GOLD HOLDINGS

New Zealand Herald, Volume LXX, Issue 21639, 3 November 1933, Page 11

GOLD HOLDINGS

PROFITS FROM SALE STATE OWNERSHIP AFFIRMED ONLY FIVE OPPONENTS MR. STEWART IN MINORITY [by TEi.KC.RAPn —srr.n.u, reporter] AVELLINCiTON. Thursday A question engaging much public interest, the ownership the profits arising from the banks' gold reserves, was the subject of an interesting debate in the House of Representatives this afternoon, when the Reserve Bank Bill was being considered in Committee. According to clause J"> of the bill, such profits are to be transierred to the Public Account. | Mr. R. A. Wright (Independent— Wellington Suburbs) moved to amend this clause by substituting the corresponding clause in last years bill. 'lbis provided that the profits from the gold reserves should either be credited to the bank from which they were taken or apportioned between that bank and the general reserve fund, of the Reserve Rank. If this apportionment could not be agreed upon, a. special tribunal was to be set up. A Matter of Justice Mr. Wright said that in his opinion the clause in the present bill was contrary to tho principle of natural justice. The Rank of Xew South Wales had shown that it had imported i'.!157.000 worth of gold since 1923. Surely the gold it had imported belonged to it. He would not stand for the sort of thing contemplated in the bill. The Leader of the Opposition, Mr. M. J. Savage, said this was one of the few clauses in the bill for which one could find justification, for anyone who knew anything about tho recent history of banking in New Zealand must know that these gold reserves had been protected by law. Tho business of tho banks had been conducted on the credit of the people. Now they were asked to believo that to take tho accumulated profits was something in the way of highway robbery. It was the only clause in tho bill preventing highway robbery. The banks had been trading on public credit for £0 years, and Jo enable them to take advantage oi the abnormal conditions in the gold market could not bo entertained for two minutes. "No Moral Claim" ''l trust tho Minister of Finance will stand to his guns," said Mr. Savage. A simple case against the amendment was that the banks would not have had these accumulations of gold if they had not been safeguarded by the law arising out of war conditions and protected ever since. Gold was to-day at a record price, which the banks had done nothing to establish. They had no moral claim to it at all. Mr. A. E. Ansell (Government— Chalmers) said Parliament was competent to decide the matter without any hostility to the banks at all. He agreed that the Government decision was both morally and legally correct. Had it not been for legislation, the banks would not have had sixpence worth of gold in their vaults. Mr. J. A. Lee (Labour —Grey Lynn) also supported the clause. The Hon. W. Downie Stewart (Government —Dunedin West) said that as he had been responsible for the clause in last year's bill, quoted in the amendment, ho would like to make a few remarks, having regard to the position then and subsequently. When the problem was first raised concerning the ownership of the gold, he took it for granted that it was an ordinary commercial matter which would be settled between the Reserve Bank and the trading banks. However, when it became clear that the banks were apprehensive, the problem arose how a settlement could be made that would be just, equitable and free from any accusation of hard dealing. Banks' Possible Grievance In submitting the clause that appeared in the old bill, he had in mind that if Parliament of its own will declared that the profits belonged to the people, the banks might quite justly have a grievance and say: "You are acting both aa judge and beneficiarv in this matter. Your interests are entirely in favour of getting Parliament to find that the gold belongs to you and not to us, and we do not consider that you are an impartial tribunal." Mr. Stewart said that he had therefore recommended the Cabinet to devise a tribunal to be appealed to in caso no friendly settlement was made. He had anticipated that they would make a friendly settlement, hut if not, they should have some sort of machinery established. He had had a further motive. Tlis reading of the subject of central banks led him to realise that unless a central bank carried with it the support, and co-operation and goodwill of the commercial trading banks, its task was extremely difficult. That was especially so in a new country setting up a central bank for the first time, for those two reasons, he thought it wise to remove any possible accusation that the banks were being dealt, with by a tribunal that was going to benefit by its own decision. The Cabinet had agreed to that, and the bill Mas drawn on those lines. Dolay with Old Bill Mr. Stewart said that if the banks thought they had lost the benefit, of the original clause, lie was bound to say he thought the blame was largely their own, because he had made it clear that unless tho bill could get to the House within a reasonable time, there was no prospect of it getting through before Christmas. The banks were to some extent responsible lor the delay. The speeches by Messrs. Lee, Savage and Ansell had all been based on,the assumption that if a tribunal were set up, the decision must go the other way. The Minister of Finance, said Mr. Stewart, had put up a very strong; case, and surely, if there was a very strong case, Parliament should have no fear of putting its evidence and arguments before some tribunal other than the beneficiary. The mere fact that eminent counsel had advised the banks to the opposite effect showed that thev had a right to submit their case. I| f! would like the Minister to indicate to the House what the prospects were of friendly co-operation with the banks. Replying to the debate, the Minister of finance, Mr. Coates, said he had a perfectly open mind, and it the banks could genuinely show, that Parliament was not dealing fairly with the g>|il they held, he was certain the Government would take the matter back to Parliament. This actually did not close, the matter if it could be shown that, there was a case that had not so far been represented. The Government desired to lie strictly fair and impartial. The division on which Mr. \\ right insisted provided the unusual spectacle of Opposition members trooping into the lobby with Government members. The amendment was defeated by oi; votes to 5, Mr. Wright's only supporters being tho Hon. W. Downie Stewart, Mr. li. Atmore (Independent —Nelson), Mr. J. Hargcst (Government —Invercargill), and Mr. 0. A. Wilkinson (Independent—Egmont)._