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Hokitika Guardian, 22 May 1928, Page 2

The Currency and Bank Notes Bill just submitted to the House of Commons is- likely, considers the Auckland Star, to prove a highly contentious piece of legislation. As a matter of fact, the Bill, as its mover explained, is tlio logical sequel to Britain’s return to the gold' standard. Up to 191-1 the Bank of England enjoyed a virtual monopoly of note issue in Britain, controlled the amount of money in circulation, and regulated credit for the whole kingdom at once, with strict reference to l the amount of its gold reserve. When the exigencies of the Great War appeared to demand the issue of inconvertible paper, the Bank ceased to control the financial situation. The Treasury put into circulation about £480,000,000 of £1 and 10s notes, thereby inflating the currency and producing a prodigious rise in general prices. The return to the gold •standard was a. vigorous attempt to remedy the evils attendant on this inflation, and to restore Britain’s financial system to its normal condition. But the restoration of the gold standard, even though no attempt was then made to render all notes convertible into gold, was unpopular because it meant falling prices, and therefore reduced profits and restricted credit. But it was also condemned on theoretical grounds by a number of influential authorities. Mr J. Keynes and writers of his .school maintain that the world’s> finance .should no longer be permitted to depend on the relative scarcity or abundance of gold. Mr Snowden, in supporting lire proposals of the Geneva Conference of 1922, maintains that the issue of notes should not depend simply on the amount of the* Bank’s gold reserve or the discretion of the 1 Bank s management. but should lie regulated in accordance with the public needs as evidenced by the rise and fall of prices, and should be coni rolled by a ‘‘public corporation,” including representatives of Labour, presumably operating on international lines. The further complaint that the Bill will unduly restrict the amount of currency will be strongly supported by those who apparently ignore the evils of inflation al together. The Bill trill probably pass, but it wi'l certainly arouse .strong feeling and vehement public discussion at Horne.