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Hokitika Guardian, 7 December 1929, Page 4

Tim cable message received from Canberra a lew days ago stating that the Labour .Ministry's new banking proposals involve the removal of the present restrictions on the proportion of notes to cash reserve held by the Commonwealth Bank does not altogether agree with later and fuller news received by mail. The information sent b.Y the .Sydney correspondent of the Christchurch Press, suggests that the intention of the Federal Government is to encourage -the Commonwealth Hank to put into circulation the difference between the value of notes already in use and the value permissible under the present restrictions. This of course represents a very large sum, and it will he interesting to know in what manner it is proposed to employ so substantial an addition to the currency of Australia without creating an artificial inflation. At the entt ut September the gold reserve of the Commonwealth Bank stood at over twenty-three million sterling, which represented 57 per cent of the notes issued. The. minimum gold reserve is, however, only 25 per cent and the present note issue of a value of well over forty million could be largely exceeded without infringing ,the minimum gold reserve restrictions. But it there was need for additional currency in the Commonwealth to meet the requirements of legitimate business, it is difficult to know why the power of the Commonwealth Bank to make a large addition to its note issue, without jeopardising its gold reserve. was not exercised sooner, and most people will suspect that what was wanted was not ciii'ionoy per se but an improved set of trading and business circuinstances which would' make an increase in the currency natural and inevitable. It would not he surprising to learn later that the Federal Government’s intentions regarding the note issue of the Commonwealth Bank are intimately associated with Federal loans, especially mi tiled irection of making the reserve note issue of the Commonwealth Bank available for underwriting flotations in five Commonwealth. It must also be remembered that loans totalling over seventy million sterling will be maturing next year, and that if the London money market is not milch easier then than it has been for some time past, every effort will he made to place as much as possible of the replacement loan iii Australia itself