1937-07-12 — Page 6

THE HONGKONG TE LEGRAPH, MONDAY, JULY 12, 19 37.

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Professor GUSTAV CASSEL, considered the world's greatest authority on gold, says

The Price

Price of GOLD Should

Cut

be

WHEN President Roosevelt, in January 1934 raised the price of gold in terms of dollars by about 70 per cent, he took a. step with extremely far-reaching consequences, both for the world's monetary system and for its economy at large.

There was no adequate penetration of the problem, and power took the place where insight should have directed.

The seed now begins to ripen into a crop of | formidable troubles.

The authorities are unable to indicate a clear course-out of the difficulties, and the world at

Hongkong Telegraph. large trembles in fear of what

MONDAY, JULY 12, 1937.

AIR MAIL AT ORDINARY RATES

is going to happen.

The increase in the price of gold immediately converted the former scarcity of the metal into a great super-abundance. The supply of gold for monetary purposes was further swollen by Early next year, Hongkong the enormously increased pro- will be brought into the all-duction of gold and by exports

of Indian hoards. Empire air mail service scheme by which all first-class mail (that is, letters and postcards)

Professor Gustav Cassel, of Stockholm University, was the Swedish Delegate to the World Monetary and Econo mic Conference in London in 1933. He has written many authoritative works economics and world monetary problems,

ол

finite assurance

www.

that he

minimum reached before the abandonment of the gold standard.

conditions a

will the

means of

Inflation of such a magnitude

is certainly not a thing to play

choose to reduce their buying

At such a price level the entire with. It is natural, then that an gold funds accumulated would be escape should be sought from such consequences. This is pos- required, or thought to be re-sible only if the authorities quired, as a basis for the necessary supply of payment. Whether under such price for gold. It would not be new equilibrium necessary to go back to the old could be established is uncertain, price; a price somewhere half- for burying gold in their cellars. but at any rate gold would again way between the old and the new President Roosevelt has in these possess a certain scarcity, which would probably be preferable. Rising Commodities

days met such doubts with a de- is an indispensable condition for Restrict Production

of atability

any gold THIS mighty gold stream press continue his gold-buying policy, standard system.

ed with almost geological will be earried without sur-

Assuming that this is going So long as large unused re- force towards a rise in com- air charge. In other words,

to happen, and assuming also serves of gold exlat modity prices-indeed, such 3 mail postage from here to any rise was originally aimed at, that the British authorities will be put in motion at any time, time it would reduce the cost of follow the same line, the United there can be reliable guarantee acquiring the gold that still part of the Empire will be at the although only to a

States and Great Britain should for a stable purchasing power of might be offered. A sufficient extent.

have to share between them the the currency. ordinary rates which at present

The limit that could be re burden of buying up all gold that apply to mail sent by sea. Com-

garded as desirable was reached may be forthcoming, or, at Serious Drawbacks pared with existing conditions about the middle of last year, least, by far the larger part of this will mean a great saving in Until then the rise in prices had it. The financial sacrifices of HOWEVER,

great increase in the production in the long run

moderate

would serve to restrict gold production to more manage- that may able dimensions, and at the same

time, at no extra cost, a saving been somewhat retarded by a such a policy would, doubtless, commodity prices can hardly be basis for the monetary system,

SL

un

THE NIGHT HUNTER

90

Naturally, the gold-producing position of a world power, would have to suffer from the lowering of the price of its product. The interest, which has acquired the

resistance from this side may prove strong enough to delay action,

Divergent Interests

lowering of the price of gold would also make it possible for the authorities to cease publle 1 development hoarding of gold, and let all gold leading up to such a rise in offered be effectively used as a that no further cost for be felt to be

looked upon with equanimity. which will be even more marked of all sorts of commodities, but intolerable. Governments con-

of when faster planes are put on when the scarcity of the means tinually working, with under True, Governments would tem- sterilising would come in ques-

The supposed reduction of production began to make balanced Budgets, and in urgent porarily be relieved of some of tion. the Empire routes. The new itself felt a further and sharper need of funds, would sooner or their most immediate financial

development necessitate a considerable writ- scheme will apply as from the rise in prices was inevitable. As later be forced to find some use embarrassments, but the draw the price of gold would, however,

would be very serious.

ing down of the gold funda. end of this year to all mail be-this rise took place at a time for their immense treasures of backs of such a

when depression had already gold.

The lowering of the pur- adready accumulated, and mone- tween England, South Africa, turned into distinct prosperity,

chasing power of money would tary authorities would have to.

incomes of face a great financial loss, This India, Burma, Malaya, and it assumed a clear character of Further Inflation

severely reduce will be inflation and could not but evoke other centres, and

serious anxiety.

