Courtesy Reuters

Britain and the Gold Standard

SINCE Great Britain's departure from the gold standard on September 21, 1931, the course of the dollar sterling exchange has revealed three major movements. It fell almost continuously till December, the average daily rate for that month being $3.37 to the pound. From thence onwards it rose to a new maximum in April 1932, the average rate for that month being $3.72. By July the rate had sunk to $3.56. In August, September and during the first three weeks of October the rate showed considerable stability, the average for the whole of this period being about $3.46. As this article is being written, late in October, the downward tendency has again been renewed.

Toward the end of the week ending October 22, Sir Hilton Young, a distinguished parliamentarian who was formerly a brilliant financial journalist, speaking as deputy for the Chancellor of the Exchequer at the Annual Bankers' Dinner, vaunted the intrinsic stability of the pound sterling and put an end to any hopes or fears that might have been entertained that the British Government contemplated an early return to the gold standard. His speech may have contributed to the subsequent weakness of the sterling exchange, in so far as it may have encouraged Continental speculators to sell short and Continental bankers to withdraw balances. It has certainly not met with even the shadow of criticism in the British press; on the contrary, it is certain that, in the present state of public opinion, a return to the gold standard would be highly unpopular. When, a year ago, sterling was falling there were certainly some voices demanding that "something should be done about it." It is significant that it was the rise rather than the fall of sterling which produced alarm in the spring.

To appreciate this state of public opinion, it must be related to the past, both near and remote. Great Britain had been a gold standard country for a century before the war; it was, and is, the center of international financial operations; the Bank of

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