UNIQUE EVENT.

Auckland Star, Volume LXII, Issue 106, 7 May 1931, Page 7

UNIQUE EVENT.

I FEDERAL PARLIAMENT , Bank Chairman at the Bar of the Senate. GOLD SHIPMENTS. /United P.A.—Electric Telegraph—Copyright) (Received 10.30 a.m.) CANBERRA, May §: An event unique in the annals of the Federal Parliament occurred when Sir Eobert Gibson, chairman of the Commonwealth Bank Board, appeared at the Bar of the Senate to give his board's view of the Commonwealth Bank Bill, under which the Ministry seeks to ship large quantities of gold overseas.. Members of the Ministry and -of the House of Representatives crowded the galleries of the Senate to hear Sir Robert's statement. Sir Robert said the board was in continous communication with the Bank of England, which had no direct financial relations with the Governments of Australia. He confidently believed that the Bank of England would do anything in ite power to help Australia, either by influencing the market in London in her favour, or by helping his board. Sir Robert added that £5,000,000 worth of Treasury bills would fall due in London on June 30, and there was a danger of default. He read a letter sent to the Treasurer, Mr. E. G. Theodore, in which he stated that the Commonwealth Bank had already shipped £5,000,000 in gold to meet the needs of the Government prior .'to March 30. If the country, must default it. would be preferable to default in Australia, and not to people.overseas. Mr. Barnes: Would you regard the better alternative to be a further shipment of gold? ' Sir Robert: Undoubtedly. Oversea Liabilities.. . Sir Robert, • continuing his remarks, said the amount of gold held iri Australia as a reserve against the note issue was £15,150,000. The total of the unfunded debte owed by the Australian Governments in London was £38,075,000, of which £5,000,000 was due to the Westminster Bank, £5,000,000 due to the bill market, £2,950,0001 to the Australian trading banks, and £25,125,000 to the Commonwealth Bank. From inquiries made in London he found it would be very difficult to discount Australian bills to meet those falling due. at an early date, or if it could be done it would be at a comparatively high rate of interest. Sir Robert emphasised that the Commonwealth could make no further shipments of gold to London without reducing the statutory reserve. The fact that the note issue would be inadequately supported would create uneasiness and loss of faith. The value of the Australian bank note would depend entirely upon the confidence of the people, and the ability of the people to redeem notes in some form or another. The country had an instance of what loss of faith meant quite recently, although in that case the Government Savings Bank was backed by ample reserves. There was the same lack of faith in fiduciary issues. On the other hand, the gold reserve had a psychological value. It created confidence' in the mind of the people, and in those who handled the notes.