CONTINUANCE ON PAPER BASIS. SYDNEY, April 30. Bankers -and business men generally express satisfaction at' the return to the gold standard. The Prime Minister (Mr Bruce) has requested the Associated Banks to use as little gold_ as possible, and to continue to do business with paper currency, a request in which the banks concur. It is considered likely there will be a. temporary demand for gold currency, chiefly by people who want again to experience the novelty of handling sovereigns, but the great bulk of business will continue to be done on a paper basis. EXCHANGE ON NEW YORK. NEW YORK, April 29. Sterling closed at 4.84-1 dollars to the m.

EFFECT ON THE DOMINION. VIEWS OF DUNEDIN BANKERS. DUNEDIN, April 30. Interviewed this morning regarding the effect on New Zealand of the return of the gold standard, one of'the, leading bankers expressed the view .that St would tend to bring trade back to .a mormal basis, and would affect the adverse position regarding the rate of exchange. Surplus money was being left 'in England because of the high cost of bringing it out and the money lying there was only earning small interest compared with what it could earn iif it was in New Zealand. The return to gold would equalise the exchange rate between the exporter and the importer. At present the exporter was the sufferer. Tf the gold standard returned New Zealand would be able to send gold to Australia, and so do away with the high rate of exchange now ruling between the Dominion and the Commonwealth. He sounded a note of warning, however. The return to the gold standard, he said, must he carefully done, and it must not be done without preparation, and there must be no flooding the country with gold. Another banker also expressed the opinion that the return to the gold standard would be a good thing for i New Zealand. At present the ex--1 change was in favour of the importer to an extent that it had never been before. A return to parity would be in favour of our secondary, industries for the reason that the existing rate of exchange was a premium that was being paid to the Home and foreign manufacturers. Any imposition on trade was a bad thing. The return to gold would enable shipments of gold to he made, and so get over the exchange difficulty at once. The return to gold woulcT also suit America, because the removal of the difference between the pound sterling . and the dollar would favour American exporters.