GOLD RESERVES

Hokitika Guardian, 27 October 1933, Page 8

GOLD RESERVES

THE BANKS' ABSOLUTE TITLE. PROPOSED PROFIT FOR STATE. WELLINGTON, October 25. That the gold coin and bullion held by t-he trading banks of 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 Bainkg, 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 Lank is the private property of those banks, both in law and in Let. The answer is, of course, that in law and in fact the gold is 'the absolute property of the banks, and that the State hr.s not and never had cny right or title to any part of it. \ TITLE NOT AFFECTED. “It is true that the export of gold coin is prohibited, and’ that therefore the banks cannot transport gold elsev here,'but the prohibitom does not affect the title of the property, though it limits the market. The present legislation proposes to take that 'property from the banka for Government purposes ,?,t a price fixed, not -by agreement or arbitration," but at a ' v!aluo determined "arbitrarily by the Government. “Property " has not hitherto 1 been so dealt with "in’' New Zealand. For example the price to be paid for land quired for Government purposes or for settlement is ascertained in default of agreement by ‘arbitration. The Finance Minister’s recent statement appears to ignore considerations which should affect the conclusion he has now arrived at on this subject, differing widely from that defined in the bill circulated during the l\st session of Parliament. “The suggestion that the gold has all been received by each bank qriginallv from customers who received in esvhflnge notes of the receiving hank, and that therefore notes of a new bank for the same gold is complete payment, is based upon a misapprehension.' (I am not referring now'to,'the fact that the receiving bank paid out a note of 1 sterling value of £1 and is to receive a note of value of 15s). COST OF IMPORTATION. “Every" sovereign in New Zealand,; except the' ‘very few■ brought. in ;.in the pockets of : tourists, ■ wag ...imported into New Zealand by the banks. When a customer paid into a bank a savereign, he had first received *that i"Sovereign from another bank. On every importation, the banks * paid heavy freight and insurance.. The sovereigns in the ; banks“have actually;, cost the bank s considerably -more than the standard gold irate at which it is proposed nominally to pay them in greatly depreciated currency. “It seems that the Government does not challenge the property, since it pro-poses-to pay a price for the ■ property. That price is tp be what the Government chooses to pay, not the actual value; It is to be depreciated by a Goverhrhent prohibition, under which its market is limited, and iis to be paid in currency depreciated as the .result of Government action; “But, .further, if the body to which the gold is to be transhipped 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 i n foreign countries for similar procedure! but I do not know that foreign precedent 'should he ’■ accepted as a guide in departure from English principles.' “The Commonwealth legislation is not a precedent. In the Commonwealth, the gold w,as taken over at sterling. The gold standard was then in force in England, and Australian currency was then practically at par with England. ’