Evening star., 1933-04-23
Britain's Reaction to
i. S. Gold Decision
BY A. G. GARDINER.

LONDON, April 2Z. -PreSlQent
Roosevelts bolt from the blue, coming
on the same day as the elimination
Of the Moscow espionage trial Of Brit
ish engineers, has bewildered press and
public alike in England.
The shock caused by Americas aban-
donment of the gold standard was
wholly unexpected, although the
strength of the inf1ationary movement
in the United States was recognized.
It was commonly supposed, and it is
still believed in banking circles here.
that Americas holdings of free gold
were amply sufficient to Withstand the
sudden rush of Withdrawals consequent
upon the recent wave of distrust.
On Tuesday, as the London Daily
Telegraph remarks, when the Wash
ington Government gave licenses for
the export of $10,000,000 of gold to
Roosevelt and his colleagues took this
view. Financial compulsion is there
fore ruled out as the motive for the
action in abandoning the gold basis.
X
When Great Britain went off gold
the fact was criticized on the ground
that it was premature, but the Finan-
cial News points out that Britain had
of England from abroad had reduced
the gold reserve almost to the vanish
ing point, while America still has more
than half of the gold currency of the
world and has recovered since March
4 many millions of boarded gold.
Since the motive was not financial
compulsion, it is assumed that it has
political and economic significance
Adoption of this policy on the brink
of important negotiations with Premier
Macdonald Of Britain and Edouard Her
riot of France suggests that President
Roosevelt believes, as the London Eve
ming News remarks. that the discus
sions are more likely to be fruitful If
complicated by the gold standard.
The difficulties Of Macdonald and
Herriot, in view of the changed situa-
ton, are much commented on. It Is
possible now that Macdonald may be
faced by Roosevelt with the formidable
suggestion that Britain must return to
the gold standard as the only alterna-
tive to chaotic worldwide competition
In the devaluation and depreciation of
currencies. Even though faced by so
grave q dilemma, says the Daily Tele-
graph, Macdonald cannot promise to
grant such q demand unless he re-
which the gold standard could work
smoothly will with reasonable certainty
be provided by international co-opera-
tion.
4 +
It is naturally assumed that President
Roosevelt, who is regarded as sound
currency man, has not taken this mo-
mentous step without full consideration
1T %I,1 -.
organic part of the Washington delib-
erations preliminary to the World Eco
nomic Conference In this respect the
opinion widely prevails that his action
indicates not merely a domestic expedi-
ept but new orientation on the part
d America toward world affairs.
As to the effect Of this policy there is
q wide disparity of views. A period of
bewildered confusion is anticipated and
the repercussionS on countries still ef-
fectively on the gold standard. as
France. Holland and Switzerland. or
nominally on the gold standard, as
Germany Belgium and Italy, are
awaited with anxiety. The general i'm
preston Is that these countries, espe-
cially the former, will find it difficult
to resist the pressure to follow Ameri-
cas- example.
Some experts. notably the managing
director of the great Midland Bank,
do not anticipate the more gloomy con-
sequences that are being forecast. but
none ventures to guess where the pound
sterling and the dollar will finally stand
in relation each to the other. The
view IS expressed, however, that the
defiationary process has already gone
so far In America that Q catastrophe
fall In the value Of the dollar IS un-
likely and no critic anticipates an in
tensive effort on the part Of the United
States to force the dollar down and
the pound up by extensive gold manip-
ulation.
It is undeniable, however. that the
prevailing expectation Is that, so far
as Britain is concerned, the effects of
American desertion Of the gold basis
must be unfavorable First, Is the
London Morning Post says, Britain will
lose to America . great part Of the ad-
vantage In trade derived during the
past le months from the depreciation
Of sterling. Next, Britain viii be in the
absurd position Of continuing to owe