BRITISH TRADE.

Press, Volume LXII, Issue 18626, 26 February 1926, Page 16

BRITISH TRADE.

THE GOLD STANDARD. In an address to the Oxford Luncheon Club recently, the chairman of Barclay B Bank, Ltd Mr P. 0. Goodonough, discussed the goia standard. It was, ho said, important in discussions on this subject to realise the absolute community o£ interests between industry, and commerce on the one hand, and tanking and finance on the other. The suggestion, often ma'de, that bankers and financiers were iu favour of the gold standard because of some special advantage to themselves, and that industrial and commercial interests -were prejudiced by it, was entirely erroneous. It might, in fact, be reasonably assorted that the gold standard suited industry and trade better than financial interests. A steady exchange, which it afforded, greatly reduced the uncertainties and riskß always incurred in ■Swing- wh» celling, and in v/ages, ™* » prices by the manufacturer and trader, while Ft was possible for bankers and financiers to make money out of fluctuating and unstable exchanges! Stability of exchangejwu.also.essential to London as an international monetary centre. It was important also to realise that every expert conference since the war, and every oxpert comrmttoe, as the Chancellor of the Exchequer had pointed out in his Budget speech, had subscribed to the principle of the gold standard, which had also been supported by each successive British Government, by each political Party, and by all departments of industry.

Stabilised Exchanges. There had, continued Mr Goodenough, been divergent view 3 as to the precise moment at which, and the conditions under which tho return to gold should take place, both because of doubts as to Britain's ability to maintain the standard, and also because of its effect on prices and; industrial conditions. Tho larger body of opinion, howevor, had been in favour of fiteps being taken to stabilise the exchanges by means of tho necessary price adjustments, with a view to fixing prices in terms of gold, and, by returning to the gold standard as quickly as possible in order to help to promote stability in other, countries. It was felt that these things were' essential to Britain'b welfare. Now that the step had been taken, its beneficial effocts upon industry .would gradually jaake themselves felt, -while the ability to maintain the standard might be considered established. What was the gold standard? It was not, Mr Goodenough stated, easy to give a simple definition. But It might be defined as a system of inteßuring the vftlue of credit and of commodities in terms of a currency based on gold, and what was known as the "foreign exchange" was the value of the currency of one country in terms of that of another. Tho external (or exchange) value of a currency not based upon gold was seldom, if ever, tho same as its internal value. The exchange value was largely influenced by speculation, and, therefore, generally variable. At one time there might be an over-valuation in terms of other currencies, which affected exports adversely, and operated as a bonus upon imports, the actual procedure beinp that the importer paid- for goods from abroad ,in,the currency of the selling country, which he purchased with that of his own country. At other times, the reverse conditions were brought about by on undor-valuation of the currency in terms of other currencies. In the case of the pound sterling, before the return to gold, it was ovor-valued in terms of other currencies, judging by the failing-off in exports, and the increase in imports, which then took place, resulting in a heavy adverse visible trade balance.

Over Valuation of Sterling. The immodiate effect of the return to gold was an accentuation of this over-valuation, and it was estimated that the exchange value of the pound sterling, at the tirao, was between 5 and 10 per cent, in excess of its real value. Although there had beon a period of adverse trade, ponding the adjustment of prices to a new level, yet ultimately those impediments to trade, which arose from fluctuating exchanges due to the instability of other currencies would bo removed. Subject to those other questions regarding costs of production, wagos., efficiency, and hours of work, Britain should soon be better equipped to face industrial competition with other countries of the world. The decision of Great Britain to return to the gold standard was followed immediately by a similar step in Australia, New Zealand, Holland, and the Dutch East Indies, and other countries were now taking action with the same object, while Austrian crowns, German marks, Hungarian crowns. Swedish Icroner, Swiss francs, and other foreign' currencies were linked to gold, 'with the result that exchange and price fluctuations had been confined within narrower limits. Mr Goodenough said, in conclusion, that while he was sympathetic towards the suggestion made by some economists that there slio.uld bo a managed currency in order to bring about a stabilisation of prices, he felt that the gold standard, being to a lar*-e extent an automatic machinery, and depending little on human perfection, had proved the best principle in practice. QUANTITY EXPORTS. The quantities of the principal .items of exports from the. Dominion for the past two years show as under:— 1025. igoi Wool (bales) .. 596,895 593 0"7 Meat (cwts) .. 3,336,045 3,lVs',b'4l fallow (tons) .. 25,020 23 988 Butter (cwts) .. 1,245,324 1269*455 Cheese (cwts ).. 1,376,754 1,594'48G . Kauri gum (tons) 5,370 5 2GI Hemp (tons) .. 16,408 12)963 Wool shows the small increase of 38GS bales, but owing to the extremely high prices ruling in the earlier months of last year the value of the staple showed a gain of £2,471,374. There was an increase of about 5 per cent, in the quantity of frozen meat shipped, but the increased value was £1,668,869, or about 18 per cent. Butter shipments declined about 2 per cent, in quantity, and the aggregate value was less by £1,401,536. Cheeso declined 14 per cent, in quantity, and the j aggregate valuo was less by £1,222,489. Tallow shipments exhibited an increase of about 4 per cent., and the increase in value was under £90,000. The quantity of hemp shipped increased by 27 per cent., and the value increase was £128,1-12.