GOLD, CREDIT AND PRICES

Stratford Evening Post, Volume I, Issue 74, 6 March 1931, Page 8

GOLD, CREDIT AND PRICES

The basis of credit in most countries is gold, but probably few people realise how large are the dimensions of the superstructure of credit. which is founded on gold or there would be a good deal less public support for the fundamental fallacy thai, there is insufficient credit for sound business, the Times Trade Supplement observed recently. To many it will coiae as a surprise to learn that aa additional ounce of gold in the vaults of The Bank of England means £BO of credit available for enterprise. To put it in another form, the gold in reserve today is sufficient on the existing system ioYroate credit of about £2,500,000,000. The vovy low bank rate is proof that there is ample "credit to meet all legitimate demands, otherwise by an increase in the rate gold would be attracted oa which additional credit could be based. To-day's depression is due to under-eonsuuipf ion of the products of British industry because they arc too dear in proportion to those of food arul raw materials. The reasons for this want of relativity are two. The first is the greatly increased production due to improvements in husbandry and genetics as the result of scientific discoveries; the second is the greater resistance to price reduction of organised secondary industries than of unorganised primary producers. Both these causes are at work throughout the world.