ABSTRACT
WE tried to prove in Chapter XVII that it is essential to maintain some form of limited gold standard in order that there shall remain one commodity which is accepted in payment to an unlimited extent by every country. We argued that in the absence of a gold reserve which could be used to tide a country over a difficult period, even a passing crisis might be sufficient to reduce a country to starvation. This all-important aspect of the problem of the gold standard has not received adequate attention from any of the opponents of the system, for these opponents merely urge that the gold reserves should be sunk at the bottom of the sea and do not propose any alternative international medium of exchange. Little constructive had ever been written on this aspect of the controversy until the publication of Major L. L. B. Angas’s book The Problem of Foreign Exchanges. Major Angas refused to accept the suggestion that gold is the only commodity which can be used for the purpose of accumulating reserves for “rainy days”. He maintained that certain non-perishable staple products could be used for the same purpose. According to him, instead of accumulating gold stocks which have little or no social utility, the monetary authorities should accumulate stocks of useful metals such as copper, tin, lead, etc., and other commodity stocks. He believes that these commodities could well take the place of a gold reserve, not only by enabling the countries concerned to import less during times of pressure, but even by enabling them to increase their exports by liquidating these stocks.
