The New Pound Note
Several newspapers have commented on the continuation in the new pound note of the meaningless words “Bank of England Promise to pay the Bearer on Demand the sum of one pound,’’ and have wondered why it has not been dropped. Not that it was always meaningless. When gold coins circulated as currency, before 1914, the promise meant, by law, that the holder of a £5 Bank of England note (there were no £1 notes) could demand gold coin for it over the bank counter. And that meant that the purchasing power of the note was always the same as that of the legally defined weight of gold contained in the coins. If the law had remained unchanged and if the promise still had meaning the holder of a pound note could demand from the Bank a sovereign, or gold pound, the present price of which in the gold market is over 60s.
The fall in the value of the note corresponds to the combined effect of the pound having been reduced from 4.86 American dollars to 2.8 dollars, and the gold content of the dollar having been reduced by nearly half in 1934; so that the pound note represents only about a third of the gold it represented in 1914. This has been brought about by the inflation of the currency. Yet all that the Radcliffe Committee on the Monetary System had to say in its report last year was:
The authorities have explained to us in evidence that they do not regard the supply of bank notes as being the only, nor nowadays the only important, supply of money . . . bank notes are in effect the small change of the monetary system. (Para. 348.)
“Small change” is an odd term to apply to an increase in the note issue by about £1,670 million, from the £530 million of 1938 to the present £2,200 million.
And when the Committee added that “the government’s function in issuing notes is simply the passive one of ensuring that sufficient notes are available for the practical convenience of the public,” they might have recalled that historically every government that has helped to pay its way by the printing press has made the same plea and disowned responsibility for the effect in raising prices.
Cinema Tax
When the Chancellor of the Exchequer announced the abolition of the cinema tax the Cinematograph Exhibitor’s Association said there was no chance of a reduction in seat prices “because it had always been part of the industry’s case in pressing for abolition that it needed the money.” (The Guardian, 5/4/60.)
Apparently the tobacco firms also “need the money” because they are putting up prices by the amount of the extra 2d. duty on 20 cigarettes.
Angry newspaper readers have written many letters of protest at the “unfairness” of it all.
In fact, the eventual outcome will not depend on what the interests think they need, but on what they can get away with; the economists call it “what the market will bear.” If competition is keen enough they will all have second thoughts.
The taxation experts who advise the Chancellor of the Exchequer look at it differently. If an industry is doing very well there is room for the government to skim off some of their excess profit. That was the situation in 1916 when entertainment duty was first levied. Now that the industry has fallen on hard times, taxation revenue declines and the point could be reached that it would be hardly worth the expense of collection.
More about Russian Gold
The Guardian (8/4/60) published an informative article by Mr. Victor Zorza reviewing developments in the Russian gold-mining industry since the changeover from dependence on the compulsory labour of political and other prisoners to the growing introduction of workers attracted by prospects of higher wages and a share in their finds. Some former prisoners have been freed though still confined to the gold mine areas. He quotes estimates by non-Russian “experts” ranging from an output almost equal to South Africa’s to a figure about half that amount and expresses the opinion that output must have fallen greatly with the decline of prison labour, though the introduction of up-to-date industrial techniques of mining may be expected to raise it again. His own view is that Russia may not possess the big gold reserves sometimes assumed to exist, and that the big sales of Russian gold in world markets in recent years may be not far below total output.
Fifty years ago under the Czar’s government gold prospectors instead of selling the gold to the government at the fixed price often smuggled it into Japan where they got the much higher world price. Things have not changed. Prospectors are still supposed to sell to the government, but Zorza reproduces from the Russian press accounts of gold mine prospectors of today smuggling the gold out of Siberia to Moscow and making a handsome gain. One miner awaiting trial is alleged to have got away with half a ton, worth over £200,000 in the world market. And just to remind us of the similarities of Capitalism east and west of the Iron Curtain the same issue of The Guardian publishes news of one of the series of cases from Pakistan of people (including airline stewards) charged with smuggling gold across the frontier.
By-Product of Automation
Automation, because it involves huge expenditure on expensive plant, gives the employers an additional motive for going over to shift working, so that the plant is not lying idle for a large part of the 24 hours. The T.U.C. report Automation and the Trade Unions noted this: —
“In order to obtain the greatest possible use of expensive plant and equipment, it is not unlikely that the growth of automation will be accompanied by efforts to extend shift working.”
For many years trade unions tried to resist shift and night work and nobody can pretend that from the workers' standpoint it is not a worsening of conditions. The March issue of the T.U.C. monthly, Labour, summarises a report on the problems that arise when shift work is introduced:
Domestic life of the family is suddenly upset; feeding and sleeping arrangements are disturbed and leisure time curtailed. The strain on a wife in such circumstances is “considerable,” says the report, particularly if a shift rota system involves a succession of changes.
Along with the difficulty of the workers trying to sleep in the daytime in a noisy home, there is the problem of getting meals at awkward hours and the problem of finding transport to and from work.
One of the attractions of automation noted by the government booklet Automation in Perspective is that ”automation lowers cost and can help to keep British goods competitive in price with those of other countries’’—and the other countries will of course be doing the same in order to keep competitive with British prices. As far as the extension of shift working is concerned it introduces a new concept of capitalist society, living worse to keep down with the foreign Joneses.
Edgar Hardcastle
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