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THE RETURN TO GOLD

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omne , where the necessary adjustments follow“automatically” from a “sound” policy by theBank of England .

The theory is that depression in the exportindustries, which are admittedly hit first,coupled if necessary with dear money andcredit restriction, diffuse themselves evenlyand fairly rapidly throughout the whole com-munity. But the professors of this theory donot tell us in plain language how the diffusiontakes place.

Mr. Churchill asked the Treasury Com-mittee on the Currency to advise him on thesematters. He declared in his Budget speechthat their report “contains a reasoned mar-shalling of the arguments which have convincedHis Majesty’s Government.” Their argu-ments—if their vague and jejune meditationscan be called such—are there for anyone to read.What they ought to have said, but did not say,can be expressed as follows:—

“Money wages, the cost of living, and theprices which we are asking for our exports havenot adjusted themselves to the improvement inthe exchange, which the expectation of yourrestoring the gold standard, in accordancewith your repeated declarations, has alreadybrought about. They are about 10 per centtoo high. If, therefore, you fix the exchangeat this gold parity, you must either gamble ona rise in gold prices abroad, which will induceforeigners to pay a higher gold price for ourexports, or you are committing yourself to a