Ashburton Guardian Magna est Veritas et Prævalebit. FRIDAY, MAY 1, 1925. THE COLD STANDARD.

Ashburton Guardian, Volume XLV, Issue 10384, 1 May 1925, Page 4

Ashburton Guardian Magna est Veritas et Prævalebit. FRIDAY, MAY 1, 1925. THE COLD STANDARD.

The resumption of the export of gold is an event of the utmost financial and commercial importance, with a direct influence upon New Zealand producers. It will materially reduce the cost of exchange to the ultimate benefit of the exporter, the wool grower, I meat producer, and dairy farmer. The Act prohibiting the free export of gold does not expire until December 31, and the announcement that its provisions will not be extended made so long before the due date, will enable the financial world to so adjust matters that the transition will be effected without undue disturbance to the normal course of trade'. It might have been expected that recent happenings on the Continent would have resulted in a change of plans on the part of the British Government, 1 and it is the more reassuring to know that the responsible authorities have sufficient faith in the future to empower the Bank of England, under special permit, to export gold forthwith. In a recent address, Mr It. McKenna, chairman of the London Joint City and Midland Bank and at one time Chancellor of the Exchequer, said one point to examine was. if on a return to the gold standard in 1925, the conditions of the supply of gold and -he demand for it were such as would lead to a resumption of the course that trade was pursuing down to 1914. So far as he was able to judge, the supply of gold at its present value was more than sufficient to meet the world's demands and consequently they would pass into a time of slowly rising prices, more active trade' and increased employment. The world's output to-day was about £80,000,000 a year at par value. A considerable demand had of late been made from India, Germany and Australia, but these three countries could not absorb anything like the total output. Regarding the eventual effect on trade Mr McKenna said he was by no means blind to the possibility, and even probability, that they might have many difficulties to encounter in the early days. But these were matters of only temporary importance, and they had to look behind market conditions to the long period trend of values. If they did so, he believed that reversion to the gold standard would eventually be attended by an influx of gold and an improvement in trade. Speaking in January, Sir Harry Goschen, chairman of the National Provincial Bank, said : With a restoration of the gold standard and a free market in gold, as prevailed in pre-war times, the position of our merchants and manufacturers would be greatly simplified in purchasing raw material and other commodities. During post-war currency conditions they have been embarrassed not only with the price movements, but also with uncertain exchange movements. With the re-estab-lishment of a gold standard the pound sterling will again possess a stable value. There is nothing which does more harm to niternational trade than uncertainty as to the amount which traders have to pay for commodities when the date of settlement arrives." *