THE BANKS AND GOLD

Otago Daily Times, Issue 18625, 5 August 1922, Page 8

THE BANKS AND GOLD

ALLEGED PROFITS ON SALES. INQUIRY PROMISED. (Pwi Uurnto Paisa Association.! WELLINGTON, August 4. An inquiry hag been promised by the Prime Minister into the profits which appear to have been made by the sale of gold bought by the banks at £3 17s 9d per ounce, plus £l4 IDs costs. A total of 1,448,8290 z, valued at £5,923,381, was exported, and is said to have realised from £5 to £7 per oz. Mr Massey pressed for direct evidence that the _ bailies had made profits on the gold attributed to them. The position of the banks in this matter is given thus; The export of gold was prohibited on the outbreak of the war, except with the consent of the Minister of Finance. This prohibition remained in force until November 5, 1919. During this period the price of all gold produced in the British Empire wag £3 17s 9d per oz, or £4 4s lOd fine, and this was also the price in New Zealand. 1[ export had been permitted, no doubt producers could have obtained more than £3 17s 9d, it they could have shipped it, which was doubtful, and the risk of shipping was very great. Hie only country to which gold has been sent from New Zealand is the United States, but from March 14, 1919, a great fall in the value of sterling in New Zealand commenced.This could have seriously affected the value of gold in transit. Mr Henry Buckleton, general manager of the Bank of New Zealand and chairman of the Associated Banks, said that the banks had no desire to make extra profits by buying gold from producers at small rates, shipping it to San Francisco, and purchasing on the London Exchange on a. favourable market. Knowing the uncertainty of the exchange, they were not prepared to buy from producers at a price based on, an exchange quotation at the time they bought, which might quite. probably be entirely altered by the time they sold. In December, 1919, they informed their goldproducing customers that they were prepared to handle bullion for them_ on commission, shipping to San Francisco, and realising there on behalf of the owners and accounting to them for the proceeds at the rate of exchange current on the day when, these proceeds were received, less a small commission charge. Almost all the gold handled by the banks since then had been dealt with on this basis, so that the producers had had the full benefit of the favourable rate of exchange. Since January, 1922, the buying at gold had been resumed, and the price had greatly fluctuated at the dictates of the New York Exchange. When the quotations in dollars to the pound sterling fell the price of gold rose. Any hardship experienced by the producers was only during the period between March and November, 1919, when the' prohibition of export was in force, and there was at the same time a steady depreciation in thq American quotation for sterling exchange. On the other hand, it must be borne in mind that during that, period the opinion was widely held by bankers that the exchange position between the United States, and Britain, and consequently between the United States and New Zealand, might at any momnt be rectified by Joint action, of the British-and French Governments in taking steps to again stabilise the exchange rates. Statements to the effect that the banks had made a profit of between £1,000,000 and £1,500,000 upon sales of gold bought during the period when export was prohibited and sold wheh the embargo was removed were absolute nonsense. When the embargo was removed the bullion held by all the banka in New Zealand was About £300,000. _________________ !