RETURN TO GOLD IN 1925 219 
employment will increase, exports will fall off and imports will 
increase.’ 
It is scarcely open to dispute that in advancing for the sake 
of his argument the conditions which he does not believe 
obtained in Britain, Professor Gregory has outlined with almost 
uncanny precision the exact situation which did exist in the 
Commonwealth. Nor can it be denied that the phenomena 
which he associates with this situation have been fully evident 
in Australia since 1925. No country in the world at the time 
covered by the events under discussion possessed such a rigid 
system of wage fixation, nor, on both the side of capital and 
the side of labour, a more decided quasi-monopolistic organiza- 
tion of industry. It is not, therefore, to be wondered at that 
real wages rose in the industries sheltered by the tariff, that 
unemployment has been a pressing problem since the return to 
gold, that productivity and exports-have fallen away, and that 
imports have tended to increase. 
The tests, therefore, which will provide strong presumptive 
evidence, if it is to be found at all, of the effects of stabilizing 
the pound at parity with the dollar will have reference to the 
relative cost of living, to the level of wages, to the volume of 
unemployment, and to the volume of foreign trade for the 
period immediately following the restoration of the gold value 
of the currency. 
Let us take first the ‘cost of living’ test. If the Australian 
pound had been previously over-valued in terms of the dollar 
we should expect to find an increase in the cost of living in 
Australia after the return to gold. Table LIT indicates that, 
whereas the American cost of living rose after the return and 
then fell within eighteen months to about its original level, the 
British index number rose in sympathy and then fell sharply. 
On the contrary, the Australian cost-of-living index rose and 
continued to rise over the whole period, thus strengthening the 
suspicion that the favourable situation in April 1925 was due 
to factors which afterwards ceased to function. Overseas loans 
and payments on account of Bawra. it will be noted, ceased 
abruptly in 1925. 
From thé records of unemployment little that is conclusive 
! Gregory, The First Year of the Gold Standard, p. 17, The italics are mine.