THE £ STERLING.

Press, Volume LXVIII, Issue 20495, 14 March 1932, Page 11

THE £ STERLING.

MERITS OF MANAGED CURRENCY. MR CHAMBERLAIN'S VIEW. LINK TO METALLIC BASIS. IBKITISB OFFICIAL WIRELESS.) RUGBY, March 11. An important statement on the £ sterling and the merits of managed currency was made by the Chancellor of the Exchequer in the House of Commons. Mr Neville Chamberlain said that the Government did not desire to see the pound forced up at a rate that would bo injurious to industry. He could not foresee the ultimate time or the rate of stabilisation, but he took the view that sooner or later Britain must link her currency to a metallic basis. He saw no better basis than gold. "It has been suggested during Ihe debate that we might be forced back to the gold standard and into buying gold," the Chancellor said, "but that contingency is so remote that it need not be considered." He thought it was an entirely mistaken view that the United States would be forced off the gold standard. The measures taken thero had been wisely conceived and were having an effect in the States, which might prove to be beneficial to the whole world. He agreed that fluctuation in the value of the pound was most detrimental and that the speculation taking place in sterling was injurious and disturbing to trade. Obviously, the power of, managing currency had diminished when they had at present such an enormous volume of short-term money available throughout Europe. If they were to manage currency it would have to bo done on a very large scale indeed. The Ultimate Policy. As to tho ultimate policy' of the Government, he expressed the purely personal opinion that ho was not attracted .by tho idea of managing currency, because, sooner or later, Britain would find that she had to link her currency to a metallic basis. Whether they should stick to gold, or mix it with something that would help them out, ho did not know, but he did not see any better basis than gold, which in tho past had served them well. Although for tho time being the currency was a managed one, it should not bo assumed that tho Government intended that it was going to be a permanent policy. The Macmillan Committee came very definitely to the conclusion that if there was management it ought not to be in the hands of tho Government, but in the hands of n central banking institution. With that he freely concurred.

GOLD STANDARD. > BRITISH SUSPENSION RE-ENACTED. EFFECT ON WHOLESALE PRICES. LONDON, March 11. In the House of Commons, in moving the precautionary re-enactment for a year of the Gold Standard Amendment Act, Major L. Hore-Belisha (Secretary to the Board of Trade) said that happily the prediction regarding food exploitation had been falsified. Indeed many of the gold countries had linked their fortunes and prices with Britain's, with the result that 59 per cent, of the food was now importer from non-gold countries. To that extent possible damage to Britain's household budget waß restricted. Furthermore, the strength of Britain's purchasing power abroad had induced some countries to adjust themselves to Britain's purses. The wholesale prices in the gold countries, had fallen nine per cent., which further restricted the area of the damage. Many foodstuffs, including Australian and New Zealand butter, were cheaper. The average reduction on all foodstuffs was 10 per cent, compared with 1930. Mr A. M. Samuel urged that Britain should have the power to defend herself. An abnormal influx of gold forced on her might have peculiar results, even forcing her back to the gold standard if there was a flight from the frano or dollar.

' The Bill passed its second reading without division.