THE GOLD STANDARD

Otago Daily Times, Issue 21243, 26 January 1931, Page 7

THE GOLD STANDARD

PRINCIPLES OF WORKING. REPORT TO THE LEAGUE. (United Press Association.) (By Electric Telegraph—Copyright.) GENEVA, January 24. (Received Jan. 25, at 9 p.m.) The second interim report of the League’s gold delegation deals with the working of the gold standard. The rapporteur draws attention to the fact that it has not dealt directly with the problem of whether there is a direct relationship between the- present economic depression and the gold position, as the terms of reference were drawn up before the depression, but it indicates the principles on which the efficient working of the gold standard depends. The report proposes a number of measures which are considered necessary to achieve the beneficial distribution of gold, including, first, the granting to monetary authorities of powers to pursue the necessary credit policy- to meet the circumstances; secondly, international agreement regarding a reduction of the existing minima of gold reserves in central banks; thirdly, maintenance of the present general practice of not circulating gold coin; fourthly, close collaboration between the central banks; fifthly, improvement of the mechanism for issuing foreign loans and promoting international transactions in existing securities. The report expresses the opinion that restoration of confidence could perhaps accelerate the slow processes by which the political and economic causes which affected the distribution of gold after the war should work themselves out. It points out that gold standard countries automatically assume responsibility for conducting an economic financial policy, maintaining confidence and facilitating the general working of the standard, but the automatic application of mechanicism is inadequate owing to post-war conditions increasing the occasions when conscious direction is necessary. These principles should lead to a more economic distribution of gold in future, assuming that political and " economic conditions do not create disturbances that no monetary policy could hope to counteract.