THE GOLD STANDARD

New Zealand Herald, Volume LXXII, Issue 22004, 10 January 1935, Page 13

THE GOLD STANDARD

Sir. —I cannot join "H.W." and other inflationists in congratulations on what has proved to be a misfortune to Britain, the Empire, and the world at large, in the suspension of the gold standard, which, unfortunately, is not a mere fetish of bygone clays as "H.W suggests. The chaos in international trade and finance to-day proves conclusively that gold is still the sheet anchor of international currencies. In 1930 Britain was pledged, through being on the gold standard, that should anyone of any nationality deliver an ounce of gold to the Bank of England he was entitled to receive through the bank from the producers of Great Britain £3 17s 10Jd of their goods and services measured by sterling. Toklay, those same producers are called upon to render a service or goods to the amount of £7 for ±he same ounce of gold, also measured in sterling. Perhaps "H.W.'' can see some advantage in this condition of affairs, but I must confess I fail to do so. If he would like to prove this contention, then let him possess himself of an ounce of that much despised commodity, gold, and lie will find he can demand £7 in British goods and services, or £lO in New Zealand. "H.W." is evidently unawaro that those people who support the return to the gold standard do so as a protest against the heavy toll that is being made by gold on tho goods and services of the people of all countries. It can be truly said to-day that tho producers of the world are being crucified on a cross of gold, but this could not be said when nations were on the gold standard. Gold standardists are anxious to check this state of affairs and restore to all people a more equitable and just standard of exchange. Both America and Britain havo realised this. The American Congress last year authorised President Boosevclt to buy and sell gold as freely as he desired at a fixed price of 35 dollars per ounce. This means that tho Congress pledged the American producers to supply 35 dollars of American goods for every ounce of gold delivered. Likewise, Britain, by the establishment of her Stabilisation Fund of £375,000,000 was able to hold in foreign currencies, securities and gold, arresting tho flight of the British pound, and has been able during the past 3.2 months to hold it reasonably stable at £7 an ounce. Both America and Britain are therefore unofficially restored to the gold standard at a new valuation. In face of these facts, it is dangerous and futile to refer to the gold standard as a "fetish of bygone days." Gold is a very beautiful and useful commodity, and like all other, commodities, derives its value from the supply and demand. The present high price of gold is due to the fact that it is the only commodity that may pass freely between nation and nation without any restriction of tariffs, quotas or exchange control. If, therefore, \ve wish to see gold brought back to a more equitable position in regard to other commodities, then we must let all other commodities share with it. its privilege of free movement between nations. Do this and gold will lose its specific value and return to its proper sphere—a mere balancer of international obligations. J. Hislop.