STERILISED GOLD

Poverty Bay Herald, Volume LV, Issue 17411, 8 November 1930, Page 5

STERILISED GOLD

LUXURY FOR DOMINION £300,000 A YEAR The opinion that the gold supply held by the banks in New Zealand was performing no useful purpose and was an expensive luxury that 'cost the country £300,000 a year in interest, was expressed by Dr. H. Belshaw, Professor of Economii s. and Dean of Auckland' University School of Commerce, in an address on “Banking and Exchange,” given at a luncheon .of the Auckland Credit-men's Club. Professor Belshaw' said that contrary to the common belief. New Zealand was not on a gold standard. Legislation passed in 1914 declared bank notes legal tender for any amount. Note issues must he hacked by gold and securities, but the amount of gold coverage was not stipulated. An important problem of note issue was one of scour ify, and the question was: Was a gold cover needed? Notes were far more convenient than gold, and the- question of convertibility was only of academic interest*. Professor Belshaw supported the scheme recently formulated that ttie New Zealand note issue should he. covered bv Government-securities hypothecated to the Crown. This, would provide adequate cover and it,' was estimated that the saving in interest would enable the banks to redact) the. overdraft rate bv about lj per cent. It would also do great service by freeing gold for use by the central banks of the world. The world l was fa*.red with a great gold shortage, ai)d unless more mid was freed for use by the central banks or they changed their reserve policy there was a probability of falling prices for years to come. He said thatthe £6,300,000 worth of gold now sterilised in New Zealand could be put to far better use by the Batik England.