RUSSIAN GOLD.

Auckland Star, Volume LXVI, Issue 49, 27 February 1935, Page 6

RUSSIAN GOLD.

A POOR BARGAIN

(To tho Editor.)

The announcement in your columns that Russia is to settle debts to Britain by shipping gold raises the question what use Britain will make of the yellow metal. The Bank of England is strongly guarding £190,000,000 of gold, which, to all intents and purposes, is useless, though one might reasonably inquire why it could not have been sent to America in partial discharge of a debt which John Bull failed to meet on the due date. The orthodox financial expert will point out that the possession of additional gold will enable the Bank of England to issue more notes or bank promises to "pay, but the economist will object that the additional notes will not bring into existence additional goods which tho people of Britain could use, and he will refer you to the desperate position of the principal countries which now possess large stocks of gold. It would seem to be incontrovertible that to issue additional money because of increased holdh.gs of gold may itself constitute injurious inflation, just as to restrict the issue of money because of reduced gold may result, and, indeed, hasi resulted, in motst devastating deflation. These considerations show the utter nonsense of the gold standard and partly explain the misery of a world unable to distribute and increase its lifeeupporting wealth of consumable goods.. It is little wonder that the proposal made by ex-President Hoover to return to the gold standard "started an angry scene in the Senate" ("Auckland Star," 23/2/3o). It is not unlikely that the leading peoples of the world will soon become too intelligent to accept more gold than they can use for jewellery and scientific purposes, and that they will understand that national money, being only authority to claim goods and services, can be more rationally and conveniently provided, with pen and ink on accredited cheque forms or by the increased use of bank promises to pay, or, preferably, of State-issued notes, containing no such promise but just as effectually entitling the holders of the only payment of value, the goods and services which alone constitute the "backing" of any currency. BARRISTER. '