Gold Money

The outstanding event of the month--perhaps of 1925--was the official resumption, last week, of the gold standard in Britain. Chancellor Churchill took his usual bold way. He resumed by resuming. Credit and trade in the U. S. as well as abroad was stimulated. His announcement showed how impressively Britain has buttressed her gold position to acquire a credit of $200,000,000 with the Federal Reserve Bank of New York, as well as one for $100,000,000 with J. P. Morgan & Co. It is probable that these credits will never be needed. In addition, the current Bank of England statement showed -L-155.742,000 in bullion, and Britain's 1925 debt payment of $166,000,000 to our Treasury on War debt account has already been "discreetly accumulated." Thus the speculators who might doubt the ability of the British to remain on a gold basis, and accordingly be inclined to sell sterling "short," depressing its price in dollars, would be running into a stone wall. The sharp punishment administered to such short sellers of francs a year ago by the J. P. Morgan & Co. credit of $100,000,000 is still clearly remembered in speculative quarters.

On the day of the Chancellor's announcement, sterling shot up from $4.82 1/8 to $4.84, which is not far enough from the gold par of $4.8665 to call for any great British export of the yellow metal.

The British resumption assures our credit system that its enormous accumulation of gold will not be negatived by refusal of foreign countries to return to the gold standard. Several European currencies will presumably follow the British example, especially those of Spain and the Scandinavian countries. Other countries, in worse condition as to depreciated currency and for the time doubtful as to the advisability of attempting gold resumption, began to take second thought as to their financial and currency aims. Even France is now wondering, not whether gold resumption is advisable, but when and how it will be possible.