New-York tribune., 1919-03-31
Cnpegg1ns' khe P0unoE
Enthroning Cold Again
England, Substituting Ec onomic Wisdom for Po
litical Expediency, Takes the First Step in the
Slow and Painful p recess of Defaton

because it is not permitted to be had
in those relations in which the pre-
MUM could declare itself. Not circu-
lating freely, it practically does not
circulate at all. Other currencies,
paper and credit, become the sole
media. Doubtless gold may still be had
on occasion from the banks, if only q
good case be made-for certain pur-
poses and limitations. There are
emergency supplies Of gold But under
free and general redemption the ex-
port of gold would meet no difficulty
and could suffer no restriction. Pro
tanto restriction means premium-in
America as in England. On no other
basis can foreign exchange fall below
the export point But because gold
may be had within limits and for
purely domestic purposes, and because
the requirements for these purposes
are slight, the other currencies serving
equally we'll for most needs, no pre-
miums come to be quoted In domestic
trade. Prices are declared equally as
gold or paper prices; the parity ap-
pears to be real; the public is uncon-
scious< In the main, that the country
has abandoned gold redemption and
the gold standard in exchanges, and has
entered into the full swing Of fiat
money and credit initiation. 1t is, in
deed, possible, that, as in America, the
divergence of the actual from the gold
prices is slight, and in most cases in
considerable, or even inappreciable, or
that, as in England and France, the
differcntials have become great and
serious.
Only, in fact, by reference to inter
national trade relations and by the
test of actual gold payments does the
degree of the departure from the gold
standard make itself manifest. And
even then the report is not always an
accurate expression of the actual
spread between gold prices and other
prices. But as against gold in New
York, it is clear that sterling Is at a
serious discount. The English pound
is not gold pound in New York. It,
will not be met in London with gold
to be shipped to New Yor,',, The peg
ging device has been the o.ncal admis-
sion Of this spread between English
circulating media and New York gold
at the samc time that it has been the
definite expression Of tho policy Of
preventing the full report and express
sion Of this spread.
And still again, what were tho final
causes and tho full significance Of the
situation? In most relations and for
all important purposes America has
maintained the full redemption Of all
its currency in gold, no matter how
great may have been the depreciation
of both gold and credit in terms of
goods. 1t is, therefore, true that
whatever goods England sells in New
York it can sell at the New York gold
basis prices. Likewise, whatever goods
it buys in New York it must settle for
in terms of gold prices. In no appre-
cahle degree, therefore, are it's pur-
chases or sales made at it's disadvan-
tage because of its imitation of prices at
home. The high domestic prices that
prompted gold exports, for so long as
gold exports were permitted, affected
its foreign trade relations only in the
way of making it a larger buyer and
smaller seller abroad. =