GOLD IN BANKS

Gisborne Times, Volume LXXIII, Issue 12076, 16 October 1933, Page 7

GOLD IN BANKS

AIU3 BJNKS ENTITLED TO TRUE

VALUE?

CONTROVERSY AYiTii CABINET

INNER LIGHTS ON RESERVE BANK BILL.

(Press Association) WELLINGTON. Oct. 14

Tlie following statement has been Diiicle by M". J. T. Grose, chairman of ibe Associated Banks:

“When tb e Reserve Bank Bill was hrst mooted, the Prime Minister agreed t-liat the proposed bill should be discussed with the banks who, though som e of them were j)k opposed to a Central bank. had agreed to assist the Government in seeing the bill was drafted on the best possible lines. As a. result of this, small committees were appointed by the Government and the banks, who went, through a pi'el'.minary bill in detail, and made recommendations to the Government, and, though on one or two major points agreement could not be reached, the bill "Vs drafted. “Following that, the heads of all the banks were invited to meet the Cabinet and the whole matter was again discussed, and a good deal o 1 discussion took place in respect or the true value of gold held by the banks. The gold is held largely against their note issues, but also substantially as a reserve in the ordinary course of their businessand quite apart- from the requirements of their note issues. “The banks held that the gold was their property, and that the true value of it, of course, was theirs also. As is recognised at law, all gold and srl'-er Paid into a bank becomes the absolute property of the bank, anti those who ” pay jt in become depositors, and have a cly*im against the. banks {, s theirs debtors. Converse y, the deposit of gold or other currency by a, customer might reduce his overdraft. and so reduce the banks claim as a creditor against the customer as a debtor.

SPECIAL CLAUSE IN BILL

AGREED UPON

“No satisfactory conclusion between the Government ami the hanks was then arrived at in 1 espeet of this matter. Many meetings between the leads or representatives of the hanks and the finance Minister and others followed, and. in the end, though the hanks did not in any way depart from their claim that the trn c value of gold held by them belonged to them, it was agreed that, a clause should be put. iido tile hid under which tin contention of the hanks was out. •‘■lt, was also : ct out in the hill that, having regard to all 'he eircumstanees, it might be contend ed tiiat the Reserve Bank or the. Government would be. equitably entitled b> a proportion of such value and the clause provided that on leal isation of the value any goldcoin transferred to the Reserve ban l ' by any bank shall he credited to that hank, or apportioned between that bank and the .Reserve bank as may ho agreed between the governor of the Reserve hank and the said hank. Failing that, the question was to be determined by others mutually agreed on by the bank concerned and the governor of the Reserve bank, and, failing that, by a special tribunal comprising the Chief -Justice of New Zealand and two other persons. “This clause was arrived ut > as stated, after very many consultations and discussions, and incorporated in the bill. The bill was introduced into Parliament last session, but did not bet beyond tho first reading. RANKS SURPRISED AT AMENDED 1 MEASURE. “The banks now learn that there have been deliberations by mem-* hers of the Coalition Government, and that an amendment bill will be introduced shortly- It has been stated on behalf of the Government that even if any possible changes should nrove necessary and desi ,r ' able in* the bill it would remain substantially as first presented, so far us general principles are concerned, and also that there were to he no major changes in the method of the working’ of the Reserve bank This would seem to Dispose of 1( - ports that were circulated recent-? that it was intended to' have a majority -of Government-appointed directors, or even that the Govern

mmit should provide the capital ldr the bank, in lieu of subscription by private shareholders. “As stated, the banks hold that their gold, with its true, value, L the;r property, and it is n o t generally known that a great deal of the gold coin imported into New Zealand by the banks and held by them lias never been in circulation but has been retained in the banks' safes. P< may also be explained that a good deal of llie gold thus held has been received hi exchange for bullion purchased in New Zealand by the banks. There is another factor that is not general‘.v known: ..that, is, that until recent years settlements of exchanges between Australia and New Zealand were frequently made in gold. ’