driving force. There would be room in the scheme for implement manufacturers, feeding-stuff and fertiliser merchants and other firms whose clients the farmers are, and this would unify many of the divergent interests of agriculture. Money would be kept in the industry, it would be easier to refuse unsuitable goods offered, and profiteering would be impossible owing to the keen competition that would continue to exist, both from abroad and from rival firms at home. In any case the profits would go into the pockets of the farmer-shareholders. These would have concrete encouragement for dealing through their company and producing goods of high standard quality, and it would help them to realise that their responsibility does not end with growing the thing that is most easily grown and dispatching it from the farm in any condition. The nation would also benefit by the money thus kept in the country through the encouraged production of an article that it wants, and will therefore buy, and also by the prosperity that would automatically return to the countryside if the scheme were successful.

We have soil and climate among the best for the general purposes of agriculture. For many years our farmers were the leading agriculturists in the world, and to-day the technical knowledge of many of them is unsurpassed; there is a demand for what they can produce that exceeds the home-grown supply by more than in any other country. But for lack of a proper system for buying and selling and stimulating marketable production half this wealth is going to waste and we have to pay foreigners to produce it. Possibly agricultural co-operation may yet be modified sufficiently to our needs to do all that is asked of it, and if that could be done no one would support it more warmly than the writer of this article. But amid the parrot-like and peevish cries of 'Why don't they co-operate?' and 'We must co-operate' it seems rather more pertinent to ask the questions 'How are we to co-operate?' and 'Why have we failed to cooperate?'

For at least fifteen years there has been a concerted effort to introduce it, so far with pitiable results. Surely it is time we asked ourselves how, where and why there has been such a lack of success, and faced facts, which we find so difficult to do, instead of indulging in pious hopes and misplaced Micawberism. This side of the agricultural question is a business problem, and we need business men to solve it, either by remodelling agricultural cooperation on lines better suited to our national genius and particular conditions, or by introducing another system altogether which will preserve for this country some of the untold millions we annually fling away by our short-sighted inefficiency.

L. F. EASTERBROOK.

THE GOLD STANDARD EXPERIMENT

In spite of the assurance with which Mr. Winston Churchill introduced the Gold Standard Bill in the House of Commons on May 4, the majority of the members, including certain Cabinet Ministers, regard this Bill as an experiment-an experiment attended with a certain amount of danger. It is true that, in reply to a criticism by Mr. Snowden that the Government had 'shown too much precipitancy in its decision,' Mr. Churchill declared that never had a step been taken by a Government more characterised by design, forethought, and careful preparation. Now is the moment which from every point of view should be seized for the introduction of the gold standard.'

I

This Bill is the result of the recommendations made by the Cunliffe Currency Committee, the members of which were, with but one or two exceptions, connected with the banking profession. Those who have studied the Committee's reports, as well as the articles which have appeared from time to time in support of the gold standard, will have noticed an absence of any reference to its effects or to those of the policy which has led up to its re-establishment upon trade and industry. Indeed, these articles and reports would convey the impression that the maintenance of the gold standard is an end in itself rather than a means to an end. The object of a financial system should be the promotion of trade and commerce, and the system which achieves this object in the simplest and safest way ought to be considered the most desirable. A 'sound' currency should tend to promote and increase trade, and the currency which periodically leads to trade depression, or repression ought to be regarded as 'unsound.' So far none of the Committees appointed by the Government to consider the financial system has given this subject of the relation of the gold standard to production the attention that it deserves. Indeed, the subject has scarcely been considered, save in the most superficial manner, and the impression conveyed to the ordinary reader is a complete inversion of their proper relations-viz., that the object of our trade and industries should be the support of the gold standard.

It will be remembered that the members of the Cunliffe Committee were not altogether certain as to what the results of their proposals would be, and they were careful to say in their first interim report that the whole subject ought again to be reviewed 'not later than ten years after the war.' Since this was written there has been a serious weakening in the opinions of some who formerly were the most ardent champions of the gold standard, whilst a few have openly declared war on this policy. Professor Maynard Keynes has recently condemned it as suicidal, whilst some of our daily and weekly journals, which five years ago clamoured for its re-establishment, are now questioning its wisdom. It is now five years since the Lloyd George Government adopted the recommendations of the Cunliffe Committee, and in the opinion of a large and increasing number of business men the industrial depression and unemployment with which the country is afflicted is the direct result of the financial policy adopted and continued by each succeeding Administration since 1920. There are numerous reasons for associating these two, as cause and effect. The trade slump started shortly after the announcement by Mr. Austen Chamberlain as Chancellor of the Exchequer that the Government had 'set its heart on deflating the currency.' It will be remembered that he also requested the bankers to assist him and the Treasury Department in their work of reducing prices, and 'destroying speculation,' by curtailing bank credit and advancing the Bank rate. The effects were both speedy and disastrous. Checking speculation' meant killing trade and enterprise, whilst lowering the general price level meant reducing, and in many cases cancelling, orders. Few purchasers care to buy goods on a falling market. This led to a slackening of the wheels of production and of employment. Thousands of operatives were discharged, whilst others were put on short time. Wages were reduced, and the seeds of future strikes and labour troubles were thus sown. With the reduction of wages and the hours of labour and the increase in the numbers of the unemployed the demand for goods in the home markets was similarly reduced. Moreover, the raising of the value of the pound sterling with the object of bringing it to the level of the gold standard acted as a tax on our exports. When a pound's worth of our goods could be purchased with three dollars and fifty cents, or with thirty francs or forty-five lire or ten rupees, orders from the United States, from France, Italy, and India were pouring in. But as soon as the pound was raised 'to look the dollar in the face' American orders fell off, in common with those from all other countries. Sir Auckland Geddes, as President of the Board of Trade, in answer to a question from a Committee representing the manufacturers, who had called to inquire whether the Govern

