NEW MODIFIED STANDARD

Hokitika Guardian, 22 June 1931, Page 3

NEW MODIFIED STANDARD

OPERATIONS OF THE MINT MINT PRICE OF GOLD. There is no protit in the minting of gold, because tlie price of gold is lixed by law. The English laWa lays down that 20lb weight troy of sfcaiid'ard gold ' shall he coined into 934 sovereigns > aiiti one half-sovereign, and standard gold is defined as 22 carats fine gold to two carats of alloy in the pound weight troy, or eleven-twelfths fine. The Mint price of gold can thus be calculated and will be found to he £3 17s 10$d per oz. of standard gold. There is, however, substantial profit to be made by • the State in the coining of silver, for the price of silver is determined by market conditions and silver coins pass current for considerably more than the value of the silver they contain. Their higher value is maintained because they are freely interchangeable with standard money and they are indeed ultimately guaranteed by gold. Before the war anybody who had gold could take his gold to the Mint and receive sovereigns in exchange at the rate of £3 17s 9cli per standard-oz. The gold standard, as generally understood however, does not now exist in Britain, which, in 1925, adopted the gold bullion standard! The' right of free'tender of gold to the Mint is now by law reserved to the Batik of England, thus giving legal sanction to long established practice, since tinder the previous rcgiiiiie of general free coinage only the Bank or England did in fact tender gold to the Mint for coinage, purposes. “If tlie hank does not tender gold for conver- ■ sion into sovereigns,” writes. Professor B. E'. Murliy, in his “Elements of Economics,” “then sovereigns will not be minted.” Persons having gold to sell usually sell it to tlie Bank of England, which is hound to buy all gold tendered, to it at a .fixed price of £3 17s 9d per standard ounce. '1 he seller appears to lose* , $d per ounce by selling to the hank, out lie enjoys the advantage that the hank pays cash for the gold, whereas if iie were allowed) to tender it at the Mint, he would ha.e to he without, Ins capital during the period required for the conversion of the bullion into coin The l,sd per ounce is really a fu.murage or interest charge. 1 By a provision in the Gold Stand rd Act of 1925, the public, in exchange f 'r legal tender money, can demand gold in large quantities and can of right, secure it in the form of gold bars. Until last year the bars issued were of fine gold but last June a slight modi fieaeion was Introduced. Owing to the hulk of the hank’s receipts being in the . e orm of sovereigns, while the witnrawals were largely in bars of fine gold, tlie Bank of England decided to vary tlie fineness of its outgoing gold and is" now issuing bars of qt standard fineness of 9167 in 10,000. ft is leg n lly entitled to sell bars of any fineness 'hat does not fall helmv the standard of the sovereign, namely 916 2-3 in .1000.: ■

ISSUE OF COINS. Coins that have been minted are .ssueu lo Uie bangs according lo their , .trying requirement and by them are passed mo public circulation. 'ibe Aioyat Mint does not retain any ownershi in the coin once it is'issued hut to nsure that face value is maintained and public confidence in the curiemy undisturbed there are stringent laws against defacing and counterfeiting. In addition to the standard gold coinage, which has a bullion value corresponding to its face value there is in the British Empire a subsidiary or token coinage of silver and bronze for petty transactions. The bullion value of these is intentionally made less than their face values so that anyone melting them down for bullion purposes could,only do so at a considerable loss. Independent commodity value is of no Importance in the case of this token coinage and limited quantities only, to meet the demands of tredJ, ore put into circulation. Silver is legal tender to an amount of 1 40 shillings and bronze to an amount of one shilling; but it is really the limitation of quantity and not the legal tender restriction, which in actual business is largely disregarded is of little importance ; that maintains the subsidiary coinage at its face value.

There’ is no mint in New Zealand but a number of the British’dominions, including Australia, have their own. There were mints in Sydney, Melbourne and Perth, but the Sydney mint, which was opened in 1855, was closed in 1926. There is, of course, not tlio same demand for coined gold now tli"t it has gone out of current eircu 1 — ation and lias been replaced by banknotes.

There is still in force in New Zea’and an Ordier-in-Council making banknotes legal tender, and for this reason no one has ’the right here to go to the hank and demand gold in return for notes. This Order-in-Conncil will evn : -e next year, arid it was partly with a view to laying down the police to he followed r-n the expiry of this Order-in-Cbunoil that Sir Otto Neimover was invited to New Zealand, to report on the currency question.

There is, however, nothing to prevent a New Zealander who dodoes o-nTfl From rwttincr it in London. provid'd he ohq comply w : th necessary co-di-ti-'.ns. These are that he establishes w'th his hank a ered’+ in T nn r,r, ri =nffieent- to comply with the Imperial Gold

standard Act of 19.25. The bars issued j under this Act are of 400 ounces troy, i (*f an approximate value of £1 00. It is interesting to note that were go'd freely in circulnt.on in Now Lealand or procuahle in New Zealand—land or nroeiirable on demand from the hanks it would b' impossible for the rate of exchange to move adverse'}" t'-. New Zealand hv more than the cost of chipping gold to London, which is about 1$ per cent.