The Guardian And Evening Star, with which is incorporated the West Coast Times. FRIDAY, MAY 6, 1932. MONEY VALUES.

Hokitika Guardian, 6 May 1932, Page 4

The Guardian And Evening Star, with which is incorporated the West Coast Times. FRIDAY, MAY 6, 1932. MONEY VALUES.

Out of the present departure from tire gold standard, Britain is likely to ovoive a new basis for money values. The position was reveived at Home, lately by one of the foremost politicians. Addressing his constituents,* Sir Robert Horne said that the recent increase, in the exchange value of sterling was at once a tribute and an •embariUjsment—a tribute because it indicated the >surpassing confidence of the work! in Britain, an embarrassment because it introduced an upsetting factor in a monetary situation which for some time had been comparatively stable. Foreign speculators, takin,<r the view that the British pound wo ltd steadily increase in value, were buying British pounds with avidity and leaving their money here. “This is had money for us to harbour, and precarious to hold. It might depart as the precursors did last year as a moment when it ill suited us. In tlie meantime it does us the disservice of forcing our pound up to an artificial level.” Once they were off the gold standard it was obviously expedient to lea' the pound fall till it assumed the level at which they could conduct international trade, with profit and support the burden of debt, Any increase in the value of the pound which by Speculation Of otherwise raised it above its true trading value created a check and impediment to every, manufacturer in the country and increased' the burden of the taxpayer jn the payment of the interest due on the colossal sum of War debt. It was above all things incumbent on those who managed me country’s finances to counteract by every means in their power all such subversive tendencies. “I do not hesitate to ,say that the pound to-day ■is too high. Wo are a trading nation. We can only survive by trade. We are in a position to choose our course. With a pound at an appropriate level wo not only help our export trade, hut we make it possmie for our debtors to pay their debts, and we assist those who with us aie off the gold stand rd to buy our goods. Rightly guarded, we are in a position to become the centre of a great area of the world trading on a sterling basis and pouring rfew life blood into the commerce of the nations.” There are. the general promises on whi&h hankers are working at present. It i., the practice in certain quarters to rail against the banks a.s something of a bane to the national welfare. The fact is that the banks are a great institution for the public weal, and ■were they to break down in their service, .a national calamity would ensue. Finance is a very nervous eoinmocfmy in times of stress, and is alarmed very easily. It is all for the good of a country that- the banks have confidence in the national policy, and the people can have confidence in both. While those mutual relations agree all is well with the financial outlook, There is every indication of a change coming in,* regard to the security for money values. Go’d as the staple basis is diminishing In output, and that annual loss may he, Increased, unless material discoveries are made. Then what is to take the place of gold? It may he that there will bo a demand for bimetallism. In his speech Sir Robert Horne pleaded for the remonetisation of silver and the establishment of a bimetallic monetary standard. He said there were two problems arising out of gold scarcity: —(1) To mitigate if possible the prei:»:nt disequilibrium icaused 1 by the scarcity of gold in all countries other than France and America; and (2) to provide against the inadequacy ol the gold supply in the years ahead. He suggested' that the remonetisation of silver was the best way of dealing with them. He agreed with the Chancellor of the Exchequer's statement that the world required some metallic basis as the foundation for international exchange, and the international exchange could not he operated upon a mannged paper currency. He was glad to note the indication in the Chancellor’s speech that, while Fi© believed in gold a.s providing the most efficient basis, he did not shut out the possibility of its being united with some,thing else, the implication being that the Chancellor contemplated the possibility of a return to a, standard composed both of gold and silver. Such a union would afford the .safest method by which a reversal o.f (,lm disastrous deflation, which had already lasted too long, could he achieved, and a.s a permanent poiyur would at, .least alleviate the difficulties in which the world would lie placed through the iii'iih'qic.icv of the go'd supply foreshadowed h\ the .MaemilPll ('iiminiifee. The sta.hilisal Imi of silver in »01110 defined ratio lo go'd would greaty facilitate trade with ,«inel» act wldcll we could nl tempt, which would so quicklv create a turn in our fortunes. Il is this Iraoic of mind that British linam im'.s and bamc-e-s are stud'’,in'* IB - nmLlom which m, of course, of great wor d iuteros-t ahffi,