WHY WE FAILED.
. It is too early yet to determine the precise and final 'effects which will be produced by our departure from the gold standard. All that I can do this week is to indiCate a few general possibilities.' But before doing so I would like to refer once again to the real causes of our failure to maintain the integrity of the pound. I have already referred to some of the immediate causes concerned with the events of the last few weeks, but to understand the real reason for Britain's failure to maintain the gold standard it is necessary to go just a little deeper and to look a little farther back. It is. possible that having regard to our foreign engagements, including the Debt Service to the United States, we may have returned to the gold standard somewhat prematurely. in 1925, but one thing is certain, namely, that the gold standard could only have been maintained if the nation as a whole, Government and people, had been prepared to economize to uphold the economic wage and economic conditions of worliing as distinct from artificial conditions dictated by Trade Union or political regulations, while in view of foreign trade competition it is probable that - the gold standard could only have been upheld by a tern-, , porary lowering of the standard of living. Had those conditions been fulfilled, however, . there is, I think, no doubt whatever that: the gold standard would have emerged -with flying colours and that the credit of this country would have been higher than at any time in its history. Indeed, that probability is suggested by the further fact that in addition to the causes I have already mentioned affecting foreign withdrawals of balances from London those withdrawals were, un- doubtedly, in many cases prompted by the concern of countries such as Holland and the United States and even France to make themselves liquid in view of the distrust and anxiety felt with regard to local conditions. Our failure, however, to fulfil the required conditions led, of course, to an ever declining trade balance and ever increasing unemployment, and I mention this now not so much by way nf..nscless. recrimination but by way of reminder that whatever currency or tariff policy we may shape in the future there can be no recovery in confidence and no recovery in prosperity unless there is an end to class hostility and the war between capital and labour.
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