GOLD AND EXCHANGE VALUES.

Hawke's Bay Herald-Tribune, Issue 120, 7 June 1937, Page 6

GOLD AND EXCHANGE VALUES.

Again, at an interval of only two monthS, we luave word of something of a panie on the gold market, followed by a rush to unload the pfeciouS metal in London. Early in April consternation was caused by a rumour spread abroad that Presideut Roosevelt intended malting some appreeiable reduction in the American standard pfice of 35 dollars ati ounce, of, in other words, that he meant to further depreciate fche United States dollar in terms of gold. It was not altogether Witb promptness that he contradicted this rumour, but he did so and thc scare died down. Now something of the same kind would seem to have been revived. Whether this is from New York or not cannot yet bc said, but in any evetot he has in this instaUce been quick to deny any contemplated change in his monetary policy. At the same time, too, thc new British Chancellor of the Exchequer, Sir John Simon, has on hi> part announced that his Government 's policy as to a resumption of thc gold Standard also remains unchangedThese two announcemehts have had the effect of calming apprehensions, from whatever source arising. But this was not • until some £7.million,s worth of "hoarded" gold had been dumped fthm abroad upon the London maTket in exehange for British stferling — a fair tribure to the high regard in which British currency is held. Here, again, the British Government 's Exehange Equalisation Fund has comO to the rescue with its avowed purpose of attempting to secure stability ij) international exehange rates. At the same time, we have to recognise how greatly, despite the dropping of the official gold standard, the exehange values of national currencies are still estimated in terms oi gold, When Great Britain abandoned, or suspended, the standiard, thc exehange value of sterling at once fell deeply in those countries which still adhered to the standard. Then the United 8tates, realising a con sequent disadvantage in foreign trade, though still nominally maintain ing the standard, reduced the "gold content'' of the dollaij so as to restore the old part of exehange between the Atnerican dollar and British sterling. It is now in terms of either sterling or dollars — tb> latter still ostensibly basesd on gold-^that the exdhange v&llies of prac tically the whole trading world are calculated.