The Timaru Herald SATURDAY, DECEMBER 19, 1925. PUT TO THE TEST.

Timaru Herald, Volume CXXIII, 19 December 1925, Page 8

The Timaru Herald SATURDAY, DECEMBER 19, 1925. PUT TO THE TEST.

With, the hunk rate standing- at 5 per cent-, an exceedingly ■ keavy strain is being imposed on Entisn industries, since tne manufactured. pruducts 1 ox Dritisli industry and ski 11 have to stand the test not only as regards quality but also price,'in the markets ox the world. Hence Mr Churchill’s policy of returning to the gold standard last April is now being put to some sort of a test, although the real test will not come until all artificial restrictions, such as the embargo on foreign loan issues in London, are finally removed. The withdrawal of gold from the Bank of England for shipment to the United States marks the beginning- of the present test. It is understood that, the greater part of the £1,566,000 of bar gold taken from the Bank on one day early in October was shipped to New York. Britain’s big visible adverse trade balance—that is, the excess of imports over exports — and the reduction of visible exports have, as a result of the war, reduced Britain’s power of retaining gold reserve® in a fine gold I market. Whether this power lias been reduced to a dangerous point, has still to be seen. Thei extent ol the shipments of - gold to the United States will afford some indication of this. These shipments are arranged by the banks and exchange dealers as a result of the fall in the exchange rate for sterling in New York. _ The rate fell to a point at which it became cheaper to withdraw gold from the Bank for shipment to New York, for turning into dollars there, than to buy exchange remittances in the market. Heavy shipments of South African gold, amounting, it is estimated, to about £2,500,000, recently reached London. Another gold import is that of £BOO,OQO from Russia. Whether these imports will 'go into the Bank of Eng - - land’s reserves is not yet certain, but it is reported that the Bank recently bought a large sum in gold, stated in some quarters to b© £1,500,000, that has not yet. appear in its daily bullion return A factor on the encouraging side is the great increase in the profits that, are being earned by rubber and tin-producing companies. These profits accrue mainly to British investors, and in so far as they are obtained from consumers abroad they count as an invisible export. Naturally the pessimists are loudly declaiming the decay of British industrialism but England is by no means down and out, and although the restoration of the gold standard may not have accomplished all its advocates forecasted, vet the spirit of the people is still undaunted, and the Old. Land will undoubtedly null through the present crisis to- final victory. \