Tue fact that sterling reached parity in New York at the end Jot last week has -a sentimental value far and away higher than it is possible to express in terms fof figures or in any manner those specially concerned with exchange on New York and London are in the habit of allude ing to. The actual rise which has occurred is very small compared with recent quotations, although when we consider how, low the pound sterling stood three or four yests ago, or even at later periods, it must be matter for congratulation that in the intervening space of time it! has made this recovery. The great point is that once more sterling has justified itself; it has stood up to one of the severest tests to which any currency was ever subjected; and by doing so has given additional prestige to Lon lon as a money! market. In one of those wholly admirable circulars which the big financial houses in America issue, usually monthly, it was pointed out a very long time ago that it was not the position of sterling alone that was reflected in the London-New York cross-rate, but that th" pound had also: to bear the brunt of all the vicissitudes taking place in Continental currencies. That it could do 0, and at such an early stage as this resume its position par, when such other curren-' cies are still at a low ebb, is a tribute not to be ignored, When Mr. Churchill became Chancellor of the Exchequer in the present administration and announced his intention of re-effective gold stand-at Britain, there was much dubiety both as to the advisability of such a policy and its chances of success. In the first place it was contended that it would give manufacturers in countries with a depreciated Jcurrency a very great advantage over their competitors in Great Britain who were working on a sold basis, In tae second place the very serious risk had to be faced that Leriou might be drained of its gold reserve these same countries, and British gold would go i their depreciated paper need not recapitulate the steps taken to avert the latter _possibility, although it may be mentioned that an arrangement was arrived at with America tha there should be a loan of gold to Great Britain should her: stocks of bullion become, at any' time, excessively depleted. That no call for such a loan has ever been made shows how well Mr. Churchill's advisers gauged the international situation and also how satisfactory were the safeguards—few in number and of great simplicity—which were enforced. Mr. Churchill carried out this policy at the expense of temporarily ousting London from her position as the borrowing! centre of the world. An embargo was placed on all foreign loans, even those to the Dominions, this with the idea of conserving the resources of the country and retaining her reserve of gold, but it was only necessary to keep this measure in force for a few months, and to-day again London has attained her rightful pos tion asa lender. What has been' lost because foreign borrowers had in that period to go to New. York, has by now been more tha made up through the enhanced prestige of the pound. We mentioned that at the time Mr. Chu chill made his announcement of a return to an effective gold standard grave fears were entertained that the trade of the! country would suffer seriously in consequence. Whatever the reason, whether it has anything' to do with the cold standard or not, the fact remains that in the intervening period British trade hag made great, strides than at! anytime since the post-war boom, and all reports in recent months have indicated that the country is once more on the road to prosperity One point may well be emphasized in connexion with the Position of sterling, for the conclusion of the general strike saw} this return to parity. It must, however, be borne in mind that from the first sterling stood up very well in New York against] the weakening influence of the crisis, and as a barometric indication this was all important, showing as it did the confidence which foreign countries have in the present Government. The position of sterling has been very instructive since the war. One must remember the low ebb which it reached during the period of reconstruction, and then how it gradually recovered, only to fall again when Mr. Ramsay MacDonald's Labour Party came into power. Mr. Baldwin's return to office saw the beginning of its recovery, and then Mr. Churchill's courtageous financial policy aided it still further. It is probably safe to conclude that the general betterment of British trade has done the rest, and this, coupled with the security and confidence which a Cabinet such as Mr.
Baldwin's represents, enabled the pound to face the recent situation with success. But it may be wondered what would have occurred had, for instance, a Labour Government been in power. Try as we may to be unprejudiced, the thought of where sterling might have gone in such a crisis and what steps would have had to be taken to safeguard the gold reserve, leaves a troubled feeling.
Text read from the printed page and cleaned; old type leaves the occasional error.