OWNERSHIP OF GOLD

Timaru Herald, Volume CXXXVII, Issue 19628, 24 October 1933, Page 14

OWNERSHIP OF GOLD

SIR FRANCIS BELL’S OPINION “ ABSOLUTE PROPERTY OF BANKS” By Telegraph—Press Association WELLINGTON. October 22. That the gold coin and bullion held by the trading banks of New Zealand is both in law and in fact the absolute property of the banks is tlie view expressed by Sir Francis Bell, K.C. Last week Mr T. J. Grose, chairman of the Associated Banks, sought the advice of Sir Francis Bell on the question of the ownership cf the banks' gold holdings, and he has now received the following legal opinion:— “The question upon which I have been asked to advise is whether there is any possible doubt that the gold coin and bullion held by the New Zealand banks is the private property of those banks, both in law and in fact. The answer Is of course, that In law and in fact the gold Is the absolute property of the banks, and that the State has not, and never had. any right, or title, to any part of It. "It is true that the export of gold coin is prohibited, and that therefore the banks cannot transport gold elsewhere, but the 'prohibition does not affect the title to the property, though It limits the market. The present legislation proposes to take that property from the banks for Government purposes at a price fixed, not by agreement or arbitration, but at a value determined arbitrarily by the Government. No New Zealand Precedent. “Property has not hitherto been so dealt with In New Zealand. For example, the price to be paid for land required for Government purposes or for settlement Is ascertained, in default of agreement, by arbitration. “The recent statement of thre Minister for Finance (the R. Hon. J. G. Coates) appears to ignore considerations which should affect the conclusion he has now arrived at on this subject. differing widely from that defined in the BUI circulated during the last session of Parliament. The suggestion that the gold has all been received by each bank originally from customers, who received in exchange notes of the receiving bank, and that therefore the notes of a new bank for the same gold constitute a complete payment, is based upon a misapprehension. (I am not referring now to the fact that the receiving bank paid out a note of sterling value of £1 and is to receive a note of value of 15/-. How the Gold Came. "Every sovereign in New Zealand, except the very few brought In In the pockets of tourists, was imported into New Zealand by the banks. When a customer paid into the bank a sovereign he had first received that soverIgn from another bank. On every imporation the banks paid heavy freight and insurance. The sovereigns in the banks have actually cost the banks considerably more than the standard gold rate which It Is proposed nominaUy to pay them in greatly depreciated currenc.. “It seems that the Government does not chaUenge the property, since it proposes to pay a price for the property. That price is to be what the Government chooses to pay, not the actual value. It is to be depreciated by a government prohibition, under which its market Is limited, and it is to be paid in currency depreciated ns the result of government action. Leaving English Principles. “But further, if the bank to which the gold is to be transferred is allowed to transport it, and a large profit results from the transfer, that profit is to be credited to the Public Account. No precedent can, I think, be found for that singular result. I am not competent to examine or criticise the precedents which Mr Coates considers can be found In foreign countries for similar procedure, but I do not know that foreign precedent should be accepted as a guide In departure from English principles. The Commonwealth legislation Is not a precedent. In the Commonwealth the gold was taken over at sterling. The gold standard was then In force in England, and Australian currency was then practically at par with England."