GOLD RESERVE.

Auckland Star, Volume LXVI, Issue 261, 4 November 1935, Page 10

GOLD RESERVE.

PRICE OF PURCHASE. GOVERNMENT DEFENDED. REPRESENTING NOTEHOLDERS. The action of tho Government in taking over tho gold of the trading banks at par was defended by the Minister of Finance, Mr. Coates, who spoke at Silverdale, Coatesville, Ararimu and Helensville on Saturday. Mr. Coates pointed out that up till the war banks were required to convert notes into gold on demand. When notes were declared inconvertible, the export of gold was prohibited except under license. If notes had been declared convertible, any note holder, or depositor, could have demanded gold and, with the license requirement lifted, could have exported it at profit. The profit would not have accrued to the banks. "It might be argued," said Mr. Coates, "that the note holders who had received notes in return for their previous deposits of gold would have been entitled to receive gold for notes with the accompanying profit. However, after the lapse of so many years, it would have been impossible to trace those people. Accordingly, the Government, representing the people, had a right to the profit." Another important point was that the rise in the price of gold was due to the depreciation of sterling and of New Zealand currency in terms of sterling, and not to any action by the banks. When New Zealand currency was depreciated tho banks expected to be indemnified against loss. Tliey could not reasonably expect to receive any windfall profits on the gold, especially when, in fact, they had no right of disposal. Mr. Coates added that authoritative opinion in England had supported the action of the New Zealand Government as correct, and instanced the case of the Canadian Government, which took over gold at 20.67 dollars an ounce when the market price was 35.48.