THE CURRENCY

Hokitika Guardian, 28 May 1932, Page 6

THE CURRENCY

GOLD AND SILVER STANDARD

SIR ROBERT HORNE’S VIEWS

LONDON, May 15

Sir Robert Horne, M.P., and others have been bringing their minds to bean on the intricate subject of the currency. In the past few days Sir Robert Horne has spoken on the subject both at the Constitutional Club and at the Royal Empire Society. The first test of statesmen of all countries, he said, will be found in the problem of reparations and war debts. Payments under these heads have not only been one of the main causes of the contraction of gold supplies and the appalling decline in prices, but they have also become a sore in the body of the community of nations which, if left without cure or remedy, will embitter feeling and paralyse action.

“I believe,” he said, “that, if Europe could arrive at a conclusion upon this question, which would take it out of the region of controversy, it would lift from the shoulders of the world a weight which at the present time is compressing the veins and arteries of commerce and crushing international life. Such an agreement cannot be reached by Britain demanding from France that she should agree to a complete cancellation of reparations and war debts; nor by France demanding from Britain that the full letter of previous debt plans should be observed. A reasonable compromise between reasonable men ought to be reached which will have sufficient regard for Germany’s present difficulties and the danger of expecting any immediate or prolonged payment of war tribute. It must be apparent by this time to everybody that enlightened self-interest ought to bring the nations together upon some such arrangement.”

EVILS OF SPECULATION

At the Royal Empire Society meeting, Sir Robert referred to the departure from the gold standard. Speculators’ manipulation of the pound, he said, did us infiinte harm, and made the conduct in many cases quite impossible. it was the duty of Britain’s financial authorities to take every means in their power to cheek those artificial proceedings. He believed it to be within their compass to make the situation very uncomfortable for speculators. They were more or less in a position now to know the figure above which sterling should not rise, ..net it was not impossible to let ft be sufficiently well known that any operations in sterling above such a figure were perilous for those indulging in them, v- vr* ■

The difficulties of a fluctuating exchange were sufficiently clear to make most people agree that at some period we should return to a metal standard. He was not one of those who believed that the business of the world could be carried on with a managed currency. Not all nations could be trusted to manage their currencies in such a way as to create universal confidence. It was plain that there were great populations in the world who demanded some tangible posses*ion upon which they could rely at all times. 81-METALISM. They now already the appalling results which hatl been brought upon the world by the existing mal-distribution of gold. Wore they to leave things to drift, or were they to take action by which the gold of the world would become supplemented by the available silver supply? Would jt not be well, even now, to take immediate action to bring silver into the monetary systems of the world for the purpose of mitigating the present shortage of available gold? Two salary effects would immediately follow. The. fact that silver was to be in a-definite ratio to gold would immediately faciliate trade with China, and the rise in the price of silver which would take place would increase the Value of the hoards of silver in China and India, and consequently the purchasing power of those two communities. There was now in Great Britain a very notable movement in favour of the reintroduction of silver into our monetary system.

In the attempt to raise wholesale commodity prices no sal or method could he taken than that of adding silver to the world’s monetary system, it afforded a well-controlled plan of inflation because its use was restricted by Nature herself. Silver would only be produced in increased quantity when the world required more lead, zinc, and copper—for it was retrieved from mines in conjunehioii with those metals—-that was to say, when the trade of the world was prosperous and therefore required more currency.

AN EMPIRE CURRENCY

Sir Hubert gathered that it had been suggested in Canada that the Ottawa Conference should lake un the subject of Empire currency. This was an Inspiring theme, and while one must recognise that, in the end the trade of every nation would lie most benefited by a system of international exchange common to all people, in delimit ol the prospect of the early renlis lion cl an agreement for Litis purpose nothing could be so bonolioial as a mutual monetary arrangement between Mritain and her Dominions. All the Dominions with the exception of South Alriea, were in effect off the gold slamlard. On the other hand, a considerable number of nations of the world bad allied themselves with sterling. In these circumstances it was not too much to

hope t.luiL :m extensive nreu in which < tcrling wns the medium of oxehimge mighthe formed. If the Millions of tin. Umpire up; reel I lie would l« l i'oiml.v In |i\ ii rnlio for silver to sterling. did mil doiilil flint mil of such I, policy there would develop Inrpe I enelil.s 1,0 flic Umpire in developing Undo with the East.