،

ment intended to carry out its promise of protecting the industries which had been created during the war, replied that our cheap pounds were in reality a protection to our foreign trade and constituted a bounty upon export. But this advantage was deliberately thrown away by the Government in its adoption of the Cunliffe Committee's proposals. The great trade boom which this country enjoyed for nearly two years after the Armistice was deliberately destroyed by the Government and the Treasury officials. As stated by the Morning Post in a recent leading article, whilst Germany was building up and strengthening her industries at the expense of her financial system, we were sacrificing our industries for the sake of our financial prestige. The result is that whilst Germany is rapidly conquering the world's markets and has become the second industrial nation in the world, our industries are falling into decay and we are faced with national ruin ! The foundations of a nation's greatness are its trade and industries, and not its banking system merely.

II

The fact that the gold standard is exclusively the creation of the financial world leaves it open to suspicion on the part of the industrial classes that whilst it may be advantageous to the banking interests it is not necessarily beneficial to the producing classes. It has frequently been remarked that whilst the average banker may be well versed in the art of banking, very few of them really understand the principles of monetary science. Mr. Henry Ford has written on this subject in various articles, and has even gone so far as to say that the last man he would ever consult on business affairs is the banker. And whilst in the main and in the long run the interests of the banker and those of the industrial classes are identical, there are many exceptions. Indeed, it is quite certain that if the deflation policy had been considered at all likely to affect bank shares and bank profits as it has affected those of the farmers and manufacturers generally, this policy would never have been recommended. Whilst the past four years has been one of the most disastrous periods in the history of British trade, it has also been one of the most prosperous in the history of our banks. To the unprejudiced person it would seem that there is something radically wrong with a financial system that can flourish on the ruins of trade and industry!

The question therefore arises whether the gold standard policy is not based upon a gigantic fallacy. There must be something wrong with a theory that fails in practice. Nobody who is familiar with the results of our monetary system since it was established by Lord Liverpool and Sir Robert Peel can regard it as an unqualified success. It has failed on four different occasions

to such an extent that it had to be suspended each time in order to save from ruin not only the nation but the banks themselves. It is surely time that this question was submitted to impartial investigation and treated as a problem of science rather than a policy advocated solely by our money-lending classes.

III

There are two avenues from which one may view this subject, although they lead to results which are diametrically opposed to each other. The one is the historical or traditional aspect, and presents the orthodox view. This was the view taken by Sir Robert Peel in his famous speech delivered in the House of Commons on May 6, 1844, prior to his introduction of the Bank Charter Act. Sir Robert traced the monetary unit, the pound, to the reign of William the Conqueror, when the pound weight of silver was also the pound of account. 'The pound,' he said, 'represented both the weight of metal and the denomination of money, but in the year 1816 gold was established as the exclusive standard.' The orthodox view amounts to this, that since gold has been the principal medium of exchange in all countries, and can be traced back to ancient Greece 4000 years ago, there is no need to seek or even to discuss a substitute. The bigotry and superstition with which this subject is surrounded, even at the present day, may be found in the writings of many of our modern so-called 'authorities.' It will be remembered that a certain professor of economics at a London University created great amusement at the commencement of the war by urging the prosecution of the Chancellor of the Exchequer for having consented to the issue of the Treasury notes, which were to be paid out in place of golden sovereigns! In the opinion of this professor the value of money depends not upon its utility but the material with which it is associated. Needless to say this view of the subject is a cul-de-sac and leads us nowhere. It is a barrier to all progress.

The other view represents the scientific aspect, and is still regarded as unorthodox. It presents monetary systems from the utility standpoint-that from which we consider every invention, convenience, and article of use. It is to this method of investigation that we owe all our progress. Where would mankind and civilisation have been if every branch of knowledge had been permanently controlled by the orthodox schools? It was the orthodox writers who tried to retain slavery on similar grounds to those urged by our present gold standard advocates for its re-establishment. 'Slavery,' they said, 'has always existed from time immemorial. It has been fought for since the world began.' There is scarcely a social or industrial evil which cannot find support from history. The traditional arguments are opposed