Gold

From day to day the pound sterling has bounded up and up. Its par level in terms of U. S. dollars is $4.8654 After 1919, it fell by degrees to a figure far under $4.00, the chief reason being that a major part of the world's gold supply was in the U. S. In the early months of 1923, it had climbed up to $4.71--the highest figure since the War control over Allied exchanges was abandoned in March, 1919. The advance was short-lived and the pound sank back to $4.34 in December of the same year. This decline was due in part to the exportation of capital to the U. S. on account of the Ruhr occupation by France, and in part to the expatriation of capital caused by the advent of the Labor Ministry early last year.

Last November, a Conservative Ministry was elected in Britain. The Experts' Plan began to function. The whole Continental situation started to improve. European countries floated loans in the U. S., began to draw on the proceeds. British capital in the U. S. began to flow home. The pound sterling pricked up its ears, shook itself and began a sensational climb from about $4.40 to its newest high point last week of $4.79 1/2--7 1/8 points off par.

The tremendous advance of nearly 40-c- in less than three months started predictions of an early British return to a resumption of gold payments--use of gold currency. * Controversy began of the pros and cons, and the discussion was given much point by the fact that on Dec. 31, 1925, the prohibition placed in 1919 on trading in gold expires. The British Government must make up its mind to resume gold payments or extend the legislation prohibiting it. Which is it to be? That is the argument.

It seems fairly certain that, if the pound continues to rise and maintains its advance, the British Government will permit the shackles about gold currency to be unlocked at the end of the year, but nothing is likely to happen before then. This view is backed by the fact that Germany, Poland, Sweden, Holland have all--to a greater or lesser extent--reverted to gold payments. Britain can hardly afford to drop behind these countries if she is to retain financial supremacy in Europe.

* The legal tender in Britain is paper pound and ten-shilling notes. Reversion to a gold standard would not necessarily mean the abolition of paper currency, but would mean that gold could be bought and sold by private persons, which cannot be done at present.