GOLD MOBILISATION
I am not surprised at the official decision to concentrate the nation's gold reserves, however revolutionary this step may seem to the orthodox banker. Virtually the whole of the Bank of England's £28o,000,000 of gold, valued at i68s. an ounce, goes to the Exchange Equalisation Account, and the gap in the Issue Department is filled by Government securities. Thus, the fiduciary issue is raised by £280,000,000 to £580,000,000, and we are brought face to face with the fact that the stability of our currency and credit system depends entirely on our stability in the broadest sense. That is true in peace as well as in war, and now that we are in actual conditions of war I see no reason why we should not recognise it openly. Raising the fiduciary issue is not inflationary, and the question of infla- tion or deflation is still a matter for decision and appropriate action by the Bank of England and the Treasury.
Just what our total gold stocks are it is impossible to tell, but I should be surprised if they Are less than £550,000,000, after allowing for the heavy cost of defend- ing sterling in recent months. In addition, there are the holdings of foreign securities, of which the Bank is at present obtaining full details. Altogether, the potential supply of readily mobilisable gold and foreign resources must be well in excess of Li,000,000,000. That is a very formidable war chest. True to our traditions we have given the squarest of square deals to foreign holders of gold in London who, although they may sell their hoarded metal at the new official price of 168s. an ounce, are not compelled to do so. Up to the present, these hoarders have shown no wish to ship their metal home on any scale.
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