BRITAIN’S POSITION

Hokitika Guardian, 28 October 1931, Page 2

BRITAIN’S POSITION

EFFECT ON ABANDONING GOLD STANDARD. AUCKLAND, October 24. An explanation of the effect of the abandonment of the gold standard, and the result- -seen in the industrial world, was given to the British Manufacturers’ association by Dr. H. Belshaw, Professor of Economics. The abandonment of the gold standard, he said, was designed to prevent the steady chain of gold out of Britain, but it was unfortunate that the economy report and the collapse of Germany should come about at that time. Both made for a lack of confidence in Britain on the Continent,. The effect- of the abandonment of the gold standard would be to discourage imports and to encourage exports. While cost® for the latter remained steady, prices, interpreted in terms of foreign currencies, would go up. But there was something to be said on the other side. Prices of raw materials and foodstuffs imported would increase also. There would be a strong tendency for inflation, induced by the business revival, but provided means were taken to prevent it getting out of hand, that might be an advantage, because it meant am additional stimulus to business. The chief ground for optimism was that the benefit to the export industry and the mild inflation might break the spell of depression and set British industry on the road to recovery. The permanence of the revival depended on subsequent financial policy. As far the the Dominion was concerned, Dr. Belshaw said there was no reason to suppose that the present position of exchanges would immediately improve because! of the abandonment of the gold standard, but that it would indirectly improve trade conditions through .the export prices. “Personally, I would rather see the rate of exchange remain at 10 per cent, for a while because of the bonus to exporters,” lie said.