King Country Chronicle. Thursday, September 24, 1931. BRITAIN AND THE GOLD STANDARD.

King Country Chronicle, Volume XXV, Issue 3369, 24 September 1931, Page 4

King Country Chronicle. Thursday, September 24, 1931. BRITAIN AND THE GOLD STANDARD.

The decision to suspend the gold standard in Great Britain is one fraught with many momentous issues. For the last half century the currency of the world has been based on the pound sterling', and London has been the \yorld-centre of finance. During' the war Great Britain financed her Allies t<> a large extent, in many cases borrowing from. the United States and re-lending to other countries to enable them to carry on. She loaned nearly £500,000,000 to Russia, and received nothing in return. The sum of £894,0000,000 was loaned to the other Allies, and provision was made to receive less than half of this sum back. In other words, Great Britain sacrificed £1,053,000,000 or 70 per cent of her war loans to the Allies. The United States sacrificed 48 per cent, of her war loans, but it has to be remembered that this country realised enormous sums from the Allies during the time she held aloof from the war, and reaped financial benefits far in excess of any sacrifices made in the writing down of loan moneys. To-day Great Britain is paying to the United States £33,000,000 a year in redemption of her war loans and in interest, and this has to be paid in gold. -Added to this drain on her resources Great Britain has been providing enormous sums for domestic social services at a time when the world’s trade and commerce is stagnant. With her obligations, principally in regard to war debts, it cannot be denied that Britain has been living beyond her means, but even now her financial position is sound. More money is owing to her than she in turn is owing to other countries. It has been Great Britain’s policy to meet her debts on due date, but the same cannot be said of her debtor countries. The present financial crisis has been brought about by Great Britain being temporarily short of gold, and a climax was reached when it was announced that her trade balance was £246,000,000 on the wrong side of the ledger. This led to heavy withdrawals of gold from London, and the position was made more acute owing to the fact that the present is the heaviest import season for Great Britain. In the past this seasonable difficulty has been overcome by “invisible exports” represented by receipts from overseas investments. , The general trade depression, however, has caused a serious shrinkage in these returns. For these several reasons Great Britain has found Tierself temporarily short of gold. Her position is not serious from a financial point of view. Of all the countries which accumulated war debts during the war she is the only one that has met these obligations fairly, and will continue to do so, notwithstanding the feeling in other countries that she is living beyond her means. The new Government is taking steps to remedy the tendency in that way, and now that the people are up against hard facts, there should be no difficulty in stopping the drift. One outstanding feature of the present difficulties with which Great Britain is now faced is the sympathy shown by other countries. A few years ago there was a distinct spirit of antagonism shown Great Britain by other countries, but this has evidently died away, for the reason that it is now being realised that during the war and its aftermath Great Britain has “played the game.” It now remains for other countries to display the same spirit by placing the sterilised gold again in circulation and revising the war debts and tariff walls so that there will be an early resumption of world trade. Britain has been forced off the gold standard. Other countries may be forced to do the same. With this prospect the United States and France, with nearly threequarters of the world's gold in their vaults, may now be giving a revision* of their war debts and reparations more serious consideration in order to maintain their own financial position.