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Gold Reserves

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GOLD RESERVES. In 90S the Council of the London Chamber of Commerce ap pointed a Gold Reserves Committee " to consider whether the Gold Reserves of the country are sufficient, and, if not, what remedies can be suggested." The Committee consisted of leading bankers and men of business, and in July, 1909, the Report which has been called an historic document) of the Committee was issued. Out of twenty five surviving members of the Committee, live agreed to it subject to various material reservations.

The principal clauses of the report are as follows : " 4. Your Committee has taken no evi dence, but having debated the many and weighty proposals brought before it by its own members, has passed the following resolutions : " 1. That the Committee recognises the desirability of strengthening the Gold Reserves of this country.

" 2. That the issues of the Bank of Eng land against Government debt and securities, commonly called the fidu ciary issue, form an undue propor tion of the whole, and should be reduced.

" 3. That a reasonable reserve in gold should be held against the deposits in the Trustee and Post Office Savings Banks.

" 4. That the Bullion Department of the Bank of England affords a means by its enlargement for the aggrega tion of gold reserves held by others than the Government of India, viz. :— " (a) The banks of the United Kingdom, including the Bank of England, in respect of such gold held against their liabilities in excess of till money as any of them may elect to deposit in the Bullion Department. • " (b) Scotch and Irish banks in respect of all or any portion of the extra gold held by them against excess issues under the Act of 1S45.

" (c) The National Debt Com missioners and the Post master-General in respect of the gold Nvhich the Com mittee recommend should be held against the liabili ties of Trustee Savings Banks and Post Office Savings Banks respectively.

" 5. That all persons or companies carry ing on the business of banking with in the United Kingdom should once in every calendar month. in case their liabilities on current and de posit accounts exceed in all the sum of ten million pounds sterling, and once in every three months in all other cases, make a statement of their position showing the average amounts of liabilities and assets on the basis of weekly balance sheets for the preceding month, or three pre ceding months, respectively, stating the following amounts separately : " (a) Liabilities on current, de posit, and other accounts.

" (b) Liabilities on notes in circu lation.

" (c) Liabilities on bills accepted. (d) Gold and other coin and gold bullion held.

" (c) Bank of England notes held. and balance due by the Bank of England.

•' (1) Balance due by clearing agents.

" And that a copy of the statement should be put up in a conspicuous place in every office or place where the business of the persons or com pany is carried on.

" 6. That it is desirable that the Bank of England should make an annual return showing the aggregate bankers' balances for each week of the preceding year.

" 5. In arriving at the conclusion that it is desirable to strengthen the Gold Reserves of the country, your Committee was in fluenced by the fact that the growth of aggregate liabilities, external and internal, has not been accompanied by a proportional increase of gold held by banks in the United Kingdom.

" 6. Your Committee is also of opinion that, were larger reserves of gold in exist ence, a modifying influence as regards fluctuations of the official rate of discount, which are more frequent in this country than elsewhere, would probably be the result.

" 7. The resolutions arrived at by your Committee resolve themselves into two main classes, viz., those directly, and those indirectly, affecting the Gold Reserves, the two not being altogether incompatible.

" S. The direct scheme for a central reserve has in view a fund of gold lodged for safe custody at the Bank of England, each owner retaining absolute and inde pendent possession and control ; the aggre gate amount only to be made public.

" 9. The indirect scheme has in view publication of the cash assets of every bank, divided into constituent parts. This would disclose the individual holding of gold of each bank.

" 10. The resolutions arrived at show that your Committee consider that all con cerned should bear their part in the cost involved in an increase in Gold Reserves, and specify : " (a) The Government, " (b) The Bank of England, " (c) The banks of the United King dom.

" 11. In conclusion, your Committee beg to report their unanimous conviction that the time has arrived when the bankers them selves should come to an agreement on this important matter, and adopt measures to conserve and increase the gold held in the country, if it is wished to avoid legislative measures."