[To the Editor of the SPECTATOR.] SIR,—I have read with
amazement the articles entitled " An Impending National Calamity " and " The Bankers' Threat," which have appeared in your valuable paper. That you should so describe the proposal to raise the Bank Rate to five per cent. in such grave and expressive terms is to me astounding. In the first place I doubt whether the raising of the Bank Rate will alone be sufficient to c fleet the purpose intended, i.e., the restoration of the gold standard and secondly the raising of the rate nowadays when we have no free market in gold is not effective for any purpose whatever. At the same time I am heartily in favour of the action as a step which is likely to facilitate that contraction of the paper currency, which to my mind is necessary before parity of exchange with America and other gold standard countries can be re-established.
Do you suggest that we should have a perpetual four per cent rate ? Why bother about it at all and let us have a two per cent rate for all time ? I am sure this is not your meaning, but will you allow me to state that you are unduly alarmed at the effect which you anticipate will follow this proposed action. You ask us to mark carefully Mr. Darling's argument that as long as we are making our great debt payments to America the return of the pound' to 4.86 is not a practical policy. May I remind Mr. Darling that before we funded our debt to America, and were paying nothing to America, the exchange was 3.50, whereas it is now about 4.88 ? The principal reason being that prises have been very much reduced, and the currency note issue has been reduced between seventy and eighty millions. We are now so comparatively near to parity that I do not anticipate much of a fall, if any, in prices or a great contraction as being necessary to bring about parity. As a trader, I am not alarmed at the prospect. On the contrary,. I hail it with delight as bringing nearer the day when ether countries will follow our eilamPle, and we will' once again see that sta'Ality of
prices and exchanges which I believe is essential for a real recovery of trade.—I, am, Sir, &c., D. M. MAsorr
(Chairman, Executive Committee Sound Currency Association).
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