Section F.— EDUCATION, HISTORY, MENTAL SCIENCE. 

 POLITICAL ECONOMY, GENERAL SOCIOLOGY, 

 AND STATISTICS. 



President of the Section — Prof. R. Leslie. M.A., F.S.S. 



FRIDAY. JULY ii. 



The President delivered the following- address : — 



CURRENCY REGULATION. 



To-day, as after the Napoleonic Wars, the regulation of 

 banking and currency is one of the most discussed of economic 

 problems. The opening of a mint in the Union makes it 

 specially necessary to examine our currency system, for with 

 the establishment of the mint it is almost inevitable that some 

 foreign banks will establish branches here. That such a ten- 

 dency exists is evident if one considers the principal causes for 

 international movements of gold. They are as follows : — 



1. Exchange at or beyond Gold Point. 



2. A High Discount Rate in the Importing Country. — This, 

 may induce banks to import gold even thougn exchange does 

 not favour it. Their loss on exchange is snnply part of the 

 cost involved in obtaining the gold which is the basis on which 

 they manufacture credit. During the crisis of 1907 the banks 

 in the United States imported large quantities of gold simply 

 to strengthen their credit position. Similarly it has been the 

 regular custom of the South African Banks to treat the cost of 

 importing gold as part of their general expenses of selling loans 

 and exchange. 



3. Preparation for Speculation on the great Stock Ex- 

 changes. — imports of gold increase the amount oi credit which 

 bankers can create, and thus such imports stimulate the specu- 

 lative markets. Buyers know that there will be cheaper credit 

 obtainable to carry the stock they are buying in the hope of a 

 rise. Thus in the United States it is not unusual for the leaders 

 of a speculative campaign to import g"old, even at a loss,- making 

 their profit by unloading' shares during the speculation which 

 follows. 



4. The Creation of Currency 'Reserves, War and other 

 Hoards. — After the Agadir incident of 1911 the President of 

 the Reichsbank bought large parcels of gold at a loss. It often 

 happened that Berlin was paying the cost of importing gold 

 from London when exchange was at the point at which it would 

 have paid to export gold from Berlin, if Berlin had been a free 

 market for gold. 



5. To Advertise the Importing Bank. — As any of these 

 causes may result in a movement of gold, it follows that the 



