BRITISH FINANCE SOUND.

New Zealand Herald, Volume LXVIII, Issue 20986, 24 September 1931, Page 9

BRITISH FINANCE SOUND.

MR. ON POSITION. AVOIDANCE OF INF»-Af»6N. EFFECT OF THE CHANGE. - LOSSES TO FOREIGNERS. By Telegraph—Press Association—Copyright. (Received September 23, 5.5 p.m.) British Wireless. RUGBY, Sept. 22. Tn the course of his broadcast speech on the financial position, the Chancellor of the Exchequer, Mr. Snowden, said the consequences of the departure from the gold standard were hound to be disagreeable, and in some ways might be serious, but they would not be disastrous or catastrophic. It would have been a. very different thing a month or so ago, when Britain had a huge deficit in the national Budget, and when her capacity to set her financial house in order was viewed with suspicion. "I should have been very alarmed," said the Chancellor, "as to the consequences then, for in that case the Government would have sought to borrow to meet current expenditure. With confidence destroyed, it would very soon have found it impossible to borrow, and it would have been driven to inflate the currency. In that way the vicious circle of inflation would have been started, which it might have been almost impossible to check. "As things are now, there is no such danger. There are no longer any grounds for distrusting the essential soundness of our financial position. "One of the consequences of the suspension of gold payments is that those foreigners who still have money on deposit here, if they wish to have it back, will be able to take it back only in depreciated pounds, and will therefore suffer loss in terms of their own currency. "We deplore that loss. We have done all wo can to avert it. Wo have not hesitated to impose upon our own people heavy burdens and drastic sacrifices, so as to remove any ground for the reproach that our own budgetary position contributed to the fall of the pound." MEETING THE CHANGE. BUSINESS LITTLE AFFECTED. EFFECT ON FOREIGN OPINION. British "Wireless. RUGBY, Sept. 22. Tho first day sinco the Government decided on a temporary suspension of the gold standard passed without incident and to-day banking business all over Britain proceeded on normal lines. Tho stock exchanges in London and the provincial centres wero again closed to-day, as a defensive action to prevent further selling of securities bv foreigners. It is understood that the situation will be reviewed by tho authorities to-day, when tho question of the date on which tho exchanges shall be opened will be considered. Much satisfaction is expressed in the newspapers at (he calmness with which Britain's decision w'as received abroad. Throughout the country to-day banking and other business proceeded on normal lines and there was a complete absence of excitement, while the Government and business houses readjusted their interests in view of the changed situation. Tho Ministers arc concentrating on the steps that may be necessary to counteract (he adverse effects. It- is increasingly clear that it was the troubles in other countries which made it impossible for Britain to remain on the gold standard. Foreign banks wero nervous about their posit ion, and had been removing money deposited in London and converting it from sterling into their own currency. Jn this way £43,000,000 was withdrawn in 3!j days at the end of last week and tho Act accelerating the suspension of tho Gold Standard Act became imperative. Throughout tho day's crisis ready sympathy and assistance were forthcoming from France and America, where threequarters of tho available gold supply of the world is held. The Bank of France did not withdraw any of its money deposited in London. It remained there intact. One immediate and noticeable effect of tho change was the depreciation of the pound sterling. No less inevitable is some dislocation in foreign trade and finance, the difficulties of which will be adjusted by tho countries concerned. In well-informed circles the view is held that one? result of the present,! crisis will be a change in opinion among some of tho Powers which have hitherto shown no sympathy with, the proposal, which, for the last 12 months, has been favoured in England, for securing by means of joint action, following an international conference, a remedy for the situation caused by tho present unequal distribution of tho world's supply of gold. There were no official foreign exchange quotations to-day. EFFECT ON TRAVEL. I RUSH BACK TO ENGLAND. HIGHER FARES TO CONTINENT. (Received September 23, 8.45 p.m.) LONDON, Sept. 22. Tho Continental boat, trains arc crowded with people rushing home to England. They all declare that they are relieved to be back again. The railway companies have increased fares to the Continent. One travel agency has already increased Hie fares 20 per cent. The Travel Association points out, that 1,000,000 British people went to France last year, while only 66,000 French people came lo England. The travel industry is worth £120,000,000 a year to France, but only £15,000,000 to England. Tho reduced sieving exchange is sure to increase tho numbers of Continental visitors to England. GOLD STANDARD KEPT. DECISION AT CAPETOWN. CAPETOWN, Sept. 22. South Africa has officially decided to adhere to the gold standard.