Ill

THE RETURN TO GOLD

2 11

will be much suspicion amongst Americans (forthat is their disposition) of any supposed attempton the part of the Bank of England to dictatetheir policy or to influence American discountrates in the interests of Great Britain. Wemust also be prepared to incur our share ofthe vain expense of bottling up the world’s re-dundant gold.

It would be rash in present circumstances tosurrender our freedom of action to the FederalReserve Board of the United States . We donot yet possess sufficient experience of itscapacity to act in times of stress with courageand independence. The Federal Reserve Board is striving to free itself from the pressure ofsectional interests; but we are not yet certainthat it will wholly succeed. It is still liable tobe overwhelmed by the impetuosity of a cheapmoney campaign. A suspicion of British in-fluence would, so far from strengthening theBoard , greatly weaken its resistance to popularclamour. Nor is it certain, quite apart fromweakness or mistakes, that the simultaneousapplication of the same policy will always bein the interests of both countries. The develop-ment of the credit cycle and the state of businessmay sometimes be widely different on the twosides of the Atlantic.

Therefore, since I regard the stability ofprices, credit, and employment as of paramountimportance, and since I feel no confidence thatan old-fashioned gold standard will even giveus the modicum of stability that it used to give,