The Guardian And Evening Star, with which is incorporated the West Coast Times FRIDAY, OCTOBER 17, 1930. GOLD RESERVES PROBLEM.

Hokitika Guardian, 17 October 1930, Page 4

The Guardian And Evening Star, with which is incorporated the West Coast Times FRIDAY, OCTOBER 17, 1930. GOLD RESERVES PROBLEM.

Bankers and economists recently all over the world, have been giving considerable thought ‘to tae v’exi-u of iUitional go'ld reserves. Long . before the Great War this complex and abstruse problem had engaged the attention of economists In that the outspread of commodity values, as compared with the actual bullion in reserve was becoming a matter of concern, and it was recognised that whilst nations ostensibly held to the gold standard, the fixture oil gold standard values deeply affected business in every;.phase and direction, Since the W«r, and with the . eruption of international war debts account into the economic field, the dislocation of exchanges has been a source of considerable anxiety. Although something has been done to bring about ,an equilibrium of valuer, there is still room for much improvement. In Great Britain, especially, and also the United States, this subject has been a prominent theme of discussion for the pajit ten years and a vast number of articles and more extensive publications have appeared pointing out the embarrassing effects or the “losing pound.’’ It is well known that the emphasis of the gold reserve has shifted from time to time, and the result is that, whilst at clivers intervals the emphasis of gold reserve is a,t Paris, or London, or New York, its security is not all that could be , wished. On this topic Sir Josiah Stamp, whose intimate knowledge of fiscal matters and their effect on the world markets is well known avers says a New York financial publication, that the rapid appreciation of the value of gold, and the accompanying fall of prices, “is making the position of debtors all over the world more serious.” Of this he gives a startling illustration, which has more than once been referred to by various British experts. “The change of gold value of 25 per cent during the past four or five years has, in effect, added the equi valent of many millions of pounds to the British national debt,” he tells us: and this at a time when everybody imagines that it has been diminished by substantial payments. Most people have this idea, One eminent authority estimated that the increase of England’s national debt during the past eleven years, in finite of payments made, has been in the neighbourhood of three hundred million lpounds. Whatever the exact amount, it is evident that hankers and fiscal are agreed about (the d is bur banco oJcnsioncd by tins, capricious fixation of Values; and the Bank of England director affirms it is “introducing the same sort ol chaos into business and international relationships as would ensure if the yard, the ton and the day were capriciously variable ” What is urged is that ■there should be a morie intelligent international handling of the existing gold reserves, so as to better provide for a more enlightened and uniform system of credit, and in turn free the industrials in the various countries from hardship. It is true that in. Great Britain the war debt annuity payments tend to convert nil outside obligation into an external debt. But it is also true that the Government is losing upoii this transaction since bonds are issued at a low rato of interest and redeemed at a high rate. The only way out of this untoward situation is some more equitalhle system of exchange which

will tend to revive trade prosperity. This vital subject is one that calls for adroit management. Meanwhile Sir Josiah Stamp has touched upon a live question by commenting upon the pracluical economic 'influence wielded by the gold reserves quotas and showing their enormous importance as respects the operation of the business markets.