NOTES OR GOLD.

Hawera Star, Volume XLVIII, 20 January 1925, Page 3

NOTES OR GOLD.

NEW ZEALAND’S CURRENCY

CIRCULATION OE SOVEREIGNS NOT EXPECTED.

With Britain on tlfb point of reverting to the gold standard, and South Africa 0 and Canada, making up their minds in the same direction independently of the English decision, it seems as if" New Zealand will much earlier than was expected come back to the gold standard, too. Rut will this mean actual circulation in gold? (asks our Wellington correspondent). Enquiries among bankers suggest that sovereigns are "not likely in any event to be circulated either in Australia or New Zealand for some considerable time. Banks operating in New Zealand have the right to issue notes, which are not convertible into gold until 'January 10 next year, the period originally fixed to elapse this’month having been recently extended by Order-in-Council. The adoption of a gold standard is quite distinct from the operation ol gold circulation. So far, Britain has had an embargo on gold export; which has only been possible, under official control. The projected change at Home would .mean freedom in the ex- ‘ port of gold, hut it may go no further, and it is believed in regard to New Zealand that the hunks will carry on the note issue under their Order-in-Council till January, 192 G. A high officer of the New Zealand Treasury, who discussed some aspects of the currency question with your representative, suggested that the public is not at all anxious to revert to hand, ling gold. His opinion was that notes are easily counted and not so easily lost as gold, particularly the half-sov-ereign, so readily mistaken for sixpence. As for the pressmans’ suggestion that notes certainly were preferred by the hanks to gold .currency, he thought there was little in the point that the hanks made a good profit from the accidental destruction of notes, and his idea was thoroughly confirmed by a bank manager, who privately gave the exact particulars regarding the operation of note currency. Idle general points of his explanation were, that the 3 per cent. Government tax on notes is taken into consideration. plus cost of printing and renewals, the banks are no better oft than if they borrowed the money represented by note circulation at their usual rate of interest for 24 month deposits, which about equals the expenses of maintaining the note issue. Despite the many caustic things said about the dirty .condition of in,any notes circulated in New Zealand, the banker gave a positive assurance that the note issue is renewed as far as possible every two years, for that is the life of the average note. The same informant remarked that lie took it that neither Australia nor New Zealand would’, oven if the gold standard were resumed, introduce gold circulation. Britain would adopt the gold standard, and it would he of advantage in enabling balances for or against them to he transferred in gold, Ft was a very important and significant development, which, in tlie banker’s opinion, would immensely .improve the feeling of confidence in international trade, hut free gold circulation in Austr.-ii.ifi and Now Zealandwould not he possible while India was such a free buyer of gold at a premium. A great shipment of gold from the United States to India recently showed the strength of the demand there, and

while "this continued our gold, if mode available, would rapidly disappear into thp East. New Zealand banks, is jyas ascertained, have had no direct hand in the export of gold from New Zealand for two or three years. Producers have utilised the banks as agents, shipping with' gr.cat profit to America. The rapid recovery of the sovereign and its close approximation to the dollar had, however, changed this situation, and it now was more profitable to export to Australia. Sir George Elliott’s statement that the cosjt of transporting gold from England to America is If per cent, was* mentioned, and some corroboration of this apparently high charge was found in the fact that New Zealand exporters of gold to the United States have been paying just over 1 per cent, in freight, insurance and minting charges. The inquiries show that if Britain adopts the gold standard New Zealand, doing most of its business with the Homeland, will follow suit, hut this will not mean that bank tellers will hand out sovereigns in exchange for notes.