The Evening Star FRIDAY, JANUARY 8, 1932. GOLD AND GOODS.

Evening Star, Issue 20995, 8 January 1932, Page 8

The Evening Star FRIDAY, JANUARY 8, 1932. GOLD AND GOODS.

When the Empire Economic Conference meets in Canada it is practically a certainty that there will be an exhaustive discussion on currency and exchange. If there is to be an attempt by means of reciprocity and the lowering or razing of tariff walls to stimulate and greatly enlarge the volume of interempire trade, the co-existence of currencies of various values, though of the same nomenclature (except Canada’s), cannot be anything except a brake—and a brake is quite out of place on an up grade. One of the strangest anomalies is South Africa’s heavy labour and bitter outcry because her Government adheres to the gold standard, being almost unique in that respect among the several units of the British Empire. For, because of the Rand mines, South Africa is easily the world’s greatest gold producer. In October, 1931, the ouput of gold in the Transvaal amounted to 945,1130 z, which established a new high record of production. To this total the mines on the Witwatersrand contributed 900,353 fine ounces, and 44,760 ounces came from outside districts. The previous best month was October, 1930, when the yield was 926,5610 z. The increase in production last year is attributed to the presence of an adequate supply of native labour,, which, owing to the depression elsewhere, has sought employment in and about the mines. The importance of the gold-mining industry in the Union of South Africa may bo gauged from the fact that the value of the October yield exceeded £4,000,000. When Britain went off the gold standard and South Africa remained on, the British pound became of less value than the South African pound. The consequent rates of buying and selling exchange on London have thus been heavily in favour of South African importers, and yet more heavily against the South African exporters—i.o., the primary producers—this being just the reverse of the position in New Zealand. Presumably it is the importers and the mining magnates who are influencing tho Union Government to ignore or withstand tho moans and angry resolutions of tho farming community. It can easily be understood that with the price of gold at or above £6 per ounce mining concerns are anxious to preserve the status quo, and to achieve a maximum production. But what is one industry's meat is another industry's

poison. A Capo Town message, cabled just Wore Christmas, stated: “Tho financial stringency, which is duo to tho maintenance of the gold standard, is hastening to a crisis. Tho exchange pool of £10,000,000, which was established in London, has been reduced by three-quarters. When it is exhausted the Reserve Bank hopes to maintain the exchange by a premium on the gold output purchased. Pretoria farmers, Respective of party, are holding meetings throughout the country demanding the abandonment of tho gold standard, otherwise, it is rumoured, they will refuse to pay taxes. AVool farmers have lost £2,000,000. Many previously substantial men have been reduced to bartering sheep for necessities. Fruit farmers fear a similar fate.” Farmers’ meetings of protest are still being held throughout the Union. At one of these General Smuts spoke. He is not and never was given to the immoderate use of words. When he attended Imperial conferences or war councils he was always accorded respectful attention as a wise, upright, far-seeing man. Yet he now compares the position with what existed at the beginning of this century, when the long-drawn out end of the Boer War was reached. General Smuts said this week; “ South Africa will have to leave the gold standard. Wo have striven to rebuild the nation after the devastation of the Boer War, but we are at present in a worse position than when we returned to our wrecked homes.”

How long will gold retain its premium over commodities? There surely must be some reaction. Many brains are working overtime to devise some workable method whereby the cornering of gold shall not spell starvation or something near it to many millions of people, distributed in many countries, at a time when there is talk of “ overproduction ” of necessaries of life. In I'lngland two noble lords have recently been writing on the subject. Lord Melchett (who worked intimately with his father, the late lord, better known as Sir Alfred Mond) writes that stocks of primary commodities are a blessing and not a curse, and represent wealth and not poverty. He proposes that they should be controlled or balanced in such a way that the joint which they form between consumption and production should be given greater flexibility, and so should mitigate tho jolts and jars of the trade cycle. He suggests that the principal central banks, probably through, and certainly with, the Bank for International Settlements, should accept bills against all the present stocks of primary commodities and such further stocks as are necessary to bring up each stock to twelve months’ world supply, based on an average world consumption for the past twelve years, the price fixed to be that of the average cost of production of the last ten years, less 10 per cent. This would mean that twelve months’ stock of all primary commodities would be in existence, standing at 10 per cent, under full cost of production. The other peer is Lord d’Abernon,- who writes: “If it is found on examination that the present standard of gold reserves is ill adapted to maintain gold as a stable standard of value; if it is further found that gold sterilisation in certain countries is one of the main causes of the grave crisis in which the world is involved, it should not bo difficult to devise measures which would bring relief.” A “ commoner,” Mr Dennis H. Robertson, has something to say on the gold sterilisation in certain countries because of the gold hoards of America and France:—

All I want to suggest at the moment is that their swollen gold hoards are a symptom rather than a cause of more fundamental difficulties; and in particular that we can scarcely regard them as a major cause of the great world slump. For if they were it is hard to explain why that slump should have both started first and run its most riotous course in goldstuffed America. . . . All I am’ concerned to point out at the moment is that if wo want to regard gold as the major villain of the tragedy of 1929-30 wo must be prepared to explain exactly how tho world would have been better off for having another £100,000,000 of go]d at its disposal, and what the most enlightened central banks would have found to do with it.