GOLD STANDARD

Hokitika Guardian, 23 September 1931, Page 6

GOLD STANDARD

MR SNOWDEN EXPLAINS. BRITISH POSITION SOUND. (British Official Wireless.) RUGBY, September 22. Speaking in the House of Commons Rt. Hon. P. Snowden (Chancellor of the Exchequer) said:—“France and the United States have now acquired three quarters of the entire gold in the world, and in their vaults it is largely sterilized and useless for the purpose of prohibiting international trade.” For him to make this historical statement of the position was not, Mr Snowden insisted, to overlook help that was recently received by Britain from France and from the United States, and he went on to pay a warm tribute to those countries, and particularly to the French bankers, wfto, he said, had maintained their London balance's practically intact. A temporary suspension of the gold standard was necessary, the Chancellor explained, not because of any disorder in internal finance, but solely by reason of the pressure on Britain’s exchange. By balancing the budget, we had made the internal position secure. Those who now displayed confidence in sterling, he stated would find it misplaced. Apart from the sales that would be due to temporary nervousness, there was no reason why sterling should depreciate to any substantial extent, or for any length of time, provided 'that the finances of the country were administered with proper care. With a balanced budget, there was no danger of there-being--an uncontrolled inflation. The country could face the position with calm confidence. Britain’s ultimate resources were great, and the Government could watch the situation carefully.

At the same time, lie said, they were entitled to look for some recognition by their creditor countries of their responsibilities. The immediate crisis might be as serious to the countries dependent otn London.' as it was to Britain herself. The world, be said, must learn that the existing economic system could not he maintained if everybody tried to maintain it by liquidating their investments. He hoped that this crisis would pave the way to better international cooperation. APPEAL FOR, UNITY.

■ Mr Snowden concluded with an appeal for unity, h e said: “We must get together as a nation, and set to work to build up our position. A new question, our adverse trade balance, will have to he dealt with. In the process of the rebuilding, we may have to adopt, many experiments—-as we did in connection with the budget—which, in other circumstances, would be repugnant. If we keep calm the country’s inherent strength will

Air Snowden said that the Gold Standard Suspension Bill imposed no restriction on the importation' or the exportation of gold, or on the free transit of gold placed in tlie safe custody of the Bank of England by foreign Governments and by Central Banks'. Moreover, , the obligations ip foreign currencies would continue- to he met The Government had decided that it would he contrary to the national interests to allow further gold to go. Any- further delay would have benefited those who showed the least confidence in sterling at the expense of those who had maintained their balances in London. The banks would now scrutinise all demands for exchange, except for present purchases, and all conversions other than those for bona fide commercial requirements. The foreign banks in London, he said, were co-operating in this matter. The Government, however, were taking powers to support, and to reinforce, if necessary-, the voluntary' action of -the banks.

' Suspension was expected

HOPES OF CURRENCY REFORM

In general an optimistic feeling prevails that the’ spectacle of a great financial-Power such, as Britain, forced off the gold standard, not ■througOi any internal weakness, but by malfunctioning of the world’s monetary system, followed by demoralisation, will have. a salutary effect in waking world opinion to the need for concerted action to deal with the fundamentals of the depression.

The decision of the British Government, temporarily, to suspend the gold standard has not greatly surprised the business community. Press opinion, which is generally shared in city circles, is that the Government has taken a firm well-considered measure to deal with the situation that ■was becoming impossible, and the eventual position will be of benefit to Britain and the world at large by festering international consideration of currency problems affecting almost every country. The gold holding by the Bank of England after heavy withdrawals of foreign capitaJ, still remains a.t 1000 millions, and it 1S considered wise in view of all the contingencies to prevent further reductions in this reserve, the decision of course does not affect the obligations of the Government or the Bank payable in foreign currencies.

The Government’s belief that the present exchange difficulties will prove only temporary, is. generally shared in informed unofficial quarters. The decision has hem received until complete calm'' everywhere. It is announced that the Stock Exchange will remain closed to-morrow. In the -sfcsence of official quotations, only a very small volume of foreign exchange business was done. The dollar was unofficially quoted at 4,25.

SNOWDEN ON GOLD SHORTAGE. U.S.A. AND FRANCE. LONDON, September 21. ■Speaking to-night on the general aspect of the situation, the Chancellor of the Exchequer, Mr P. Snowden, said the distribution of the world’s supply of gold had long been under the consideration of the British ' Government and the Bank of England. They had 'sought co-operation towards finding a remedy. They would have called a conference, but it was made abundantly clear that such a proposal would have been unwelcome to other Powers, and therefore was foredoomed to failure.' It might be that the present crisis would bring home the pressing necessity of concerted action, and the British Government would miss no opportunity of urging the importance of holding a conference on this problem. .Britain’s post-waa - financial record, declared Mr Snowden, was honourable. “We .set the example botli as to meeting obligations and helping reconstruction, and if we failed, it was because the undertaking was too heavy. It does not seem to me that other countries can challenge our endeavours. We exported to America during and immediately after the war, actual gold to the value of 322 millions, to discharge our obligations. We funded our war debt to the United States. I undeii-stand that we paid 280 millions, representing 30 per cent, of our debt at the date of the fund. Although the British debt to the United States, our payments represent 83 per cent, of the total payments they have received.”

