ABSTRACT
In describing the "pre-war monetary system", Mr. Hartley Withers represents the Bank of England as being the creator and destroyer of credit. Of course the Bank would make good use of such a fine opportunity, never selling except at a handsome profit. But the Bank is no more favoured than humbler bargainers; it is forced to abide its time and sell when it can and must. How little the Bank was able to manage, to control the situation, is most aptly demonstrated from the manner of its action when gold flowed from its reserve. The movements of gold, which bank-rate policy is supposed to control, have a significance far beyond the reach of such policy. Rightly considered bank-rate policy is nothing but a repudiation of the fundamental principle of the gold standard. Mr. Withers quotes from and comments upon the Cunliffe Report to this effect: Under an effective gold standard all export demands for gold must foe freely met.
