CZECHO-SLOVAKIA'S GOLD

New Zealand Herald, Volume LXXVI, Issue 23487, 26 October 1939, Page 10

CZECHO-SLOVAKIA'S GOLD

Political references to the subject of banking always succeed in arousing Mr. J. A. Lee to a fine financial frenzy. This was again the case when the Under-Secretary for Housing delivered a post-sessional address at Grey Lynn on Tuesday night. Mr. Lee quoted as an instance of the evils arising from private banking the action of British bankers in "handing over Czech gold to the value of £6,000,000 to Germany." Great Britain, he alleged, was financing Germany's war effort because of her loyalty to "the empire of high finance." This canard has been gaining such wide circulation of late that a restatement of the precise facts becomes desirable. Some time ago the Czechoslovak an National Bank deposited with the Bank of International Settlements gold valued at between £5,000,000 and £6,000,000. This gold was subsequently deposited by the Bank of International Settlements with the Bank of England, which received it purely as an international and not as a Czeclio-Slovakian deposit and which, in fact, was ignorant of the original source of the gold. Shortly after the German seizure of Czecho-Slovakia earlier this year the Bank of International Settlements, the headquarters of which are situated at Basle, in Switzerland, received from the Czecho-Slovakian National Bank definite instructions, properly signed and fully in order, for the transfer of this gold to the German Reichsbank. The order, which was perfectly valid under Swiss law, was duly carried out and, on instructions from the Bank of International Settlements, the Bank of England made the necessary transfer. Even if the Bank of England had known that it was Czeclio-Slovakian gold that was involved, it would have been powerless to stop the transaction, because it was acting merely as an agent in the matter. Thus it is clear that the argument borrowed by Mr. Lee from "his Socialist friends overseas is entirely without foundation.