GOLD TRANSFER.

Auckland Star, Volume LXIV, Issue 283, 30 November 1933, Page 20

GOLD TRANSFER.

NEW ZEALAND ACTION CRITICISM IN AUSTRALIA. " DANGEROUS PRECEDENT." (From Our Own Correspondent.) SYDNEY, November 23. "A Dangerous Proposal," "Gold Grab for New Zealand Reserve Bank"—these are two headings from current newspaper issues, and they may suffice to show that the New Zealand Government's proposal to take over the gold reserves from the various banks trading in the Dominion at the original mint rate of £3 17/10 A per standard ounce, is not approved here. As the sovereign is worth about 38/ as bullion to-day, the banks would be compelled to surrender their gold assets amounting to £4,;"500.000 —for about £1,500,0d0 less than their market value. In Melbourne the four banks in question—Union, Australasia, New South Wales and Commercial Bank of Australia—are gravely concerned, and are protesting against the proposed step as "sheer confiscation." In Sydney the general feeling seems to be fairly well expressed in a special article which appeared this week in the financial columns of the "S.M. Herald." It traverses at length the argument put forward by Mr. Coates, tlujt the gold, being part of the banks' statutory reserve for the redemption of notes, cannot be regarded as free specie, but must be taken over as it" stands for the benefit of the note-holders—in this case tho people of New Zealand; that the gold cannot be exported, because of the embargo operating since the war; and that therefore any profit that accrues from these assets subsequently should go to the State. Against this the writer in the "S.M. Herald" contends that the banks took this gold to New Zealand; it is their property; and if it is taken from them it should be taken at "the market price of the day." ' The writer quotes with approval Sir Francis Bell's opinion that the embargo on export cannot be held to affect the value of this {fold reserve, which should be determined not 'by an interested party, but by reference to some external arbitrator.

• What the Commonwealth Did. Tho "Sydney Morning Herald" further points out that, when the Australian banks handed over their gold for shipment to London through the Commonwealth Bank in 1029, it was sold and valued at current market rates. Also the Commonwealth Bank has followed tho market rate for gold ever since, purchasing sovereigns not at their nominal value, but at current specie value. Again, in 1931, when Britain went off tlie gold standard, the Bank of England began to purchase gold at current market rates and has followed the fluctuations in price ever since. For these reasons the "Sydney Morning Herald" regards the claim of the New Zealand Government as unjustifiable; and it adds tho warning that it might Ave 11 prove a very dangerous precedent, which others "may be only too willing to follow when acquiring property other than gold by force of law."