N.Z. GOLD RESERVES

Sun (Auckland), Volume IV, Issue 984, 29 May 1930, Page 12

N.Z. GOLD RESERVES

EFFECT OF AUSTRALIAN LEGISLATION Special to THE SUN WELLINGTON, Today. Will the new legislation providing for central banks in Australia strike a blow at tho gold reserves held by the banks in New Zealand? Four of the six hanks operating in New Zealand are run rrom Australia, and are Commonwealth banks. Between them, they hold gold in coin and bullion to the extent of £2,400,000 out of the total gold reserves in New Zealand of £6,000,000. Their reserves, in proportion to their note issue, are all vastly greater than those of either the National Bank or the Bank of New Zealand. The Bank of New Zealand holds £3,300,000 in gold against a note circulation of £3,580,000 and the National Bank £870,000 in gold against notes to the extent of £1,100,000. The Commercial Bank of Australia has a note circulation of £ 240,000 and gold reserves of £220,000; the Bank of Australasia has a circulation of £430,000 and 977,000 reserves, the Union Bank a circulation of £530,000 and gold to the extent of £956,000, while the Bank of New South Wales has notes worth £520,000 and gold totalling £1,280,000. The assumption now is that Australian banks may consider these reserves unnecessary and withdraw some of them from New Zealand.

This speculation is prompted by the move to create a Central Bank in Australia, which will hold the gold reserves of the Commonwealth banks (some £30,000,000) in the endeavour to ensure proper currency control. Financial houses in Australia fear the Government's plan to run a reserve bank and a trading bank concurrently, and also fear political interference. It is believed that the first steps of the bank authorities will be the endeavour to build up large gold reserves perhaps at excessive cost. If the Commonwealth takes these steps and requires the Australian banks in operation In New Zealand to hand over all available supplies over and above a safe margin, a withdrawal of more gold from the country is expected. However, it is considered that the banks will not be at all anxious to ship gold to Australia, as it will then pass out of their hands and into the coffers of the reserve bank.