THE N.Z. RESERVE BANK

Press, Volume LXX, Issue 21121, 23 March 1934, Page 14

THE N.Z. RESERVE BANK

TRANSFER OF GOLD ; SI li .I.VMKS I'.MtR'S I.F.iTKR TO " Till: TIMES » LONDON. February 13. The High Comm.issioner for Nrw Zealand. Sir .James Parr, in a further ■ Ictier to "The Times," replies lo ! Mi - Joseph Nissim's letter regard- ; ins the transfer uf the geld reserve.-; from the hanks el issue to the New Zealand Reserve Bank. It will he remembered I list Mr Nissim con- : iderec! the matter a jundieal rather than a banking problem. Sir James Parr writes: ' "The goid holdings are nut being ; taken over at a price 'much below I cost.' hut at actual cost price, as ! shown in the New Zealand banks' > balance-sheets. It is of interest to note that between August. 191-1. i when bank notes were, made legal '.tender, and December, IDM2. there j was a net export of gold com of approximately £ 07.'!.000. and that at the present time the gold reserves ■arc 1 actually less than they were in 1014. Again, although this is a comiparatively minor point, it is incorrect Uo state that the six banks have i managed the note issue for 'more [than 60 years,' as one of the banks jat present operating in the Dominion did not have the right ot note ! issue unti 1 1 OK!. British I'reccclenls

Ail- .\issim also sunos mat u.eie is no precedent vithsn the Ifriitish Commonwealth for New ZeaI land's proposed action. Presumably | ho is unaware that, when Croat P>riitam went oIT the gold standard, the ! gold which she required to discharge ; her obligations to the United States ot America, was acquired ii'om the : Rank of England at book value (the j market value at the time being in 1 excess of that value) and the 'pru- ' tit' was credited to the Government Exchange Equal .sat ion Account. .More recently the committee on Injdian Reserve Bank Legislation uii- ! animousl.v recommended, in diseusi sing the valuation of gold assets. ' that 'in principle Mich profits should | belong l ather to the Government ! than to Hie Hani: l.egal Opinion "As : Sated in a preview.' letter of mine which \oii were good enough to , publish, bank note* were originally made legal tender m New Zealand 'as a war-time mea.-ure. and if sue!) : legislation were cither repealed or ■ allowed to expire (normally December. 19, ti- banks would be called .upon by note-holder.-, to redeem the notes m gold, and the banks would thus lose Ihe whole of their gold reserves. Rivmg a sovereign m cxi change for each one pound note pre- • sciited. I "Mr Xi> am. iiov. ever, is g.-od | cnou&h to yum it that the matter 'has | been quite fatr'y treated as a banking 1.-sue.' but apparently con.siders , that the pi'oblem is of a juridical | vat iter than of a banking nature, lb .wiil therefore doubtless lie interested 1 to learn that on referring tho point i to London counsel of unquestioned ; eminence his arlv.ee v. as t'nat 'the 'Government's ca'e is unanswei--1 able." "