BRITISH CURRENCY POLICY

Nelson Evening Mail, Volume LXVI, 18 February 1935, Page 9

BRITISH CURRENCY POLICY

QUESTION OF STABILISATION A statement of Britain’s monetary policy, indicating that there was no present intention of stabilising the currency, was made by the Chancellor of the Exchequer, Mr Neville Chamberlain, in replying to a debate in the House of Commons. Everyone recognised, he said, and certainly no one more than the members of the Government, that it would be very helpful if they could get established once again a common standard of currency. But Britain had made perhaps the best contribution that it could in the circumstances by stabilising sterling in the sterling area, and the policy it had followed there had. he thought, achieved a very considerable measure of success. The level of currencies in the countries of the Empire and in those countries which were linked up with sterling had remained really very steady for a period of two years. The exchange of goods and trade in the countries in the sterling area had shown a very gratifying increase at a time when international trade generally was inclined to shrink. But at the present time we had on the one side of us what was called the gold bloc, the countries which were on the gold standard in Europe, and on the other side we had the dollar. We held an intermediate position between the two, but the real difficulty—and one which we ourselves could not control —was that the dollar and the franc, taking the franc as representing the gold bloc, were not in harmonious relations with one another, and the pound, which stood in between the two, was dear in terms of dollars, but not so dear as the franc, and it was weak in terms of francs, but not so weak as the dollar. In our present condition if, in consequence of this disharmony between the gold bloc and the dollar, there was a pressure and strain on the pound, there was freedom to move in either direction, and thus to achieve again a fairly stable position for the pound. But if we had stabilisation we lost that freedom. We could not then move either in one direction or the other, and the only result, therefore, of trying to stabilise while this disharmony existed, would be that we might find ourselves in a position where we had either to go on gold again or follow that policy of deflation which he was sure would be the last one suggested by members.;