GOLD RESERVE

Otago Daily Times, Issue 23894, 23 August 1939, Page 7

GOLD RESERVE

MOLDINGS IN RESERVE BANK QUESTION OF REVALUATION LABOUR MEMBER ANSWERS CRITICISM (From Our Parliamentary Reporter) WELLINGTON, Aug 22. Suggestion by the Opposition member for He.uraki (Mr J. M. Allen) that it was possible there would be a further leaning by the Government on the Reserve Bank and that the gold reserve would be revalued was referred to by Mr J. Thorn (Govt., Thames) when speaking in the debate on the Financial Statement in the House of Representatives to-day. Mr Allen had said this policy must inevitably lead to inflation, with all its misery and hardship. The question of the reValuation of the gold reserve had not been discussed at any meeting of the Labour Party, Mr Thorn said, but if the Government did revalue the gold holdings of the bank it would be following the recent action of the Bank of England and the conservative British Government. Mr Thorn claimed that members of the Opposition did not object to a little inflation when it would suit their own interests. The Government had been criticised for not fixing a guaranteed nrice that conformed with the recommendations of the 1938 Price Advisory Committee. Had those recommendations been adopted by the Government the effect would have been to add about £1,500,000 to the present deficit in the Dairy Industry Account in the Reserve Bank. The annual report of the bank had said that to the extent that such deficits existed they represented the creation of credit beyond the equivalent of the commodities produced, and the board considered it important that the inflationary tendency of such accommodation should not be overlooked. "If the present Opposition members accept that statement they cannot sincerely argue for any increase in the present guaranteed price," Mr Thorn said.