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4. Let me begin then by some observations upon three important matters which have been the subject of discussion here and upon whfch some indication of the ultimate British objectives has been specifically asked for. I shall have a good deal to say upon the subject of price levels but I want to make it perfectly clear at once that upon the desirability of raising wholesale commodity prices the United Kingdom Delegation is in full sympathy and agreement with the Dominions and India. 5. Not only is it truly the fact, as stated for example by Sir George Schuster, that we are necessarily affected favourably or unfavourably by anything which concerns their prosperity, but the fall in price level has created its own special problems in our country. We in common with the Dominions have had to face the difficulties created by an increased real burden of debt—by the heavy rate of taxation necessary to balance our budget out of an income diminished by decreased production at home and loss of income from abroad; by the widening discrepancies between wholesale and retail prices; by an excessive reduction in the profits of enterprise; and by a very great volume of unemployment. 6. All these phenomena are only too familiar to the world at large and the purpose of enumerating them here is only to make it clear how severe has been the effect upon the United Kingdom. On some matters such as excessive taxation and heavy unemployment it has perhaps suffered longer than the rest of the world. 7. I hope I have now made it plain that any idea of there being a divergence of view between the United Kingdom and the rest of the Empire on this question of price levels must be founded upon a complete misapprehension of the real facts. 8. In the second place there is the question of the measure of value which should be ultimately adopted. I venture to express my agreement with Mr. Bennett's observation when he said that he failed to see how we could carry on business with the world unless there were some universal yardstick, and I am not disposed to differ from him when he said that he was unable to see a yardstick other than one based on gold which would be universally acceptable. The leader of the South African Delegation also made some extremely weighty observations on the same subject. At the same time we must make it clear that we have no intention of returning to the gold standard unless we can be thoroughly assured that a remedy has been found for the maladjustments which led to the breakdown of that standard last year. It would be useless for the countries now on the sterling basis to revert to gold if the fundamental conditions—economic and political, as well as monetary—had not been so changed as to obviate the risk of a fresh fall in gold prices. Before we change our present basis we must be sure that the change can be maintained and that we shall not have to do our work all over again in a few years' time. 9. There is a third point on which the opinion of the British Delegation has been sought, namely, the possibility of the stabilization of exchange within the Empire. The United Kingdom Delegation recognizes the great importance to traders of a stable rate of exchange and they desire to see the utmost possible stability of exchange rates both between those currencies within the Empire which are based on sterling and also between sterling and gold. They would be very glad to discuss any proposals which may be put forward with this object in view, but they must submit that present world conditions are singularly unfavourable to stability. One of the most alarming features of the world situation is that vast accumulations of capital have been formed which instead of seeking investment in normal fashion on a long term basis are held for safety in short form. This international short term capital is moved from one financial centre to,another with extraordinary rapidity whenever distrust as to the future of an important currency or the prospect of a quick profit suggests a transfer and its volume is so great as entirely to outweigh for considerable periods of time the effect of ordinary trade factors on the course of the exchanges. The United Kingdom has had experience of the working of this factor both-ways, In the summer of 1931 very great withdrawals of short term money from Great Britain took place whereas this year we have had equally sudden and undesired inflows of short term foreign money seeking a refuge in London, and these facts emphasize that, whilst the difficulties caused by big movements of short term capital are usually minimized or ignored by theoretical economists, they present a formidable problem to the people who actually have to handle exchange. The British Government has" devised important new machinery for dealing with this problem so far as practicable in the shape of the Exchange Equalization Account, but it would be going too far to say that even now we could give a