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ESSAYS IN PERSUASION

PART

this kind, why it is necessary to drag in goldat all. Mr. Hawtrey lays no stress on theobvious support for his compromise, namelythe force of sentiment and tradition, and thepreference of Englishmen for shearing a monarchof his powers rather than of his head. But headduces three other reasons: (i) that gold isrequired as a liquid reserve for the settlementof international balances of indebtedness; (2)that it enables an experiment to be made withoutcutting adrift from the old system; and (3) thatthe vested interests of gold producers must beconsidered. These objects, however, are solargely attained by my own suggestions in thefollowing section that I need not dwell on themhere.

On the other hand, I see grave objections toreinstating gold in the pious hope that inter-national co-operation will keep it in order.With the existing distribution of the world’sgold the reinstatement of the gold standardmeans, inevitably, that we surrender the regula-tion of our price level and the handling of thecredit cycle to the Federal Reserve Board of theUnited States . Even if the most intimate andcordial co-operation is established between theBoard and the Bank of England , the preponder-ance of power will still belong to the former.The Board will be in a position to disregard theBank. But if the Bank disregard the Board ,it will render itself liable to be flooded with, ordepleted of, gold, as the case may be. More-over, we can be confident beforehand that there