118 PRESIDENTIAL ADDRESS SECTION F. 



If it be objected that such an International Reserve Bank i*. 

 impracticable and Utopian, then it is proper to reply that it is for 

 speculative criticism to form opinion, and much would be gained 

 if we could obtain a clear idea of the measures which would reliev( 

 the present situation. But such a proposal is not so impracticable 

 to-day as it might have been before the war. Is not this a function 

 for a department of the League of Nations? The need is present, 

 urgent, insistent, the beneficence unquestionable, and the effect 

 would be increasingly and cumulatively remedial. If there is a 

 case for simplifying the labour problem by starting a Labour 

 Bureau of the League of Nations with a view to establishing a 

 series of international subsistence minima, is not the case stronger 

 for simplifying the whole system of exchange by establishing, what 

 no one could object to, what all trade implies upon a lower national 

 scale, a common measure of value. I am aware it is customary to 

 say that the stabilisation of the exchanges depends upon the re- 

 establishment of equilibrium in trade and finance. The equation 

 is probably a reversible one, and it is at least true to say that the 

 establishment of autonomous central banking would materially 

 expedite the process. The shock to the international exchange on 

 a bullion basis, which was given when free import and export of 

 the precious metal was interfered with, has not yet been recovered 

 from. The mutual, want of confidence is indicated and measured 

 by the dislocated exchanges. Nothing can repair the system but 

 the re-establishment of confidence. We advocate a centralised 

 banking system, as best calculated to establish and maintain such 

 confidence. 



Economic Dependence. 



But not only is national interdependence evident in the 

 economic sphere, it conditions our internal choice of policy. We 

 have been led, as it seems to me, to appreciate in South Africa the 

 reality and force of such a conception by our recent currency 

 history. It will be remembered that in 1915 an embargo was laid 

 on the export of gold by Proclamation, that on October 22, 1919, 

 a Gold Conference was held in the Union Buildings which reported 

 (i.) that it was not practicable to fix any definite data for the 

 removal of the embargo; (ii.) that the best way of checking the 

 disappearance of gold specie was to take gold out of circulation and 

 replace it by fully covered certificates — temporarily inconvertible 

 pending the restoration of the gold standard; (iii.) that the best 

 way of establishing confidence and credit and avoiding financial 

 crisis was the establishment of a Central Reserve Bank with suitable 

 restrictions of cover and limitations of dividends. This report with 

 its recommendations is severely criticised bv Professor Edwin 

 Cannon in the "Economic Journal," Vol. NXX, December, 1920. 

 He points out that the real issue was whether it would be best for 

 South Africa to keep its currency level with gold or level with the 

 British paper pound. The Conference, he says, practically advised 

 the latter course, and hence, as he puts it, the chief gold-producing 

 country of the world has demonetised gold. There are minor criti- 

 cisms to be passed on this mordant and trenchant attack, as Pro- 



