GOLD VALUES.

Poverty Bay Herald, Volume LI, Issue 16805, 11 August 1925, Page 5

GOLD VALUES.

(To the Editor of trie Herald.) Sir,—Surely the knowledge that the money changers have by reversion to what they call the geld standard, placed a 10 per cent, embargo upon British exports at such a critical time as the .present in Empire affairs, will give a fillip to some reform in our present day system of exchange and a tendency toward the understanding that as the whole kingdom is affected, the governance of gold values becomes a State duly and not the sport of private endeavors and gam.

Speaking generally, the volumo of our currency is the sum of our credit-, expressed per medium' of bank note issue. This noto issue is converted into gold by the sale of our products overseas. M we can convert a El note into 21s worth of gold, our standard ooin is at a premium. If we are only realising 19s 6d it is at a discount. When it is at a discount the sovereign is withdrawn and overseas payment is made in bullion. When at a premium, gold is coined again and used for this purpose, because as an index to the value of our currency it has a purchasing power of 21s. When the money changers, by means of this reversion to an increased gold value—tfie sovereign—for the purpose of their exchanges, are enabled to collect that Is in the £, they naturally place the industry using the currency in the position of having to make it earn more, or else at a disadvantage with foreign competitors. The Federation of British Industries claims that by virtue of this reversion, their exports are now 10 per cent, dearer to foreigners than before, and Mr Keynes states, in your columns, that as an inevitable consequence a general wages reduction is necessary in order to reduce costs.

If casts are sufficiently reduced our ability to make the £1 note earn 20s is reinstated. If it not the volume of currency decreases and the unemployment problem becomes still greater than before. The standard ooin should never he used to effect foreign payments. It was originally installed to adjust the value and volume of token money when convert ability was direct. In these days of theoretical convertaibility, it- is misused arid diverted from its original purpose. Gold is Ihe basis of exchange and gold coin the caesarean loan to the people to obtain their confidence in the use and circulation of token money. By alternate use of the gold basis, bullion, and the gold standard coin, for foreign exchange adjustments, a fluctuation is engendered which the gold basis was designed to allay or prevent.-—-I arti, etc., INTERESTED.'