BRITAIN'S DECISION.

Auckland Star, Volume LXII, Issue 262, 5 November 1931, Page 11

BRITAIN'S DECISION.

'ADMIRATION IN AMERICA.

READJUSTMENT INEVITABLE.

POSSIBLE CONSEQUENCES,

(From Our Own Correspondent.)

SAN FRANCISCO, September 24,

The momentous news that Great Britain had resolved temporarily to suspend her gold standard basis of business treated a furore throughout the United State?. '

• Bankers throughout the country generally: believed Britain's action would prove a tremendous benefit to Britain, ■ and there were expressions of admiration at the heroic stand inad© by Mr. Ramsay _■ Mac Donald and his Cabinet Ministers, it being remarked that such eelerity.of action could have no counterpart in the United States, where days of useless discussion would have' been wasted before any action was taken. Radio addresses" were delivered all over the 'country complimenting England on her courage.

The background and possible consequences of Great Britain's abandonment of the gold standard were summarised by Roger W. Babson, the -noted economist and statistician, who said England's financial difficulty was due to three factijrs, as follow:—•

. (1) A large percentage of the character, . judgment and energy of Great Britain was killed off during the war. Great Britain is in a position similar to the South during the Civil War. Time *ill "cure this defect, but it will take one or two generations to do it.

(2) To uphold British honour, England resinned business upon the gold oasis following the war, and did not ffiark down the price of the pound, as. France marked down the price of the franc, and as other' countries marked the price of their currencies. France is now beiilg praised for» her strong financial position, but it should remembered that she stabilised her franc at one-fourth its former value and hence with one swoop wiped out threefourths of her domestic debt. This England refused to do, and England should 8 praised for her courage and her good Mentions, but the readjustment was instable. England could not continue indefinitely to stagger under this tremendous load.

(3) The above two factors have led . n ol a nd into bad habits and 'bad firjancduring the past few years. The Enghankers have been borrowing from 8 at 3 per cent and loaning their money o Germany at 7 per cent, thereby takE a gambler's chance to recoup prei' ous losses. English politicaus have een giving labour a dole, as a further gamble in order to prevent any domestic "Pnsing. J

"In the meantime, through natural °nomic changes and tariff enactments 7 other countries, England's industries, typing, etc., have been severely hurt. • Co H rs . e » i s hard for a nation and individual to acknowledge their.misI? es » I feel that England is taking ? Tl ?ht step in making such an _*nowledgment. We never like to take i , or °il> but in the end we are much °fi- In the end, England and the 6 world will be better off."