THE BANKERS’ GOLD

Otago Daily Times, Issue 22101, 3 November 1933, Page 8

THE BANKERS’ GOLD

Only five members of the House of Representatives were found in opposition last night to the proposal in the Reserve Bank Bill that the price at which the Reserve Bank should take over the gold coin and bullion held by the trading banks on their own account should be 77s 10id per ounce, and that the profits derived by the Reserve Bank from the sale of the gold should be paid into the public account. The proposal has been criticised as confiscatory and as involving the exploitation of the increase in the value of gold. Those who take this view refuse to acknowledge that the Minister of Finance made out a very strong case for the transference of the gold at its old price. Mr Downie Stewart, however, who voted against the clause in the Bill relative to the matter, readily admitted the force of the argument employed by Mr Coates. In reality, the Government’s proposal is not so outrageous as some of the opponents of it contend. It is as the outcome of a Government regulation, renewed from time to time, under which the banks are absolved from the obligation to pay gold in exchange for

the notes they issue, that the banks < were enabled in the first place to accumulate their gold reserves. It is ! only fair and .reasonable that recogni- ( tion should be taken of this fact in ] the consideration of the banks’ claim that they are entitled to the increase against sterling in the value of their ( gold holding. The claim is arguable, and, because it is arguable, it is foolish to condemn the provision in the Reserve Bank Bill in the violent terms that have been used regarding it. l ________________