GOLD BASIS

Wairarapa Daily Times, 14 March 1932, Page 6

GOLD BASIS

FUTURE OF CURRENCY.

IMPORTANT STATEMENT

RUGBY, Saturday.

An important statement on the pound sterling and the merits of managed currency was made by the Chancellor of the Exchequer, Mr Neville Chamberlain, in the House of Commons. The Chancellor declared that the Government did not desire to sec the pound forced up to a rate injurious to industry. He could not foresee tlm ultimate "time or rate of stabilisation, but lie took the view that sooner or later we must link currency to a metallic basis, and he saw no better basis than gold. . ~ ‘ It had been suggested during the debate that wo might be forced back to the gold standard and into buying gold, but ‘’that contingency was so remote that it need not be considered. He thought it an entirely mistaken, view that the United States would be forced off the gold standard. He thought it an entirely mistaken view that the United States would be forced off the golds tandard. The measures taken there had been wisely conceived, and were having an effect, in the United States which might prove to be beneficial to the whole world. . He agreed that fluctuation m the value of the pound was most detrimental and that speculation taking place in sterling was injurious and disturbing to trade. Obviously, the power of manaoUvo- currency had diminished, when thev°had at present such an enormous volume of short-term money aiailab e throughout Europe. If they ueie t manage currency, it would have to done on a very large scale ui&cc . As to the ultimate policy o£ the Gov eminent, he expressed the purely personal opinion that he was not attracted by the idea of managing currency because sooner or later we should find that we had to link currency to a metallic basis. Whetliey they should stick to gold or mix with it something that would help them out, lie did not knov, but lie did not see any bettei basis than gold, which in the past had sei cd well. Although for the time being our c urenev was a managed one, it sliou not be assumed that it was going o a permanent policy. The MacMillan Committee came very definitely to i conclusion that, if management the c was to be, it ought not to be m the hands of the Government, but m the hands of a central banking institution. With that he freely concurred.