Mr. Leaf

London bankers are in somewhat of a quandry just now. The Dawes Plan proposes to put Germany back on a gold basis, and consequently make the German mark a gold par currency. The British do not relish seeing the pound sterling lag behind in this race to return to the gold standard, as it might mean the enforced abandonment of her former international trade and financial position. The problem therefore is--how soon can the pound get back to par and a gold basis?

In an attempt to answer this question, Mr. Walter Leaf, famed Greek-scholar and chairman of the Westminster Bank, dropped something of a bombshell into the discussion. In order to attract capital to London--a necessary preliminary to removing the British restrictions on the export of gold--Mr. Leaf advocates an increase in the Bank of England rediscount rate from 4 to 5%.

Now many college economists in England--notably J. M. Keynes and Arthur Kitson--doubt the advisability of going back to the gold standard anyway, and, consciously or not, are inflationists. The Labor Government is also naturally in favor of easier money. Moreover, the London money market itself rather shrinks from pursuing the heroic seemingly necessary remedy of higher rates proposed by Mr. Leaf.

In any case, a most enthusiastic and heated controversy is now going on in the London journals, over the old issue of deflation vs. inflation. Yet no one so far has met or controverted Mr. Leaf's recommendations.