PRESIDENTIAL ADDRESS SECTION F. 119 



fessor Cannon is not quite fair to the banking proposals of the 

 Committee, but what I think is of more general interest is to 

 notice that the criticism ignores the extent to which South Africa 

 was limited in its choice by the fact that she was a borrowing 

 country. Besides the countless connections of business which cannot 

 be broken at a moment's notice, South Africa has imported large 

 quantities of capital from the London market and has to pay 

 interest upon the same, by remitting a certain portion of its 

 produce to the same market. To have elected to follow an inde- 

 pendent line and make South African currency level with gold 

 would have meant the re-export of all its borrowed capital. The 

 temptation to have recalled such capital to London, taking advan- 

 tage of the gold premium in transmision would have been too great 

 to resist. The country would have been denuded of its necessary 

 capital, development stopped, and a state of things indistinguish- 

 able from ruin produced. With this danger staring the Committee 

 in the face can it be wondered at that they preferred the second 

 alternative? 



I have thus endeavoured to argue 



(1) that the international export and investment of 

 capital has woven the world into one financial system ; 



(2) that such an international system implies theoretically 

 either a universal unit of account, or an international 

 banking system ; 



(3) that the control of such a general standard of value 

 so as to preserve an invariable ratio between goods 

 and money is the most important of public and pri- 

 vate interests. The slightest variation in such a 

 ratio impedes and prejudices trade, while the larger 

 and more rapid fluctuations in such an equation are 

 capable of causing the dissolution of modern society 

 itself. 



I also commend to your consideration the view that while 

 exchange, and the provision of a suitable medium of exchange, 

 may safely be left to the ingenuity of the commercial agencies which 

 have already done so much for simplifying and expediting it, the 

 question of the standard of value and its stabilisation is a matter 

 which concerns every member of our civilisation, more nearly and 

 poignantly than any other political or social question. I suggest 

 that it should be placed under the care and supervision of some 

 non-political officer or commission similar to the Auditor-General, 

 directly responsible to representative institutions, but not function- 

 ally a part of the Government. Lastly and principally, as soon as 

 possible, such non-political agency shall be internationalised and 

 formed into a department of the League of Nation's. 



