GOLD STANDARD

Grey River Argus, 14 March 1932, Page 5

GOLD STANDARD

BRITAIN’S ATTITUDE Wait and See ? (Aus. & N.Z. Cable Assn). LONDON. March 11. In the House of Commons Mr L. Hore-Belisha, for the Government, moved the precautionary re-enactment of the Gold Standard Amendment Act for a period of one year. Mr Horn Belisha said that happily the prediction that the going off gold would cause food exploitation had been falsified. Indeed many gold countries had linked their fortunes and prices with Britain’s, with the result that 59 per cent, of the food was now imported from non-gold countries. To that extent possible damage to Britain’s household budget was restricted. Furthermore, the strength of Britain’s purchasing power abroad had induced some countries to adjust themselves to Britain’s purses. The wholesale prices of gold countries had fallen nine per cent., which further restricted the area of the damage. Many foodstuffs, including Australian and New Zealand butter, were cheaper. The average reduction of all foodstuffs was ten per cent, compared with 1930. Mr A. M. Samuel urged that Britain should have the power to defend herself. The abnormal influx of gold forced on her might have peculiar results, even forcing her back to the gold standard if there was a flight from the franc or dollar.

The Bill passed its second reading without division.

An important statement on the pound sterling and the merits of a managed currency was made by the Chancellor of the Exchequer in the House. The Chancellor declared that the Government did not desire to see the pound forced up at a rate that would be injurious to industry. He could not foresee the ultimate time or rate of stabilisation, but he took the view that sooner or later Britain must link her currency to a metallic basis. He saw no better basis than gold. “It has been suggested during the debate that we might be forced back to the gold standard and into buying gold,” he said, “but that contingency is so remote that it need not be considered.” He thought that it was an entirely mistaken view that the United States would be forced off the gold standard. The meaures taken there had been wisely conceived and were having an effect in the States, which < might prove beneficial to the whole world. He agreed that fluctuation of the value of the pound -was most detrimental and that the speculation taking place in sterling was injurious and disturbing to trade. Obviously the power of managing currency had diminished when they had such an enormous volume of short-term money available, throughout Europe. If they were to manage currency it would have to be done on a very large scale. As to the ultimate policy of the Government, he expressed the purely personal opinion that he was not attracted by the idea of managing currency, because, sooner or later, Britain would find that she had to link her currency to a metallic basis. Whether they should stick to gold, or mix it with something that would help them out, he did not know but he did not see any better basis than gold, which in the past had served them well. Although for the time being the currency was a managed one, it should not be assumed that the Government intended that it was going to be a permanent policy. The MacMillan Committee came very definitely to the conclusion that if there was management it ought not to be in the hands of the Government, but in the hands of a central banking institution, and with that he freely concurred.