PART III

THE RETURN TO GOLD

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articles produced at home, it is impossible forthem to cut their prices 10 per cent, unlesswages and expenses in home industries generallyhave fallen 10 per cent. Meanwhile the weakerexport industries are reduced to a bankrupt con-dition. Failing a fall in the value of gold itself,nothing can retrieve their position except ageneral fall of all internal prices and wages.Thus Mr. Churchill ’s policy of improving theexchange by 10 per cent was, sooner or later, apolicy of reducing every one’s wages by 2s. inthe £. He who wills the end wills the means.What now faces the Government is the ticklishtask of carrying out their own dangerous andunnecessary decision.

The movement away from equilibrium beganin October last (1924) and has proceeded, stepby step, with the improvement of the exchange—brought about first by the anticipation, andthen by the fact, of the restoration of gold, andnot by an improvement in the intrinsic value ofsterling. 1 The President of the Board of Tradehas asserted in the House of Commons that theeffect of the restoration of the gold standardupon our export trade has been “all to thegood.” The Chancellor of the Exchequer hasexpressed the opinion that the return to the

1 This view was shared by the Treasury Committee on theCurrency, who reported that the exchange improvement of lastautumn and spring could not be maintained if we did not restorethe gold standard; in other words, the improvement in the ex-change prior to the restoration of gold was due to a speculativeanticipation of this event and to a movement of capital, and notto an intrinsic improvement in sterling itself.