GOLD COMEBACK

Poverty Bay Herald, Volume LX, Issue 18057, 6 April 1933, Page 2

GOLD COMEBACK

SHIPMENT TO U.S. BACK IN BANK OF ENGLAND VAULTS LONDON, Feb. 25. The extraordinary paradox of the use. of gold in settlement of international debts is emphasised in the news that the Bank of England has restored to its vaults all the gold it. paid on behalf of the British Government to the United States in December last as the war debt instalment.

Ever since January* the bank has been purchasing gold to restore its reserves depleted by tho American payment, but the present accumulations do not mean that this country’s financial position has so improved that it can make .future gold payments for war debts. Gold stocks have accumulated solely because foreign centres have been sending their balances to London temporarily through uncertainty regarding the future value of the dollar. However, critics of tho British bankers’ policy do not hesitate to say today that the Bank of England's continual policy of buying gold is likely to give the impression in Washington that the case made out by the British Government against war debts is merely bluff and that London’s 7 financial strength is such that future debt payments arc quite within its capacity to make.

Gold now in the bank’s vaults has been bought through operations -of the sterling exchange equalisation fund, which, while under the control of the Treasury, is managed by the Bank of England.

“Apparently the bank is given a free hand to do what it likes with £150,000,000 worth of public money,” nay critics, “and if the United States banks’ crisis deepens it may involve the British public in heavy losses.”