It must not be overlooked that the departure from the goid standard is by no means the same thing as the abandonment of gold as an instrument of monetary policy. Gold pi and will continue to play an essential part in the exchange relations between countries conducting the bulk of international trade. But for u it no longer plays a governing part. True, our stock of gold is much larger than ever it was in the old days. but the essence of the present s tem lies not in the amount but in the availability of the stock. The gold both in the Exchange Equalization Account and in the Bank of England can be made immediately available, as we have recently seen, for regulate ing the external value of sterling without necessarily affecting our internal issue of currency. The great achievement of monetary progress since 1931 is the discovery that our domestic business can be protected against extraneous developments with which it has nothing to do and for which it is not responsible, and that we can expand or contract credit according to internal needs. To this extent at least we have become masters in our own house.
T say "to this extent" because when we consider the prospects of business we have to remember that a good monetary system will facilitate trade but cannot make it. It is akin to cheap and convenient transport, which carries the goods but does not pro duce them. When world conditions are adverse to trade we cannot escape altogether from the general decline, however efficient our monetary system. may be. At the present time sustained recovery in the United States would be the biggest single factor in a general revival of world trade. There have recently been welcome signs of recovery in that country, but we cannot be certain that it is on a solid foundation until we see a convincing revival of capital investment New capital construction on a large scale, which is essential for the maintenance of a high level of employment, will be undertaken only when men of business can allow themselves a confident outlook on the future. Confidence breeds enterprise, ind enterprise calls for the expenditure of the capital funds representing the accumulation of savings. If, as in America, savings are left idle through fear of loss and are not ventured freely in new enterprise, trade depression sets in and unsimilar ground for depression in our Own country, but we cannot isolate ourselves from depressing factors elsewhere. The most we can say is that the decline here has been less than in many other countries and that our general standard of living has been fully maintained.
Text read from the printed page and cleaned; old type leaves the occasional error.