GOLD STANDARD

Southland Times, Issue 19458, 23 January 1925, Page 5

GOLD STANDARD

MAY MATERIALISE THIS YEAR. EXPIRATION OF EXPORT EMBARGO. (By Telegraph.—Press Assn.—Copyright). (Australian and N.Z. Cable Association.) LONDON, January 21. The city editor of The Times definitely connects the recent visit to America of Hon. Montagu Norman (Governor of the Bank of England) with the question of the return of the gold standard, which, he says, may materialise before the end of 1925, when the embargo on gold export is due to expire. A return to gold, of which the course of sterling-dollar exchange gives hopes, promises two considerations, first, the removal of the embargo on the export of gold, second, a refraining from hoarding on the part of the people. Only with a free gold market will there be a restoration of the gold standard. If there is a free gold market, if the banks by surrendering notes can obtain gold in their place, then gold can be used for the purpose of aiding and easing exchange operations. With a free gold market, another function of gold would be ‘ the settlement of interbank operations at present accomplished by means of £lOOO notes. Probably gold would not enter largely into circulation. The people have got used to notes, which, although they become dirty, are more convenient to carry, and are more economical from the point of view of the authorities who provide currency. There might be a tendency to hoard on the initiation of the standard, and if the number who hoarded increased, some inconvenience might be caused to the financial institutions. It is notorious that on the outbreak of war a great deal of gold was withdrawn from the banks, and was hidden away. Some of it was in amounts running into thousands. How many of these hoards are still secreted it is impossible to say. Many hoarders, having got tired of seeing no return for their money, after a time paid the coins into the banks again. There would not be now the same incentive to hoard, the incentive based on the fear of tangible cash failing. Hoarding is more likely to take place on a threatened withdrawal of gold rather than on its actual return.