GOLD STANDARD.

Press, Volume LXVII, Issue 20426, 22 December 1931, Page 12

GOLD STANDARD.

BRITAIN'S RESPONSIBILITY. UNDESIRABILITY OF STABILISATION. t**o*' oua own coaaMPOKDENT.) I/)NDON. 'November In the "Monthly Review" of Barclay's Bank, there is an article on the "Gold Standard Crisis," which points out the grave responsibility which devolves upon Great Britain in tye management of her currency and in any decisions she may make as to her future policy. . , "At the moment," it is stated, any form of exchange stabilisation is open to the objection that indirectly it would link sterling to gold; and while thismust be the ultimiate aim/yet, in the existing 'unsettled conditions, it might be very undesirable to .compel sterling prices to follow the vagaries of gold prices. •' • 'Nevertheless, although,the time for the " consideration, of any definite plan of stabilisation has not yet arrived, the danger of progressive depreciation which always attaches tp an unstable currency has constantly to be borne in mind/ and it is, therefore, of vital importance, not only to ourselves, .but also to tie whole world, that sterling, notwithstanding its- incoiivertibility, should achieve stability in terms of commodities with the minimum amount of delay.,. > . "in the light of the experience gathered during the* post-War, period, there should be no danger of "the development of inflationary tendencies, especially as there ' can be no doubt of the determination and ability of the authorities to take immediate action to check any such movement should it appear. "At the same time it is important to emphasise; that ' the • return to the gold standard cannot be hurried, for it would be folly to ignore the fact that in the conditions which, have prevailed in recent years "the system has signally failed to achieve its principal objective —-namely. stability of prices. The various impediments "to its smooth working have at last insulted <in its complete breakdown and it would be extremely unwise for Great Britain again to link her currency to gold until there is -a reasonable prospect, that all countries adopting the system will agree to abide by rules, the non-observance of which has been mainly responsible for the existing position. ... "It has been claimed that the gold standard was free from imperfections, but prior to the War, when, to a much greater extent than in the postwar period, it was allowed to operate according to the recognised principles and gold niovements were permitted to exercise their normal influence as adjusting factors upon the credit struct tures of the countries concerned, it proved its value and was gradually adopted by .the greater part of the civilised world. In those days, monetry gold was not regarded as a commodity for the settlement of international debts, but as an- adjusting agent for the correction of unbalanced trading positions, and the present breakdown has shown the necessity for a return to these broad principles, even if modern conditions may necessitate some modification of the system in detail. It is along these lines that reconstruction plans must be laid, but it is generally recognised that if .they are to be successfully operated, a much greater degre of international co-operation will' be required than has proved possible in recent years."