WELCOME DECISION

Manawatu Standard, Volume XLV, Issue 128, 4 May 1925, Page 10

WELCOME DECISION

RETURN TO GOLD STANDARD. DOES NOT MEAN GOLD CURRENCY. Sir Francis Bell (Acting-Finance Minister) was asked by a New Ziuilond Times representative what were the intentions of the New Zealand Government in view of the announcement by the British Chancellor of the Exchequer (the Rt. Hon. Winston Churchill) that Great Britain was returning to the gold standard Sir Francis replied that the Ehglisli control over gold export would have lapsed next December. New Zealand had extended its prohibition of gold export until the end of 1926. “But,” he added, “we have stated gold could be freely exported under license." When the heavy demand from India for gold, and the well-sustained demand also from Australia was remarked upon, Sir Francis said he would not enter into a discussion of the general situation, but the Government had retained its power to stop export in any case deemed to be justifiable. The question was asked whether the turn of political events in France and Germany would be affected by or have any effect upon the resumption of the gold standard. The replies varied, but generally were that, on the surface, international politics had not much bearing on the subject one way or the other. The quotation of sterling at 4.83 dollars was regarded as a decidedly favourable sign of the improved financial situation brought about by the action of the British Government in restoring the gold standard. There would, however, still be fluctuations in the dollar rate, and in the other foreign exchange rates. It was generally agreed that London had been steadily regaining its old position in meeting foreign demands for loans. The restoration of the gold standard and the limitation of exchange by “bold points,” that is, the cost of transport, handling and insurance of gold will place Britain in a more favourable position to compete with other nations than she had enjoyed for some years past. It was held, too, that the general financial and trading conditions of Great Britain were evidently regarded by the British Government as well as towards improvement, and tending to return to normal. Generally speaking, it might be said that the announcement was received with gratification in banking circles in New Zealand. BANKER’S VIEWS. Restoration of the gold standard in the Empire caused no surprise in local banking circles, as it was generally felt that the resumption of the export of gold was pending, although the date of the Act prohibiting its export wAs December 3lst next. It was asked if free export meant an early return to the circulation of the sovereigns and half-sovereigns of former days. The replies were unanimously in the negative. The danger of letting loose a lot of sovereigns among the public, only to disappear from circulation, is obvious, it was said. It was added that this would result in the hoarding of gold and, further, a steady flow of gold ooins towards the Orient, whence they never returned. Another view was that there would not be enough sovereigns to satisfy the demand that would immediately bo made for gold if notes were no longer legal tender. The shipment of gold will be as between the banks, it was explained, and there appeared to be no doubt that the effect would be beneficinl all round. Confidence would be restored, the position of exchange between Australia and New Zealand would be improved, and rates of exchange, as far as they affected the exporters of produce of the Dominion, would be more stable and easier for the exporter.