USELESS COMMODITY

Rotorua Morning Post, Volume 2, Issue 448, 4 February 1933, Page 2

USELESS COMMODITY

TRUTH EXPLODED . "USE GOLD WHILE THE GOING IS GOOD" CONVERSION OF PAPER MONEY. The December issue. of the Chamber of Commerce Journal, London, ! states that the United States will have ' fendered great service to itself and , td the world if, by insisting* upon payi merit of 'the instalnient of the war debt on December 15,— it makes the t peoples for the first time understand that one nation can only pay another by means of goods and services, atnd that gold is, in fact, merely a eommodity, and a peculiarly tiseless one at that. , i J Sir Robert Horne, the Journal adds, undoubtedly expressed the view of the i bulk of the community when he deprecated any suggestion that payment should be withheld. The Bank of E'ngland has at present in its vaults £139,422,094 worth' of bars of gold. These are perfectly useless for any practical purpose, and the fiction that a paper pound note would not be generally acceptable unless it were possible to convert it into gold was finally exploded as long ago as 1925. In that year the right to demand gold for a pound note was taken away by Act of Parliament, although it was still possible to buy a bar of gold with paper pounds if one happened to be the owner of £1600 (at par). The vast bulk of the nation not. being in that fortunate position, their paper pounds, so far as they were concerned, were inconvertible. Nobody in consequence gazed the next day at his paper pouiid and wondered whether his grocer would honour it by handing groceries, for the sufiicient reason that, the paper pound being legal tender, the grocer had no option. Since September, 1931, it has not even been possible to obtain a bar of gold, "but again there has been no wild panic such' as had been predicted for us in lurid colours. In no country in the world, not even in the United States, the Journal continues, can more than a trifling fraction of all the money claims of the' people be converted into gold. In normal times none wishes to a'ealise their money claims in the form of gold. In times of crisis, when in theory every one might be expected to want to do so, it is mathematically impossible to realise all money claims in gold. In practice the nation always comes to the rescue of th'e system in times of crisis by declaring a moratorium. This was done in 1847, 1857, 1866, 1914, and again in 1931. The Journal concludes by suggesting that Britain should use its gold while the "going is good."