GOLD BASIS REACTION.

New Zealand Herald, Volume LXVIII, Issue 20988, 26 September 1931, Page 9

GOLD BASIS REACTION.

MOVEMENT EXTENDING.

PERTURBATION IN EUROPE.

DANISH ACTION REPORTED.

STEELING as the standard

gy Telegraph—] Press Association—Copyright. (Received September 25. 9.45 p.m.) L.OXDON\ Sept. 25 Tjjs City editor of the Daily Mail, discussing the question whether the pound will replace gold as a new basis jjr currency, points out that any country git liberty to make the pound its par escbange instead of gold, is reported that Denmark has already decided to go off the gold standard and to measure its currency against the British pound, and that other Scandinavian counties are likely to follow suit. The Daily Mail adds that if the greater part of Europe decides to follow the pound, the gold standard may become an

anachronism. Jlr. Arthur Wade, writing in the Evenins Standard. says the pound is becoming tie centre of a block of currencies which are deserting gold in order to link up with the pound A pound sterling for the Empire would be beneficial, but a currency movement which foreign countries which are exporting products to England on the same ' le?sl means th§ loss of the advantage of going off the gold standard. According to reports from Paris, the currency situation is regarded by independent experts as gloomy. Many express the opinion that the other principal currencies of the world may be forced to follow the pound sterling. French trades which are dependent on foreign custom are already feeling the j pinch.

POINTS OF DANGER.

INVESTMENTS DISTURBED. SPECULATION ON MARKETS. LONDON, Sept. 24. The City editor of the Morning Post gars: " Making all allowances for the rise in metals and in some commodities, which reflect the hopes of an improvement in trade, the present condition in the stock markets cannot be described as satisfactory. The resumption of unrestricted dealings has led to a severe slump in investment stocks, which is bound to distnrb the investor. " The fall in the pound sterling yesterdav was the most severe this week. hile the boom in 'many industrial stocks and gold mines is stimulating speculation, it is regrettable to see high-class investments sold that the money may be used in speculation/' The Daily Herald gives a warning that if the pound sterling falls too quickly there must be a sharp rise in the cost of living. Just as there was an exaggeration ci the danger of going off the gold standard, there is a danger that the optimism regarding its beneficial effects in industry is being overdone. BRITISH INVESTMENTS. LARGE HOLDINGS ABROAD. SOUNDNESS OF POSITION. British Wireless. RUGBY. Sept. 24. Sir Arthur Salter, who was until recently economic adviser on the League of Nations Secretariat and is now a member of the British delegation at Geneva, referred to the world financial situation in the second committee of the Assembly. Dealing with the situation in Britain, Sir Arthur insisted that the events of the last few cays did not mean that hi 3 country had ceased to be what she had been throughout modern history, the principal creditor country. Her ultimate resources were greater than her liabilities. The freezing of short-term credits in Germany, and the later loss of confidence, had resulted in a large withdrawal of short-term foreign credits in England and large 3aies of foreign-held British securities. British investments abroad were not so liquid and had rot been / similarly realised by sales. They remained, therefore, to the value of thousands of millions of pounds sterling, as against hundreds of millions of short-term credits. The consequence was that the pound *as now where it had been in 1925.

HIGH 7 BANK RATE. EFFECT ON INDUSTRY. CHECK ON SPECULATION. LONDON", Sept. 24. Lord Mariev (Labour) inquired in the House of Lords whether the Government wag taking steps to secure a reduction in the bank rate in the interests of industry. The reason for the hi_;h bank rate, he said, was invalidated bv the departure from the gold standard. The deposits in the great Links had increased by £140.000.000 since 1925, and a large proportion of the money Was kent there' instead of being used in industry Lord Melehett said the high bank rate tad not checked industry as much as was Supposed, .but. had had a steadying effect on speculators. The Lord Privy Seal, Earl Peel, in replying, sa:d there was no Government authority over-the bank rate, which was entirely a matter within the authority of the Bank oi England. The recent raising of the pate was most valuable to the world a s indicating a firm determination to have B.othing to do with inflation.

exchange dealings. mostly foreign orders. British Wireless. RUGBY. Sept. 24. Chancellor of the Exchequer, Mr. Snowden, in answer to a question in the % ons e. of fommons, stated that although *aa impossible to give the exact figure ® the foreign exchange transactions by ritish. subjects in the last three weeks, •shaustive inquiries showed that among , „ 6 thousands of transactions no substan- 1 iff number were British.