120 SECTIONAL ADDRESSES 
constant ; international trade adapted itself to that system and for this 
reason the system did not seriously prejudice the operation of the gold 
standard. This statement does not constitute a defence of protection. 
Finally, the credit system of the world was not only firmly organised, 
but organised in such a way as to facilitate the working of the gold standard. 
The Bank of England acted not only as the Central Bank of Great Britain, 
but also as a sort of International Bank of Economic Settlements. In 
time of need it was able to draw funds from other countries and to employ 
those funds at the place of need and in the manner dictated by that 
need. One of the outstanding features of the system was that, when 
any country was in distress, the Bank of England was able and ready to 
mobilise the reserves of the world and to rush to the rescue of that country. 
Credit or liquid capital was thus a balancing influence rather than an 
influence employed to destroy an existing state of equilibrium. If actual 
gold was needed it was forthcoming, as in the case of the United States 
of America during the crisis of 1907; if a short-term loan was needed 
gold was not unnecessarily moved from one country to another; gold 
movements merely supplemented credit operations. Gold was not an 
alternative to a short loan, neither was it moved about in such a way as 
to necessitate a counteracting short loan operation. Both credit and gold 
movements were correcting rather than disturbing influences; they 
restored rather than destroyed equilibrium. The Bank of England 
adopted a more or less neutral attitude in the sense that it performed the 
essential functions of an International Bank and regarded the problem 
of monetary stability as an international problem. I do not, of course, 
suggest that its attitude was altruistic and that Great Britain voluntarily 
adopted such an attitude merely in the interests of world stability and 
progress. Such was not the case. The economic structure of Great 
Britain and the position that she held as the largest investing country 
and the centre of world finance made her individual interests identical 
with the interests of the world as a whole. There was no conflict, or 
presumed conflict, between the one and the many. 
IV. 
In all these respects the post-war world has differed from the pre-war 
world. Moreover, it seems to me that it is in precisely these differences 
that we find the real explanation of the failure of the gold standard, and 
that, before we can hope to establish any international standard that will 
stand the test of time, it will be necessary to restore those conditions which 
made the pre-war gold standard not merely workable but also highly 
successful. 
In the first place, the post-war gold standard was not of slow growth. 
Most of the countries that had abandoned gold under the pressure of 
war rushed back within the short space of about four years, and with- 
out considering with sufficient care the changes that had occurred in 
the underlying economic conditions. ‘The result was that in some cases 
the rates of exchange were fixed too high and in other cases too low. 
I may refer briefly to the two outstanding examples—Great Britain and 
