Ill

THE RETURN TO GOLD

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with such means as are at their command, shouldbe the stability of prices.

II. How can we best combine this primaryobject with a maximum stability of the ex-changes? Can we get the best of both worlds—stability of prices over long periods and stabilityof exchanges over short periods? It is the greatadvantage of the gold standard that it overcomesthe excessive sensitiveness of the exchanges totemporary influences. Our object must be tosecure this advantage, if we can, without com-mitting ourselves to follow big movements inthe value of gold itself.

I believe that we can go a long way in thisdirection if the Bank of England will take overthe duty of regulating the price of gold, just asit already regulates the rate of discount. “Re-gulate,” but not ‘‘peg.” The Bank of England should have a buying and a selling price forgold, just as it did before the war, and thisprice might remain unchanged for considerableperiods, just as bank-rate does. But it wouldnot be fixed or “pegged” once and for all, anymore than bank-rate is fixed. The Bank ’s ratefor gold would be announced every Thursdaymorning at the same time as its rate for dis-counting bills, with a difference between itsbuying and selling rates corresponding to thepre-war margin between £3:17:10^ per oz.and ,£3:17:9 per oz.; except that, in order toobviate too frequent changes in the rate, thedifference might be wider than i^d. per oz.—say, to 1 per cent. A willingness on the part