HOW BANKERS GAIN

Grey River Argus, 22 June 1925, Page 3

HOW BANKERS GAIN

[ 'A’ : th I Id* return of the goid stand, itird. peo])lt' are finding that whi <’ i t-•c'idically gold coins will ho obtain, ahi', in practice so many obstacles wil 1 lie put in the way that the public will not obtain them. Th<- bankers end financial house's will gain a groat adxantago from the restoration of the gobi standard. Not only will uneprtaintv in nearly all foreign transactions be removel. but the might and glory of the £1 sterling will he restored, and. in conseipience, Loudon will again have a prominent ]»la<-e as a financial centre, but will not be as Lef tic the war the out' financial -en--1 re of tin', world as it will have to share that prt'stige with WalLstrect. ?<cw York’. Of course, sonn* bem'fit will g‘> to tin l < >LI Country as a whole Irom this restoration of London’s limincial activity, and the manufaHurers aiul traders find themselves for tl'c time since tin' outbreak ot war. in possession of a. free, st abb-, and certa in exchange with nearly all tin* eo'intries of tlie world, and this will undoubtedly prove a great advantage'. But the rt't’irn also involves a seriously adverse result. For some time past, with a view to restoring gold, tin* Treasury and I’m' Bank of England have been inc-easing the exchange' value of the £1 in proport ion to its spending power. That is to say. that they have 1 • the* external value' ot tin' £1 greater than its internal value. This means that prices in F.nglaiul lo.elax are- more abejve their pre_war level than in America; South Africa, and other gold-using countries. Re'-ently it was acclaimed that wlu'J’eas British prices were up 71 per e-ent. dedlar price's in lhe I niteel States w'*rc up onlv 62 per cent against 1914. The restoration of the gold standard confirms this discrepancy. What has hap. peueel is the reverse of what happened to the* mark in Germany a few years ago. Tim internal value ot the' mark wa- then greater than the external, and it was consequently easy for the' (terman manufacturer to undersell the British manufacturer. The German mnufaeturer thereby gained an advantage. Tn precisely the eqiposirc wav the English manufacturer is at a disaelventage at the present time. If the British manufacturer pro. .luces an article for export which he can just manage to sell at £1 with a slight profit. If the Treasury and the bank had not manipulated the ex. change this would be the equivalen, of 4.G0 dollars in U.S.A, am! this is the price which the exporter would quote on the American market. Owing, however, to th" restoration of the ..Ohl standard, the exchange will ac. t’uallv be 4.87 dollars, and the export, er is bound to quote this figure instead of 4.G0 dollars. That is to say. he has to quote 27 tents above the eal price, and this nmv easily lose him the eon_ tract. Unless, therefore, world pru-es rise in the immediate future there udl have to be a cut in British prices to the extent of nearly G per cent and „ f this v.ill arise a den,and bv en>- , ....yers for new cuts in «ng.-y ■ will be seen, then, that e" “' • unemployment, and demands < lower wages are the natural conseouenees of the policy ol the 1.. returning to gold.