USE OF GOLD RESERVE

Hawera Star, Volume L, 26 March 1931, Page 5

USE OF GOLD RESERVE

COMMONWEALTH PROPOSAL MEETING URGENT DEBTS FIXING NOTE ISSUE United Press .Association —By Klectrio I'eiegrapn *-aii>yngtu.j CANBERRA, March 25. The Government’s new financial proposals were outlined by Mr in moving the second reading of the Commonwealth Bank Amendment Bill, which authorises the Government to use the present gold reserve to meet urgent outstanding liabilities and fixing the minimum issue of Australian notes at £60,000,000. The explanation of the need for the measure was that Sir William Gibson, chairman of the Bank Board, Iliad indicated that they were approaching a position where shipments of gold to meet the London indebtedness would intrude on the amount the bank was legally required to keep in the vaults. “It is far better to make use of this gold in London than to have it in the vaults, where it is performing no dis■cernibly useful purpose,” declared the Treasurer.

Unless gold was shipped Australia must default on her obligations falling due, as it could not raise loans in London, nor get credit", there to carry on. Since January, 1930, £28,470,000 worth of gold had been shipped and the Commonwealth Bank now held £15,385,000.

The debate will begin when the House meets after Easter. It is. stated at Canberra that the Opposition _ is perfecting plans for an early election. Mr S. M. Bruce, former Prime Minister, will contest his old seat at Flinders as a Nationalist.

G AMBLER’S THROW. LONDON, March 24. A stockbroker describes Mr Theodore’s proposal to ship the gold reserves to England as a gambler’s throw. The Treasurer is plunging in the hope of a trade recovery. A high official authority refuses to believe in the possibility of Australia defaulting now or hereafter. He predicts that the indebtedness to the Westminster Bank has been satisfactorily arranged and expresses the opinion that Mr Theodore’s attitude is inspired by political motives, in view of the possibility of the impending elections.

City circles believe that the whole interest payments amounting to £2,250,000 payable on April 1 have been assured.

The weakness in Australian stocks has further developed on the publication of Mr Theodore’s references to the possibility of a default, though city opinion inclines to the belief that be is trying to frighten Parliament into passing the Bill. Mr Theodore’s speech was one of the most serious received from Australia, according to the financial editor of the “Morning Post,” but if the London market could be assured the necessary reforms would be carried out there should be no difficultv in obtaining credits to tide over the crisis. Mr Theodore’s statement that Australia was off the gold standard went to the root of the trouble. The. gold standard and other sound banking measures could be deflected if economic costs of production were subordinated to political expediency.