Good Reason for Believing It Will Not Be Abandoned The attitude is, no doubt, that the British Govern" ment feels that international financial conditions are still too uncertain, to justify the announcement of a definite policy which subsequent developments might modify or render Great Brit One of the immediate results. of "5" suspension of the! gold standard last September has been that one by one other im-Portant countries which had. pre-Viously been successful in maintaining a gold currency basis have also abandoned gold, until a point has now been reached at which it is possible to count on one hand the ow countries still remaining true gold basis.
'A number of the countries which have followed Britain's lead have, because of the' closeness of their trade relations with Britain, sought to maintain practical stability of their exchange in_terms of sterling, so that there is- already a. large Dart of the world which, having Ceased to be on a gold basis, is now effect upon a sterling basis. "As 8 result of this situation very considerable interest attaches to. the operations of the Bank of England, which the instrument for putting into effect the monetary policy considered appropriate by the British Government, while at, the same time i'"must be recognised that the responsibility of the latter is considerably increased.
The British Government in framing and carrying through its monetary policy has now to take into account not only the probable effects Upon gold quotations of sterling exchange, but also the repercussions of its policy" in" those countries which are seeking to maintain ther feurrency at a mote of less fixed tatie to sterling. Thus, while a few Important countries, such as the USA. and Trance, "are still definitely committed to gold, already large part of the world is seeking fo operate a system of managed currency largely. based on sterling. This naturally raises the important question of the prospects of a turn to gold at some time in the future shen the immediate causes of the failure of the. international fold standard have passed awa 'Although the gold standard system worked "comparatively smoothly and efficiently up to the time of the Great War, its opera tion since that time has been far Tess satisfactory, "with the result that the. possibility' is. now being suggested that gold may cease to tea world standard of value for the future. There are, however, good Feasons for believing that the. use fof gold as & monetary standard will hot be abandoned, and some of these reasons are riven below.
Tt is clear that the value of gold epeads upon wide acceptance of the jeeld standard system, and that a decision by. number of important countries permanently to abandon the old standard would materially fect its" current " price. Tt must rot, however, be forgotten that gold foa for any. years nast hed, an Untivailed position as the prine monetary, metal and even to-day fora large part of the human race itis still the only form of money that inspires complete faith. This may be seen in the, extraordinary Holl movements of the past year. When' international confidence there is at once a rush to patriate foreign balances on a scale that can only be accomplished by means of gold shipments, and, as Soon us an embargo on the export of gold is imposed, the foreign currency in question is at once Quoted at a discount.
Even those. Countries which have been forced to abandon the gold standard still Strive to maintain as large a reserve of gold as possible as backing for their note circulation, The strength of the case for a gold standard can, however, be even better appreciated by considering the weakness of possible alternatives. Ina world that demands the backing I7 of note circulations with metallic re-Seives clearly there is only a limited scope for management on any other fs, and if, internally, the neces-y of metallic reserves for the note circulation is so obvious, how much, more so is it internationally? trade between all countries not only. balanced in the long run but actu from day to day, the need for sume common link' between the world's currencies would not arise, but, as it is, the direction and terms of international trade and finance fre frequently changing, so. th Some monetary common denominator of universal acceptance is required for the purpose of settling outstanding balances and of measuring prices on an international basis. No one Who takes a realistic view of the resent international situation would venture to suggest that the world is as yet ready to accept payment' of such outstanding balances, often over a considerable period of time, ina managed currency with no metallic backing.
It is now being suggested in some quarters that, since the value of gold
so greatly in recent years, the metal in terms of commodities has risen should be replaced as a world stand-fard of value by some other metal combination of metals the value lof. which might be expected to remain more stable. Such proposals fare, however, at present of little more than academic interest. Gold attained its pre-eminence as a monetary metal in the modern world not [by accident, but because, more than any other commodity, it fulfilled the requirements shown' by experience to be necessary for an international standard of value, If the operat of the post-war gold-standard system has proved unsatisfactory it is because it has been called upon to fulfil an impossible task. The causes that have led to the present maldistribution of gold, and the consequent enhancement of its value, would probably have affected in like man-her any other metal chosen as the world standard of value, while past experience of bimetallism, and the complexities of the silver problem, make it unlikely that any attempt in the meat future to introduce a joint standard of gold and silver would prove generally acceptable.
If it is agreed that there is a likelihood of @ general desire to re turn to gold in preference to the adoption of either bimetallism or seme form of internationally man-faged currency, itis necessary to consider in what circumstances and how soon such a result is likely to be achieved. It is, of course, by no means certain as yet that' the tide of world finance is at its lowest ebb, and the progress of financial events during the next few months, especially in the U. S. A., will be watched with the keenest' interest. Responsible leaders of American finance have several times recently ridiculed the idea that the United States may abandon the gold standard, and, provided the will to remain on gold is there, and the popu-Tar demand for governmental action to improve the economic situation does not develop too far along fa tionary lines, there appears at present little doubt as to America's Ability to maintain the gold standard.
In any move to restore the gold standard it may be confidently hat Great Britain wil attempts have been made to persuade park. "A number the British Government to. diselove {te intentions in. this respect, bat Without result unt the Chancellor Of the Exchequer opened the Bud
target speech the Chancellor Opel 10. th the courte EWe'do not know when nor in what circumstances we might return to 8 standard mor at. what. level the same time he announced the creation ofan exchange eauali tion account for which he proposed ask powers to borrow an amount for, exceeding 150,000,000. The Sbfect Nor this "account. wan enable Britain to function effactively centre, to hold adequate res gold and foreign exchange in order wonderful recovery during the pa britain has undoubtedly made half year or so, but, it would most unwise for' her to attempt to restore the gold: standard, even at anew parity, until satisfactory arrangements had been made garding future payments of war debts and reparations. Indeed, until these most important questions have deen settled once and for all in a realistic manner, it may be doubted Jwhether any substantial progress can be made towards that, restoration of confidence throughout the world. which alone will ensure the smooth working of the gold standard system, With the continued shrinkage of world trade, and the growing intensity of financial difficulties, all sorts of artificial expedients "and restrictions are now being adopted of preserving some degree of finanial and political order, but these measures can at best only postpone the development of new arises unless the underlying causes of world stagnation are tackled in a resolute manner and a spirit of compromise, Just as it has taken a number of years for the present world crisis to develop, so it may be anticipated time will pass before the ing itself out of the bog into which it has fallen, Those countries will first recover which face the unpleasant facts and take the neces-Sary steps to put their house in order, The conduct of foreign trade is so closely bound up with the stability of the exchanges that no effort should be spared to secure such a settlement of outstanding international obligations as will permit the exchanges to funetion once. again in a normal manner. The machinery of the gold standard is quite effective for its proper purpose, but obviously innet perform an. impossible The sooner this is realised, the sooner the world will find itself back on firm ground, with some hope of an improvement in world economic and financial conditions, Prices of rice dropped by ap: proximately a dollar a picul during the past two days, According to the Tice merchants, the drop in price was not because of fewer demands for the grain or the non-arrival of rice junks, but due to the fact that bankers were reluctant to. grant Toans to the rice merchants with the result that the latter were compelled spose of their rice stocks to meet, obligations.
'Tur weekly return of the Publi Health Department, S.M.C., for the week ending June' 25 shows th there were five deaths amongst local foreign residents and 208, amongst the Chinese from various causes, The figures for the previous week were 12 and 184, respectively. There were 82 cases of cholera, five of the suf-forers being foreigners (with, six deaths), 18 cases of relapsing fever fkamongst the Chinese and one case of typhus.
Text read from the printed page and cleaned; old type leaves the occasional error.