Saturday, October 14, 2023

Editorial: The Gold Standard and the Workers. (1931)

Editorial from the October 1931 issue of the Socialist Standard

In the formation of the National Government its partisans gave such a gloomy picture of the financial condition of the country that foreign holders of English securities got the wind up and increased their selling. As so much English money is tied up in foreign investments not easily realisable (particularly in Germany), the drawing of gold from the Bank of England to meet the situation increased. This gave the industrialists their opportunity, and on Monday, September 21st, vivid placards announced that the free export of gold had been suspended. This represents a victory of the industrialist section of the capitalists over the banking section, and it is curious to notice that preparations for abandoning the gold standard had already been prepared several days before.

The comments of the Daily Herald for September 21st are fitting expressions for the mouthpiece of the industrialists. In the Editorial they make the following statement :
“Not only during the War, but for seven years after the War, we were off the gold standard, and the pound was at a discount against the dollar.

There were no disastrous consequences. We were, indeed, far more prosperous then than now. And it was in very large measure the forcing of the pound back to parity that crippled our export trade and created the heavy problem of unemployment.”
Thus does the Daily Herald help to hoodwink the workers by blaming economic troubles upon gold. The “prosperity” of the early post-war period is apparent from the following unemployment figures, 1921 to 1925 :—
The City Editor of the Daily Herald, under the heading, “More Reforms,” makes remarks that show how their real concern is for the investors :—
“Now let us turn for a moment from contemplation of the Stock Exchange as a factor in an absorbing international situation, to consider how this re-opening on Saturday will affect the ordinary British investor.

It gives him an advantage in that he can buy and sell shares on six days of the week instead of five.  (….)

It is but one reform out of many which must be accomplished before the Stock Exchange can really claim to provide an adequate service for the ordinary investor, or can take the place it should in national life as a great institution, assisting sound industrial enterprises to obtain capital and to develop along lines which will improve our trade and set to work the millions of unemployed who can find no demand for their services.”
The above “Reform” is surely a treasure, and the workers who have received wage cuts and those who will be thrown out by the economy programme agreed to by the Labour Cabinet, backed by the Herald, will know what to do with their surplus cash !

As we are preparing this issue for the press, we see that Mr. Henderson offered no opposition to the passage of the Gold Standard Bill and that there is a prospect of the Labour Party joining the National Government—possibly their hearts are aching for the lost prestige and positions,

However, to return to the Gold Standard. According to the Daily Express on Monday, September 21st,
“Nothing more heartening has happened for years.  (…) 
The fact remains that at last we are rid of the gold standard—rid of it for good and all.  (…)  
It is the end of the gold standard and the beginning of real recovery.”
The Evening Standard for the same day echoes these sentiments :—
“We are now free of the yoke of France and America. We are not tied to an illusory symbol of wealth ; we stand firmly in the fundamental strength of our position as a great trading and manufacturing nation. And we look confidently to the future.

For what does this mean ? It means a decline in imports and a corresponding boom in the great exporting trades, such as cotton and iron and steel.”
When the workers commence to pay higher prices for food with lower wages, they will not share this view. For, like other attempted solutions for economic troubles, it is a move in favour of a section of the capitalists, leaving the workers where they were before—in a condition that is steadily worsening. Taking the situation at its best, according to the advocates of abandoning the Gold Standard, the increase in exports will be offset by an increase in the prices of imports and home products, thus leaving matters where they were, but re-shuffling the positions of commercial concerns.

It will be remembered by those who read it, that the Macmillan Report on Finance and Industry recommended raising prices approximately to the 1928 level as an alternative to the lowering of wages. Mr. Bevin, a member of the Committee, agreed with this policy.

The illusion that lack of gold has anything to do with the main problems is easily dispelled. America has nearly a thousand million pounds in gold in its reserves and is the great creditor nation, Yet America has been, and still is, suffering severly from economic crises, and has an unemployed army in the neighbourhood of ten millions. France has a gold reserve of nearly five hundred millions, a regular revenue, in gold or gold marks of 50 millions from Germany, and a flourishing export trade. Yet France is already in the midst of a crisis and has an unemployed army well over a million, and the numbers are rapidly growing.

These facts prove that a gold reserve is no guarantee of internal harmony or increasing employment for workers ; and that, with or without a gold reserve, on or off the Gold Standard, the workers are, in the long run, no better off.