MONETARY orthodoxy would large classes of the population; may be a reason for their hesi- extended later to Australia as į

have no reason to object to very rise of prices would in- tance. It should, however, be `Being aware of the dangers of well. It embodies an agree- superfluous gold supply, an enlarged supply of means of cluding all forms of old-age pen- remembered that this loss grows

Further part of its value; in addition, the is.postponed. ment between the Air Ministry, monetary authorities both in payment, "backed" by so abun- sions, would lose a substantial rapidly every month the measure

un- very rise of prices would in- the Post Office and Imperial Air. England and the United States dant gold reserves.

have taken measures to diminish inflation would then be

Commodity prices evitably cause far reaching dis- ways for

a period of fifteen the active influence of gold on avoidable. years, during which time sub-the supply of means of payment, would presumably rise to a level turbances in the conduct of

Such measures may be des- some 70 per cent. above the business. sidies totalling £9,000,000 will be

cribed, in short, as a "sterilising"

The! paid. It is expected that about of the gold required. a hundred thousand letters per principal means for this purpose year will be carried during the is that the central institution it may be a bank or a system the service. first

Treasury, or of banks, a years of

FIND there is magic and my-jabsence of Bound-the bird can

posed in an international There will be nine services a Exchange Equalisation Fund-

stery at the gloaming hour in listen while on the wing, a great AN alternative has been pro- away in its vaults. This may the woods, as the moon rises over benefit to a nocturnal raidor. The A

Nature week to and from Egypt, five a buys all gold offered and puts it week to and from India, three aseem an effective means of com- the tree tops and lights up the owl's hearing is exceedingly acute, agreement for restriction of gold irrational. It has become more week to and from East Africa bating Inflation, but when the glades with a soft, amber light. not a sound escapes it.

cannot impracticable since gold produc- and the Straits Settlements, with offerings of gold on the London The soft breeze scams to whisper has formed Its ears for every ad-production. Such a proposal is.. market run up to several million as it treads its way, waving the vantage, to hear sounds from above however, both impracticable and

Equipped as it is, one Reclining on a fillon tree trunk, eventual extension to Hongkong,pounds a day the method begins censers of the summer's fragrance. as well as below.

I hear the trailing garments of the wonder at the owl's success as a tion has been extended to and two a week to and from to be a bit expensive.

wood's myriad stirring night life.night hunter. Killing rats, frogs, many different countries with interests. For instance, nobody I listen to the night singers. The mice, and volcs, truly he is the the most divergent economic South Africa and Australia. Buried In Cellars

believes that it would be pos- an agreement Both landplanes and flying-boats

TT is only natural that people j sedge-warbler is trilling in a duet fricad of the farmer.

Several years ago, while ramblsible to come to

an owl ask themselves how long can with the black-cap. will be employed on these ser-

with Russia, involving a severe Silent as floating thistledown, the on spending

curtailment of that country's no tawny ow? winnowed his way ing through a field, I saw vices, which will operate from the authorities go England. Extended night millions in this way-for

productive purpose, but simply through the wood, settling softly blinking at the foot of a hedge in

upon a nearby gate bordering a the garish light of day.

п trice he I paused to admire his taway production of gold. The pro- precipitous glen. In flying will ultimately bring

Now he "loo, hoo, fessor-like face. It seemed like hardly be common sense first to Sydney in Australia within

all night. So I thought, "My man, cent. above the old price and. seven days of London, Cape- about 200 miles per hour. It is flies off, a If scenting my lurking brown plumage, and his wise proposal is also irrational. It can town and Singapore within 100 stipulated that they shall be rehoos" with terrific volee from the one who had been out on the tiles raise the price of gold 70 per

placed within seven years by new far end of the wood.

The peculiarity of this owl is its I'll get you now.". Immediately 1 then try to correct the bad con- increase of production which is hours of London, and Karachi machines embodying "all modern

aeronautical habit of hooting when it launches grasped it it gave a terrible cry sequences by preventing that and Kisumu within 60 hours,improvement

the cry with greater force when it claws. I took off my

Thus the discussion is going but until the routes are fully technique and construction exist itself upon its prey, and repeating badly lacerating my arms with its farm. When the good farmer be equipped with night flying faci-ing at the date of replacement." has seized its victint. It carries its enveloped the eavage, which I called forth by the higher price... held ine conting into his steading, on without any decision being. lities and further experience has It will thus be seen that every prize to its perch, where it croons carried in triumph to an adjacent

care is being taken not only to over it ere devouring it.

Meantime the world's economy Sbeen gained, it is proposed

start the services on a sound

AB I waited he came over the with blood-covered face and hande, arrived at. observe the following schedule: basin, but to make provision for high beech hedge with a full-grown he was quite apprehensive, ti i

uncertainty about the funda- Sydney in ten days, Capetown their future expansion and de-rat in his claws. Straight to haunravelled the cause of the trouble.

"The owl became the farmer's mental conditions for its work and Singapore in six to seven velopment. In this way the perch he headed, Alling the wood Safe In the seclusion of a large is held up in the most painful success the Incapacity of the days, Hongkong in seven to eight various parts of the Empire will with his cry. From afar his mate bar we left him.

Much has been said.atkout the of rate, and mice. When food got days, and Karachi and Kisumu become kalt closer together, and for supper. An idyll of the woodal pot, rklding the barn of its plague ing, and revolutionary agitators

capitalist system. in three to four days. The craft the exile in Hongkong will feel employed will be all-British and that he is in more living touch noiseless fight of the owl, which scarce he disappeared to resume his are preaching with increasing will have a maximum speed of with the people of the Homeland, allows it to drop in allence on its beneficent work elsewhere,

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answered, and the two joined up

prey. More important, in

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80