CAUSES OF THE CRISIS.

Press, Volume LXVIII, Issue 20497, 16 March 1932, Page 12

CAUSES OF THE CRISIS.

ENGLAND AND GOLD STANDARD. A FRENCH ACCUSER. [By Hartley Withers.] Just after .England was pushed oft the gold standard* M. Charles Rist very kindly gave lier a handsome testimonial in the columns of the "Economist," saying that the pound sterling had fallen, like a good soldier, lighting to support the currencies of Central Europe; and that the lall of the pound had been due to unjustifiable panic, caused almost entirely, by external circumstances In his opinion, as then expressed, the crisis would never have become so acute as it did, had it not been for the recrudescence in Europo during the previous year of a 'policy of nationalism which superimposed on an already serious economic crisis a universal sense of political insecurity. But the worst of these great economists is that they contradict > one another nearly always and .themselves very often; and now this eminent Frencn critic charges England with having bqen responsible for all the evils that the world has lately suffered, owing to the mistaken monetary policy that she; has persistently followed for ten years and ''seems unfortunately disposed to follow still."

Tli'is accusation is detailed, with sill the grace and lucidity with which Professor Rist always writes, in an article in "L'lnforniation" of January 21st. It begins bv refuting the arguments with which Sir Henry Strakosch had endeavoured to prove that reparation and war debt payments had been the cause of the accumulation of gold by the Bank of France and the Federal Reserve Banks of the United States. He misquotes Sir Henry's figures rather seriously, but, in view of tho many other influences that affected gold movements, M. Rist had little difficulty in showing that reparation and war debt payments might have been carried out without causing any drain of gold to the two creditor countries. If it had not been for the American boom and slump and the political . apprehensions arising from the Hitler'election in 1930, which made French investors - more than ever inclined to keep their money at home, the great . movement of gold into France and America might have been' avoided.

England's Return to. Gold Parity. But, not content with demolish i no; Sir Henry Slrakosch, M. llist then threw off his gloves and began punching poor old England with the accusations already mentioned. "Who," lie asks, ''provoked the formidable accumulation of gold by the United States from 1920 to 1925 but England by lier presumptuous ambition (pretention) to return to gold parity, an ambition which her enormous war debt and her enormous inflation through her currency note-issue made illusory in the eyes of every unprejudiced person?" This deadly illusion, he continues, prevented during five years the Bank of England from buying gold at a price above the old legal level and so sent all the gold offered during those live years to New York,'so causing the American boom and the almost unlimited American loans to Central Europe. Iho misuse of "which has finally produced the insolvency of a wholo division of tho world (toute une region du monde). And finally London's multiplication of credits, at a time, when &he ought to have been making every effort to strengthen herself, destroyed the gold standard that had been so painfuily re-established, inflicting the greatest shock on credit that the world had- known for a long time. Here, he says, in conclusion of this part of his indictment, we find the true origins of the actual crisis— : in a monetary policy inspired by reasons of prestige and • which took no account of realities. ,

England's Purpose. But if you please, H. Rist, it was not only our prestige that we English were thinking about when we worked to get the pound badk to' the old par between a question of common honesty. Eng--1920 and 1925. It was, in our belief, land had had, during and after the large sums left with her by foreigners, who expected that when the after-war , disturbance ■ was over England would pay that money back in pounds as good, in exchange value, as those which had been deposited. If wo had deliberately devalued the pound in 1920, as M. Rist now suggests, we should not only have robbed all those foreign creditors, but 'we should- also have giyen a much worse shock to credit than . was administered by our involuntary abandonment of tho gold standard. , It is true tliat France devalued her franc, and has since then restored her financial prestige witli magnificent success. But then, Paris never was an international banking centre in the same sense as London and had not the same necessity to consider the interest and feeling of those who had entrusted money to her. England may have made a mistake in bringing the pound back to the old par, but she can fairly claim that she acted not from presumptuous ambition but from ay honest desire to meet the just claims of lier creditors.

, And is' it true that if England had devalued the pound in 1920 this action would have prevented America from first scattering money too freely over the world and then indulging in that boom which has had such evil oonsequences? Iv was not America's huge heap of gold that drove her into these courses, because the Federal Reserve banks wore sterilising the gold. Impressed with the sense of lier new and immenso wealth and power, America first lent wildly and then gambled madly. But to suppose that England could have prevented these ebullitions hy any action in devaluing the pound is, surely, to over-rate England's influence and to under-rate America's self-confidence.

Finally, England is accused by M. Rist of having weakened the pound by multiplying credits when she ought to have been calling them in. In fact, there was for a long time an embargo on new foreign issues in the London market; and, if London had joined in the general mania for calling in cash, she might perhaps have saved the pound, but she would have made the general crisis much more acute and widespread. FARMERS' SALEYARDS. The Farmers' Saleyards, 87 St. Asaph street, report the following prices at the weekly sale:—Black gelding £2, bay gelding £2 10s, bay mare £lB, grey mare £4 15s, bay mare £2l, black gelding £l2, bay mare £5, bay maro £4 15s, bay gelding £2, bay mare £l4, Friesian cow Bgns, do. 9gns, do. lOgnn, do. 121gns, 4 Jersey cross* lieifers at £0 ss, spring dray" £9 ss, do. £JO 15s, saddle and breeching £2 10s, do. £2 Is, saddle and bridle £2 Bs.