The Waikato Times. With which is incorporated The Waikato Argus. FRIDAY, OCTOBER 28, 1932. THE GOLD STANDARD.

Waikato Times, Volume 112, Issue 18778, 28 October 1932, Page 6

The Waikato Times. With which is incorporated The Waikato Argus. FRIDAY, OCTOBER 28, 1932. THE GOLD STANDARD.

The fall in the value of sterling is somewhat mysterious. We have not been told of anything whloh has happened to cause uneasiness. Reference Is made to a speech of Mr Ramsay MacDonald on unemployment whloh is said to have been misunderstood, but although foreign flnanolers are known to be nervous it can scarcely be that it is as bad as that. We must not forget the penalty of going off the gold standard. Naturally we have not enlarged on it, but to foreign Investors it meant a serious loss. When they withdrew money which they Invested in England they received from 14s to 15s in the £. It is not wonderful that the countries wh'lch are withdrawing capital are those countries which have remained on the gold standard, together with France. That country stabilised her currency at 4s in the £ and caused heavy losses to investors, her own citizens and foreigners, and has ever since lived in fear of maklns similar losses with other people. It was France that withdrew so much gold from the United States, and though the possession of the metal did not help that country, which had more gold than it could use, the loss of 11 frightened her. Ignorance respecting ourrenoy has much to do with these panics. In France and the United States there has been much hoarding of gold, in the United States from fear of the banks. In India there is always hoarding; it is traditional and due to the times before British occupation, when no man’s possessions were safe. Fortunately there is a good side to the Indian hoarding, for the high price of gold has tempted the holders to sell, and this has strengthened the Bank of England, and enabled loafis from Franco and the United States to be paid off. The present run on sterling is one more illustration of the fact that the world is sadly in need of a standard of value and that gold has ceased to he able to perform that function. Since the immense increase in the amount of international loans, the gold in existence has been insufficient for exchange purposes, for it is usually the movement of money and not that of goods which affects exchanges. Then the lack of comprehension of how the gold standard should be worked, on the pari of France and Ihe United Stales has brought the whole question to a head. A member of the British Cabinet said recently that Britain would not return to the gold standard at any

parity, until she was assured that Its proper working was understood, and if that be the last word the return is distant indeed. In the nineteenth century London was the financial centre of the world. She lent money to nations which were developing their resources, and took payment of the interest in goods, mainly food and raw material. Now financial control Is shared with Paris and New York, while Britain, herself, puts difficulties in the way of payment of interest by foreign borrowers. There can be no stability under such conditions. Hitherto the settlement and progress of the world have been carried on by the supply of funds from old and wealthy countries, but if interest cannot be paid loans will not be made, and the world will stand still or will at least progress very slowly. When countries do so much of their trade Internally, it may seem unreasonable 'to think that protection can exercise so blighting an effect. But no country can be self contained, though some may come nearer to it than others. Robinson Crusoe offers the best known example and appears to be the model which some people set before 'themselves. The effort to be self-supporting leads to a lowered standard of life. It is going to make the existence of- any standard of value impossible, for whatever may be taken as. that standard will be accumulated by countries that persist in selling more than they buy. It Is clear that every country cannot sell more than it buys, and the effort to do so leads to restriction of imports and finally everyone sells less. That is what has happened to us today.

The world badly wants a standard of value, but it is impossible to obtain it until more has been learnt about how it should be worked. For want of that standard an element of chance enters into every international transaction, and business loses the’ stability it should possess. Experts and author 4 ities understand this in many countries but the vested interests behind protection are strong. Those who disouss the matter with politicians find that it is not the economic argument that appeals to them but the consideration of the lobbying and the special interests to which they will be subjected. A special effort will have tp be made in every country to overcome this blight which has spread like a noxious weed. Every country wants every other country to begin first, and hopes to be allowed to take an unfair advantage. In the meantime the gold standard like other benefits which we might enjoy becomes a hopeless boon.