GOLD COIN AND BULLION

Otago Daily Times, Issue 22101, 3 November 1933, Page 10

GOLD COIN AND BULLION

HOLDINGS OF THE BANKS ALLOCATION OF PROFITS IMPARTIAL TRIBUNAL URGED (From Our Parliamentary Reporter.) WELLINGTON, November 2. The basis of the transfer of gold coin and bullion from the trading banks to the Central Reserve Bank formed the subject of one of the most interesting discussions in the House to-day during the committee stages of the Reserve Bank of New Zealand Bill. For once the Minister of Finance (Mr Coates) found whole-hearted support from the Opposition benches for the proposal contained in the Bill that any profits derived by the Central Bank from the sale of coin and bullion should be credited into the public account. The clause had its critics, however, and one of these was Mr Downie Stewart, who had charge of the Bill as originally brought before' the House, and who still took the attitude that this controversial question should be settled by an impartial tribunal.

Mr Stewart said that when the problem was first raised as to who was entitled to the gold he had taken it for granted that this was an ordinary commercial matter which would be settled between the Reserve Bank and the trading banks. When it became clear, however, 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. 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 as judge and beneficiary 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 he had therefore recommended the Cabinet to devise a tribunal to be appealed to in ease no friendly settlement was made. He had anticipated that they would make a friendly settlement, but if not he thought they should have some sort of machinery established. He had had a further motive. His reading of the subject of central banks had led him to realise that unless the Central Bank carried with it the support and co-operation and goodwill of the commercial trading banks its task would be 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 was drawn up on those lines. Mr Stewart said that there was a good deal of argument about the matter before it got to that stage, and if the banks thought they had lost the benefit of the clause he was bound to say he thought the blame was largely their own, because he had made it clear that unless the Bill could get to the House within reasonable time there was no prospect of its getting through before Christmas. The banks were to some extent responsible for the delay. The speeches of Mr Lee, Mr Savage and Mr Ansell had all been based on the assumption that if a tribunal were set up the decision must go against Parliament, Mr Stewart continued, but the Minister of Finance 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 a beneficiary. The Minister had secured a great deal of further information that had not been available to him. Mr Carr: From London?

Mr Stewart: From London and elsewhere. Apparently, he continued, there was a very strong and very authoritative body of opinion expressed in the Bill as now presented. The mere fact that eminent counsel had advised the banks to the opposite effect showed that they had a right to submit their case. He would like the Minister to indicate to the House what the prospects were of friendly co-operation with the banks. He knew that the House would be practically unanimous in favour of the clause. These were two points he emphasised—that they should not give the banks even the appearance of a tribunal that was a beneficiary, and secondly, since the cooperation of the banks was highly desirr able, some friendly adjustment should be made, if that could be done without abandoning the rights which the Minister had established as his.