Ill

THE RETURN TO GOLD

241

tougher than we thought,” in the words of theChancellor of the Exchequer. In short, wecan afford it!

The special losses of the Coal Strike periodare not allowed for in the above. They seemto have amounted to round £100,000,000, andto have been met by increasing our short-loanindebtedness, partly with the aid of the usualtime-lag in the settlement of adverse balances,and partly by a relatively attractive rate of dis-count drawing foreign balances to London .

In determining the future of our NationalPolicy, we have three alternatives before us:—

(1) We can seek at all costs to restore thepre-war equilibrium of large exports and largeforeign investments. The return to gold hasrendered this impossible without an all-roundattack on wages, such as the Prime Ministerhas repudiated, or a considerable rise of externalgold prices which we wait for in vain.

(2) We can continue indefinitely in the pseudo-equilibrium described above with trade de-pressed and a million unemployed. Thispseudo-equilibrium has been the result, thoughprobably not the intention, of the Bank of Eng-land ’s policy up to date. I see no convincingreason why it should not be continued for sometime yet. Mr. Norman may have an awkwardperiod ahead owing to the delayed results of theCoal Strike. But even if the worst comes, apartial reimposition of the embargo on foreigninvestments might be enough.

(3) The third course consists in accepting the