Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-10-01
WORLD BANK MAY
FIX NEW CURRENCY
Situation Precipitated by
Britain Chief Problem of
October Meeting.

BY Cable to The Star.
BASEL, Switzerland, October L.
The meeting Of the board Of directors
Of the Bank for International Settle
mentS october IL promises to be most
important. Since their last meeting
the member banks have backslid from
the principles of the gold standard and
war has been declared on the century
old monetary system.
At stake Is the existence of the gold
standard itself. The question to be
decided by this gold war is: Shall gold
be abandoned as a measure for trade,
or shall a new managed currency" be
set up?
Central banks, as the Federal Re
serve System in the United States, are
the watchdogs of their countries cur
rencies, which they protect by regula-
tions, chiefly through interest rates
The Bank for International Settlements
is the central bank of the central
banks. Even before the war debt and
PREPARATIONS payment suspension was de-
clared, the main business of the Bank
for International Settlements was to
act as an agent for the central banks.
Its job was to protect the worlds cur
rencies through facilitating interna-
tional settlements, through economic
ing gold movements, through using
capital deposits for short-term and
middle term loans, through opening
financial valves allowing money and
capital to flow from high level reservoirs
to dry tanks and through placing funds
where interest rates were highest until
an automatically leyeling motion &C.
CURED.
No Provision for Situation.
Ideal was the situation in which the
world bank could not make a profit.
Indeed, this bank was not organized
for profit, but to serve the world as q
gold clearing house or level-valve oper-
ator.
The world bank is pledged to work
for the gold standard and its members
are pledged to the gold standard Now
we have a situation wherein the star
member. in fact, the member which
invented the gold standard system, Is
backsuding and it was so taken for
granted that none of the members
would backslide that there is nothing
in the statutes to meet this eventuality.
Here in Basel they are wondering
what will be the attitude of Montagu
Norman, governor of the Bank of Eng.
land-presuming that he comes to repre-
sent that bank-and there is con-
siderable doubt that Mr.. Norman thinks
that abandoning the gold standard has
been right or wise. There are differences
of opinion even in London.
1t is generally thought that Great
Britain went on a wild currency basis
through necessity. AS one banker here
says, 1T is probably nearer right to
say that Great Britain is now getting
in line with the rest of Europe than
to say that Great Britain is doing some-
thing unusual"
War Just Beginning.
But whether premeditated or not, II
Is certain that the British had been
planning the move for two years and
that they surprised the world with
their act In order to preclude a flight
from the pound. The queer report Of
the gold delegation of the League of
Nations showing that the world did
not have enough gold was inspired by
the British. The campaign for nom
political international bank was British.
The gold exchange standard growth was
British. Then came the campaign for
lower tariffs and the impoSsibility to
get costs Of production down in Great
Britain. Taxation was increased to one
third the revenue-and the crash came.
The battle Of the Marne In the gold