126 SECTIONAL ADDRESSES 
currency system is but one aspect of economic nationalism or economic 
isolation, of which tariffs is another. A national system of currency is 
intelligible if not defensible for a nation which isolates itself from the 
family of nations. It is not, however, consistent with a policy of inter- 
nationalism in other departments of economic activity. The gold standard 
stands for internationalism in economic affairs ; it is a condition of free 
development of trade between nations. Nor should it be forgotten that, 
if most countries were on the gold standard, secular changes in the value 
of gold would be relatively small. Post-war changes in the value of 
gold have been due not to the gold standard but to the failure of a number 
of countries to operate that standard. 
Without pausing to consider the case for bimetallism, I venture to 
express the belief that the restoration of the gold standard is necessary 
to the progress of the world in that future which is worth considering. 
I am content to leave the twenty-first century to our great-grandchildren. 
I do not, however, suggest that the gold standard should be immediately 
restored ; on the contrary, I fear that political considerations will drive 
us back to that standard before the essential preliminaries have been 
properly considered. In the first place, it would be folly on our part 
to return to gold until we knew precisely the rate of exchange that would 
enable international trade to be distributed in the manner determined 
by real costs of production. The new rates should be determined by 
purchasing power parities. We are not yet agreed, however, upon the 
precise meaning of purchasing power parity, neither do we possess the 
information that would enable us to estimate purchasing power parity, 
howsoever defined. Again, we should not return to gold until the price 
averages of different countries, expressed in their respective currencies, 
have reached those heights which are regarded as satisfactory; for it 
is clear that subsequent changes must be international rather than purely 
domestic in character. Further, we should not restore the gold standard 
until individual countries are prepared to pursue investment policies 
that are appropriate to the remaining parts of their economic structures. 
It is too much to hope that the great mass of liquid capital which now 
readily—too readily—flows from one country to another will quickly 
be invested in long-term securities and thereby cease to be a danger 
to the financial stability of a number of countries, but it should be easy 
to form an international exchange stabilisation fund under the control 
of an appropriate body which, in effect, would perform the pre-war 
international function of the Bank of England. Such a body would 
direct the flow of funds according to the needs of individual countries, 
not, as at present, in the opposite direction. 
A word should be added on the question of tariffs. Before the war 
the tariff system of each country was determined by long-term considera- 
tions. During the last few years all countries (our own included) have 
found refuge in the doctrines of the mercantilists of earlier days. ‘Tariffs 
have been used not to direct the development of industry but to direct 
the immediate flow of trade. An adverse balance of trade is no longer 
regarded as an incident of economic growth but as a calamity to be avoided 
at all costs. An established system of protection is not inconsistent 
