SIR,—You argue that the devaluation of the pound in terms
of dollars is the wisest course to adopt in the situation in which we find ourselves; but is not there also a strong case for devaluing the dollar in terms of gold?
This would mean that the value of gold reserves in terms of goods would become much greater than before; and countries such as the US, France and Switzerland with substantial gold reserves would benefit in an arbitrary way. The price of gold in dollars might be raised to, say, $2 a gramme—that is, nearly doubled—in order to increase world liquidity. But if this were done might it not at the same time be possible for agreement to be reached for nations to transfer a substantial part of their gold reserves —say a third—to the United Nations as such? The countries concerned would be better off than before for the gold they had left would be worth more in terms of goods. At the same time the UN would be saved from bankruptcy and would be made more effective. Moreover it would become possible for the UN to issue its own currency like the humblest of its member states.
Such an international currency, backed by a third of the world's gold reserves', might replace Sterling as an international medium of exchange; but for it to be generally acceptable it would probably be necessary to vest the United Nations with the power to tar member nations in proportion to their expen- diture on arms instead of having to rely upon more or less voluntary contributions.
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