28 NOVEMBER 1931, Page 19

Gold and Money and Prices

The International Geld Problem. Discussions of a Study Group of the Royal Institute of International Affairs. (Oxford Press : Milford. 12s. 6d.) The Gold Standard in Theory and Practice. By R. G. Hawtrey. (Longmans. 3s. 611.) Money and Prices. By Augustus Baker. (Dent. 68.)

IF the man in the street does not soon understand all about gold and money and their effect on prices and trade, it will not be for lack of books on the subject. If quantity of counsellors will do the trick, it is done, as witness the fresh batch that has lately been poured out. Unfortunately, most of them tell a bewildered public a different tale, and the consequent confusion is increased by the inability of most of the exponents of the subject to explain, in language that an ordinary reader can understand, what the trouble is all about, and what (if any) is the way out of it.

It was a happy inspiration that led the Royal Institute of International Affairs to form a study group to examine the international gold problem, through a series of addresses fol- lowed by discussions, oral and written, and then to publish the contributions of all the talented people who had expressed their views. It mustered a highly impressive orchestra, includ- ing Messrs. Keynes, Stamp, Ilawtrey-, Gregory, Brand, Addis, Kitchin, Strakosch, Niemeyer, Henderson, Blackett—everyonc in this country who is known as an authority on the subject— with Dr. Sprague some time of Harvard, Dr. Palyi from Berlin, and Professor Rist from Paris to swell the international anthem. It need not be said that the addresses and dis- cussions were of the highest interest and that the Inter- national Gold Problem is a mine of lore, at which the student may cut until he is gorged. But when the practical man asks—What do they say should be done and how ? he will find that this mighty 'orchestra produced, as "was inevit- able, a magnificent crash of discords. They could not agree whether it should be the object of the monetary authori- ties to keep prices steady, or gently rising, or gently falling ; many impressive figures were given concerning what is called the mal-distribution " of gold, which was considered by most of the disputants to have been an important cause of the fall in prices ; but M. Rist argued very ably for the contrary view, showing that great differences in the quantities of gold held by different central banks have often been noticed before, but were never considered to have been a cause of big move- ments in prices. In short, on nearly every aspect of the problem there was disagreement and dispute, and the chief lesson of this highly authoritative book is, that money matters are so inextricably involved in a maze of conflicting in- fluences that may affect trade and prices, that it is impossible to be sure as to what is cause and what is consequence.

Dr. Paul Einzig's International Gold Movements has been revised and enlarged by the addition of six new chapters, dealing with Political Gold Movements, Price Levels and Gold Movements, Capital Transfers and Gold Movement., Gold Points and Central Banks, Fine Gold v. Standard Gold, and the London Money Market after the War. A passage in the chapter on capital transfers is significant in the light of recent events :

" The factor of discrepancy in taxation has been operating slowly, but steadily over since the end of the 'War. Its strength became, accentuated by the advent of the Labour Government, as a result of the anticipation of higher taxation. . . . If the outflow of funds necessitates the maintenance of a higher Bank rate than that of rival money centres, London will lose a substantial part of her international banking activity. This would mearr'the !OAR of one of the principal advantages for the sake of which the gold standard has been restored at the price of heavy sacrifices."

In Mr. Hawtrey's new edition of his Go'd Standard in Theory and Practice, we find a fresh chapter which brings the problem up to the date of the suspension of the standard by England, and definite views as to what should be done next, He thinks that we should absolutely refuse to return to gold till there is some adequate safeguard against undue fluctua- tions in its purchasing power. Ile sees little hope in general international _co-operation, advised and agreed to at Genoa in 1922, and since then persistently ignored in practice ; but he thinks that if it were possible to arrive at an agreement on policy with the United States, that would probably be enough without the participation of any other country ; but in any case, he is convinced that : " When the time is ripe for a return to the gold standard, if the pound has boon maintained at a stable purchasing power and if gold is settling down to stability, it is clear that the pound will have to be stabilized at its then gold value, without regard to the old historic parity."

An interesting foreign opinion on the crisis is provided by Dr. Robert Eisler's This Money Maze. He is very much up to date and lays stress on the decisi%.e strengthening of England's diplomatic position through the suspension of the gold standard : " England. was diplomatically powerless to an unheard of degree as long as it was asking for big loans in order to bolster up the vacillating pound. As long as the capitalist world lasts, the lender will lay down the law for the prospective borrower. But all that will change the very moment that England announces that she does not need any more loans, on the contrary that she is able and willing not only to fend for herself, but to finance with the necessary sterling exchange credits the trade of the British Empire and of all the nut ions willing to peg their currencies to the pound."

He also suggests an immense creation of credit by all the central banks, working in luirmonious co-operation. To which it may be objected that if this harmony, and the political harmony that is a condition precedent, could be secured, so much hoarded money and frozen credit would at once be set free that his remedy would be unnecessary.

Mr. Augustus Baker, in Money and Prices; provides a critical and stimulating examination of the problem of want in the midst of plenty and of means for solving it. His reason- ing is highly abstract and often difficult to follow. TIC con- cludes that " prices must be controlled, but not through the maniptilation of credit credit must be controlled, but not for the purpose of acting on the price level."