“ NO USE FOR GOLD ”
EXPENSIVE LUXURY
DOMINION’S POSITION
“There is a certan amount of prestige to be gained from keeping a stock of gold in the country, and many people will doubtless regard the suggestion to ship it all overseas as distinctly revolutionary, but an analysis of the position shows that we really have no use for it in New Zealand. Further, the. stock of gold is an expensive luxury, costing the country about £330,060 a year,” said Mr B. C. Asiiwin, British Commissioner, in the course of an address to the Economic Society recently.
“Incidentally.” he continued, ‘■‘another £8.600.000 of gold would be an appreciable gain to tbe banking! ieservo of the- Bank : of England, and the resulting reaction. on credit in Great Britain could not fail to benefit New Zealand through an improvement in the prices of otir exports. Tims our own material advantages could be combined with it graceful gesture to the Mother Country. “Jii sayirtg that the gdid stock should he sent 10 London I do not suggest that legislation should he passed compelling the banks ,to take such action. All that need be done is to amend the legislative provisions which require gold .to be held in Now Zealand, and it may safely be pt-e slimed that it would not be long before most, if not all, of it was sent aibroad. There is a risk, of couise, that in the. ca.se of the four Australian banks, ii] a, time like the .present ilie resulting addition to the London balances would be used to bolster up the Australian exchange, and thus b<* lost to New Zealand. However, -f steps are taken to fix definitely the sterling exchange standard by legislation, this would force a separation of the Australian, and New Zealand exchanges, and tbe banks, to protect their position, would practically find it necessary to reserve the New Zealand funds for New Zealand business.”
ESSENTIAL POINTS
Mr Ashwin suggested the following as essential points to be considered concerning legislative provisions that should he made! ' assuming the formal acceptance of the present sterling exchange standard:— (a) Definitely fix the sterling exchange standard by'making it man-datory-for the banks to provide exchange’ on ' London at a premium or a discount, ■ within certain prescribed limits roughly corresponding to the cost df shipping gelid to''or from London. At present the system is operative on a voluntary basis.
(h) Bank 'notes as legal tender to ho made li permanent' feature of the sys'em.'' A return to a gold circulation being out of the question, there is no alternative, to doing this. (c) The note issue to be fully covered by Government securities. This is practically the present requirement under the war regulations. It is ieally more a security provision than a regulative one, .as the note; issue is governed by commercial custom in relation to the volume of credit.
(d) That, subject to necessary safeguards, Government securities to cover the note issue may he held > n New Zealand or London. This would give more elasticity, to the system and would prevent a large favourable trade balance from paradoxically being art embarrassment to the banks.
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Hokitika Guardian, 10 June 1930, Page 2
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523“ NO USE FOR GOLD ” Hokitika Guardian, 10 June 1930, Page 2
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