THE BANKS' GOLD

Waipa Post, Volume 47, Issue 3385, 26 October 1933, Page 5

THE BANKS' GOLD

ABSOLUTE PROPERTY IN LAW AND IN FACT.

SIR FRANCIS BELLAS OPINION

That the gold-coin and bullion held b(y the trading banks in New Zealand is, both in law and in fact, the absolute property of the banks, is the view expressed by Sir Francis Bell, K.C. Last week Mr J. T. Grose, chairman of the Associated Banks, sought the advice of Sir Francis Bell on the question of the ownership of 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. 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 the Minister of Finance appears to ignore considerations which should affect the conclusion he has now ai*rived at on this subject differing widely from that defined in the Bill 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 notes of a new bank for the same gold is complete payment, is based upon a misapprehension. (1 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 155.) " 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 sovereign from another bank. On every importation the banks paid heavy freight and insurance. The sovereigns in the bank have actually cost the banks considerably more than the standard gold .rate at which it is proposed to nominally pay them in greatly depreciated currency. " It seems that the Government does not challenge 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 is to be paid in currency depreciated as the result of Government action.

" But, further, if the body 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 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 ipractidally at par with England."