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EFFECTS OF THE WAR ON CREDIT, CURRENCY, AND FINANCE, 281 
of prices of our exports falling more rapidly than the general level of prices 
of our imports.’ 
Mr. Shaw replies : ‘ I cannot understand anyone but a speculator 
prices to fluctuate.’ 
Question 9 (2).—Jn pursuit of our object, whatever it is, ought we to seek 
to maintain our currency at a parity with gold? 
This is one of the few questions on which we are able to reply with practical 
unanimity in favour of linking our currency with gold. Professor Cannan 
replies: ‘Get it to par with gold first, and then join other gold countries 
in seeking either greater stability of gold or a substitute for gold.’ Mr. Mason 
also wishes ‘Gradual contraction of the paper currency until parity of exchange 
with gold standard countries has been re-established. A date then fixed for 
resumption of specie payments. Legislative enactments would probably ke 
necessary to facilitate machinery of convertibility and regulation of currency 
issues between the Treasury and the Bank of England and the other banks 
throughout the country. All of the foregoing would be helped and stimulatea by 
drastic economy in every department of the State.’ 
Mr. Pethick Lawrence replies: ‘In default of an index-number standard 
(Professor Irving Fisher’s compensated dollar), which I regard as theoretically 
best, I favour gold parity.’ 
Sir J. C. Stamp replies: ‘ With gold certainly, but I do not think an actual 
parity matters, so long as there is reasonable stability.’ 
Dr. Dalton replies : ‘ As an immediate policy, Yes. When this is achieved 
the next stage should be to seek to apply Professor Irving Fisher’s or some 
other similar scheme.’ 
Mr. Gibson, who is reading a paper at the Edinburgh meeting on the 
subject, replies: ‘I think the time is ripe for the introduction of a new 
standard of value, to be stabilised by the interest factor when an inter: 
national agreed-upon index-number has fallen to pre-War level. The working 
man is surely entitled to a continuity of employment. In pre-War times the 
state of employment was dependent on variation of gold supplies. I suggest 
an international note-issuing bank (denominations of notes, say, 1,000/. and 
upwards), such notes to form the basis of bank cash reserves, and cover for 
internal paper issues. Bank and Government applicants for international notes 
would pay interest thereon, the rate of which would be subject to variation. 
sé 
wanting ”’ 
Each country would have its own internal rates of interest, varied from time 
_ to time according to the course of the exchanges and domestic conditions. 
Gold in pre-War times functioned as the mercury of the barometer that 
compelled interest rates to be altered from time to time in accordance with 
the current economic atmosphere. The interest factor preserved the due pro- 
portion between the employment of labour for producing consumable goods and 
capital goods.’ 
Mr. Lavington replies: ‘ Against the advantages of re-establishing a gold 
standard must, of course, be set the evils resulting from (1) the raising the 
value of the Bradbury to that of the sovereign. or (2) the fixing of its value 
‘in terms of gold at something lower than the sovereign. JI doubt if it 
is socially desirable to lower the level of prices. except in so far as this 
may be necessary to re-establish a gold standard. In correcting old injustices 
in this way we should also be creating new ones.’ 
Mr. Hirst and Mr. Allen maintain: ‘That any monetary measure and 
standard of value should possess intrinsic value, so that its utilitv should 
not depend upon the pleasure of the Government. No doubt the fact that 
gold has been so generally adopted as a standard adds to its value.’ 
Question 9 (3).—If so, should it be at the old parity, or some other—say 
one correspondina to the present gold value of the Bradbury? ; 
Here some differences of opinion will be found. Professor Cannan replies : 
oy old. The fixed-income people will have been a good deal robbed even 
en.” : Y 
Dr. Dalton. Mr. Ellinger. Mr. Lawrence, and Mr. Mason favour the old 
parity. Mr. Shaw replies: ‘It depends on circumstances. A big change in 
the purchasing power of a currency upsets everything frightfully. A restora- 
Na 
tion may he as great a calamity as an acceptance, of the change.’, Mr, Allen 
marsen, and regrets that, these sotisiderations, which seam so obviots hows 
ax 
