Gold Reserves

Dominion, Volume 27, Issue 38, 8 November 1933, Page 11

Gold Reserves

Sir, —The main points of the statement on this subject published to-day by the Minister of Finance are:— (1J That the viilue. of gold has increased. (2) That there is no reason why the trading banks should make a profit pn their gold reserves. . The Minister says "Government action has raised tlie value of gold in terms of currency”; and again, "Any accretion to the value of gold coin, will be due solely to the passing of the Bill." This is a.eomplete mis-statement of the position. There has been no accretion to the value of gold. On the contrary, there has been a decrease in the value of all currencies, including our own, aud our currency is no longer a stable measure in which the value of gold eau be expressed. There would be no increase in the length of a chain measure it’ the Government decided to alter the standard of the yard, in which that length is expressed from 36 inches to 18 inches.. The Minister toward the end of bis statement uses a much more accurate aud appropriate expression when he refers to "The ‘adventitious’ value given to the gold coin by reason of tlie new legislation." I, and those who agree with me, have never suggested that the trading banks should make a profit on their gold reserves. We suggest only that they should get the tirue value,. measured by true and stable unit. The Government's action in suspending the right to demand gold in exchange for notes has no bearing.whatever on the question of the value of the gold reserves. If our currency had no depreciated, and in part deliberately depreciated by the Government, our pound note 'would still be worth a sovereign—and if the Government having deliberately participated i. tlie depreciation of our pound note, were now to require the trading banks to.redeem their notes with sovereigns, its action would be as immoral, and as unfair to the rading banks as its proposed expropriation of the gold belonging to those banks. —I am. etc., x- STRONACH PATERSON. Wellington, November 7.