Thames Star FRIDAY, DECEMBER 1, 1933. THE GOLD STANDARD.

Thames Star, Volume LXIV, Issue 18972, 1 December 1933, Page 2

Thames Star

FRIDAY, DECEMBER 1, 1933. THE GOLD STANDARD.

“With malice towards none; with charity for allj with firmness in the right, as God gives us to see the right.”—Lincoln.

The very great rise in the price of gold shows that there is a great demand for it, which can only be justified by the belief that in the not distant future gold will become once again the standard of international currency. When this takes place the price of gold Avill again be stab- , ilised, and considerable interest is naturally aroused as- to what the point of stabilisation will be. Although it is possible for a Government to declare bank notes, silver or other forms of currency legal tender for internal purposes, the only means hitherto employed - for t adjusting international balaiiccs has been gold. Imports are ..paid, for , by exports, and when the balance is not adjusted the exchange rate rises until a point is reached when.it. pays better to export. gold, rihan to .buy exchange. Up till l9i| the. production of gold kept pace with the increased structure of credit, but after that time. it lagged behind owing to the phenomenal increase of credit during the Avar and to the fact that some countries built up gold reserves Avhich Avere immobilised and ’ not used as a basis for currency and credit. BetAveen 1929 and 1933 ' the gold reserves of 50 countries iii- ' creased from £2316 5 millions to £2700 millions, of which total the United States and France had about tAvo-thirds. In September, 1931; Britain found it impossible to remain on the gold standard, and this year the United States has folloAVed suit. At present the United States is buying gold; at inflated values in the hope of forcing up internal prices. It had been hoped that the World Economic Conference which met in June last would be able to reform currency and stabilise values, but President Roosevelt refused to take part in the discussions OAving to his difficulties at home, Avith the result that nothing could be accomplished. At the present time France and one or tAvo of the smaller Continental countries remain on the old" gold standard. The French people are rather restive under the deflation caused by this position, but there is a strong feeling against inflation, which Avas experienced after the Avar and hit the large number of investors in Government securities very hard. The United States dollar is in the air and no one can tell wvhen or at what level it Avill ultimately be stabilised. Britain and a number of other countries form a sterling block in Avhich conditions; are comparatively stable, but Britain, as an exporter,'has profited by her inflated currency and is unwilling to give the advantage to, the United States which she would gain by a dollar depreciated beloAV sterling. The real difficulty is that the United States Avishes to increase her exports, but is unwilling to increase her imports. She does not realise that since the war she has become a creditor country and must therefore import more than she exports. So long as she excludes imports there Avill be a drain of gold to America to pay for exports, and this makes Britain very chary of returning to gold, which she might be forced to abandon again. There is general agreement that there Avill bo no return to the old gold standard in either Britain or the United States. Before September, 1931, the pound sterling contained 113 grains of fine gold, Avhich Avas equivalent to £4/4/ll£ an ounce. It is suggested that thp pound may be diluted to 70 grains of fine gold, Avhich Avould put the price of gold at £6 17/3 sterling an ounce of 480 grains. With the dollar and franc at a similar level international trade Avould slioav greater activity. The big reserves of gold in the United States and France are a hindrance to action being taken, and we can only Avait and see. It does, however, seem certain that gold will never . fall to its old level.