Manawatu Evening Standard. TUESDAY, MARCH 12, 1935. VALUE OF GOLD.

Manawatu Standard, Volume LV, Issue 88, 12 March 1935, Page 6

Manawatu Evening Standard. TUESDAY, MARCH 12, 1935. VALUE OF GOLD.

The price of gold last week made a further record when it fell very little short of £7 9s a fine ounce, a sum considerably in advance of the ruling rate, ii 4 ss, when Britain was on the gold standard. Very few countries m Europe still have their currencies linked with gold. They are France, Switzerland, Belgium, and Holland, but of the four only Switzerland and Holland remain on their original standard. The period of post-war inflation gave to France and Belgium a devalued coinage which they still maintain. The position of these gold standard countries as world trade measured in terms of gold has substantially fallen is for them a serious matter. For instance Belgium’s foreign trade since 1930 has fallen by one half, unemployment has reached high figures and shows no sign of abatement, and her position lias been well described as desperate. Much more is heard of France’s plight and her internal situation has been described in recent cable messages as so serious as to dominate everything else. While Holland’s general standard is firmer than that of France and Belgium, she has her trade weaknesses. Currency values have moved very far indeed since 1930, and the holding of an unofficial international monetary conference in London last week, of which nothing had been heard previously, provides an interesting sidelight upon the situation. It recommended France, Britain, and America to consult with a view to provisional stabilisation of exchanges on the basis of gold as preliminary to the establishment of a stable world gold standard. Britain’s financial policy was again restated by the Chancellor the Exchequer in the House of Commons in reply to a Labour question when he assured the country that the recent unsteadiness of sterling contained no element to cause a moment’s uneasiness. Ihe internal value of the pound, he said, was unshaken, and would buy the same amount of goods as three years ago. “At present we are-not in a position to risk putting the pound at the mercy of either the fianc or ‘'the dollar,” he said. “Some day we and other countries will in all probability go back to an international gold standard, but we are not prepared to take the step to put England back until we can see conditions so favourable that, having returned to the gold standard, we can be pretty certain to remain there.” The countries that are in the sterling group are similarly minded. Should stabilisation of currencies be achieved, it has been pointed out, the price of gold will depend on the amount of devaluation of each currency determined by the respective Governments if and when a gold standard is set up. Whatever is done can only be done by international agreement with adequate guarantees, if they can be given, that the agreement will be kept. Answering the question, what would happen to the hoards of gold which are locked up in various safe deposits if a gold standard were instituted, this writer says that were half these _ hoards brought out and passed into the Central Banks, the offerings would be accepted and the money they represented would go into circulation. In the meantime the increased value of gold has proved of immense benefit to countries where gold mining is a recognised industry. It lias meant the 1 economic rehabilitation of South Africa; in Australia the yield has doubled since 1929 and the value in Australian currency is almost 25 per cent, more than in sterling. Mr J. Martin, the president of the Chamber of Mines in South Africa, sees a

bright future for gold. Even if the Governments of the various countries were unwilling to return to the old gold standard by putting a fixed price, in currency, on gold, and committing their monetary authorities to the purchase and sale, on demand, of gold at such fixed price, the ordinary working of the trade would always put a price on gold and see that it would move in settlement' of international payments that could not otherwise be made, he said recently. London is the most important gold market in the world; the British Empire produces 64 per cent, of the world’s output, and last year Britain again absorbed a large quantity of gold on account of other countries, which is attributed to hoarding by interests which do not care to" face the fluctuation of their own currencies. Much of this gold was withdrawn recently when sterling showed signs of weakness.