.“The Times’s” city editor points out that withdrawals of gold Irom London were chiefly for the purpose of supporting the position in foreign centres, which have been feeling acutely the effects of the world crisis.” He says: “The responsibility for the temporary abandonment ol the gold standard belongs to those countries, which have been hoarding gold on an unprecedented scale.” Tbs point is emphasised in most papers. BRITISHERS IN RIVIERA. RETURNING TO ENGLAND.

PARIS, September 22. Effects of the fall in the value of sterling are already -being felt in the Riviera. A great trek homewards has begun among the British expatriates, who had settled there when the franc was soaring. Now the pound is unofficially quoted at from 100 to 108 francs, and they are thus losing from three to four shillings on every pound, and they are, ottering to let or sell their villas to (French people, who will miss their money also, as it is estimated that British tourists .spend twenty millions sterling- yearly in France: 'Phis will be cut down by at least half inext year. MINOR U.S.A. BANKS. SUSPEND OPERATIONS. NEW YORK, September 21. The Eauciaire (Wisconsin) State, Bank, with resources of four million dollars, and the Union Savings Bank, a smaller institution, closed to-day. The sale of the Edclaire State Bank’s assets to the North West Bank Corporation of Minneapolis was in progress, but was stopped by the news of the British move off the gold standard. The -Wilkcsbaire. (Pennsylvania) Liberty Bank Trust Coy., capitalised at 325,000 dollars, closed to-day. At Pittsburgh, in Pennsylvania, three local banks closed to-day “to conserve their assets and protect their depositors.”

INTER-EMPIRE EXCHANGE LONDON, September 21. Commenting at length on what he describes a s a “real starting point of cheaper production and a return to prosperity,” Mr Arthur Wade, financial editor of the “Evening Standard” in an article in that paper says : “There is plenty of food in England while in the Dominions there are willing suppliers for food wants and willing buyers of goods and manufactures in return. There is no need to fear foreign exchange troubles in our relations with the Empire. InterE'mpire trade and exchange transactions balance out very nicely and promptly. Personally, l believe that a trade revival in England will begin this year. THE £ WILL NOT CO OUT LONDON, September 22, The“ Daily Telegraph”, says: “There is no need to fear a fight from the pound on the parallel of the flight from the mark or the 'ratio British currency is not inflated. I n ‘ financial condition of the. country is fundamentally sound, nothing, therefore, in the shape of a currency slide need he anticipated, though some depreciation of sterling must be expected.” The “Daily Mail” describes the decision as “welcome news, which takes n load off British backs,” and it praises the Prime Minister for “the strong line lie has taken.” SUEZ CANAL DUES. PARTS, September The Suez Canal Company have decided that the canal dues which for merly have been payable in sterling, ‘.oust now he paid m gold francs. This decision involves increased expense to British shipping.

BALANCED BUDGET HOPEFUL.

RUGBY, September 21. Referring to the gold standard decision at the Indian ledcral Structure Committee, Sir S. Hoar said: “Britain’s system of national finance is a s - sound and honest as any ill* the world, and the inherent wealth and productive power ol the nation are almost limitless. A way had always been paved for a revival of confidence in this country, when the crisis broke upon us, precipitated by action, not of British citizens, hut of other nations, nervous as to the conditions in their own countries and ignorant uf the true position of Britain. For a temporary period therefore tin country will be-obliged to protect itself in the manner announced. The ease must, however, be viewed in its true proportions. At the moment when almost every other country is faced with a large deficit. Britain is now balancing her budget, heavy burdens. being willingly shouldered by the taxpayer, and drastic retrenchments being made in all possible dilutions. The Unemployment finance has been overhauled, and hollowing for this, purpose is ended. The basi for stability thus has been laid and the foundations necessary for a full restoration of confidence firmly seemed.

INDIAN ON THE STERLING BASIS RUGBY, September 21. At the Indian Conference, Sir S. Hoare referred to the effect of the British suspension of gold payment® on India. He said that since fixing the rupee by statute. at Is (;d, sterling. had. until to-dav been, synonymous .with gold, and for all practical purposes, the stabi ity of the Indian exchange had been based on sterling Indian trade was financed through sterling, and the greater part of India’s external obligations is in terms of sterling to follow gold, and sq to increase the sterling value oi the rupee at this juncture was out of the question. It was therefore decided to maintain the present currency standard, on a sterling basis. He was satisfied this was the right course for Indian interests, the'Viceroy, to-day issued an ordinance temporarily relieving the Government-of the obligation under the Currency Act, to sell gold, and the sterling hanks and markets throughout India will remain cloged to-morrow.

RISE OF PRICE LEVELS. LONDON. September 21. The price.of many commodities are already showing advenes in Britain. Notable increase are:—Cotton, a fnrfhing a pound; rubber, seven-six-teenths of a penny; and metals and sugar have also risen in price. The* wheat business! pn the foreign exchange is practically!'pt a strndsti' 'awaiting events on the Continent'll exchanges. NOT AN ILL WIND. LONDON, September 22. The ‘'‘Morning Rost’* paints -out that the cheapening of sterling will make it easier for Australia, India and Argentina to meet their sterling obligations... '