CONTROLLED CURRENCY.

Auckland Star, Volume LII, Issue 72, 26 March 1921, Page 12

CONTROLLED CURRENCY.

REPLACING GOLD STANDARD. A TEMPORARY EXPEDIENT. RON". A. M. MYERS' VIEWS. ISj Te! "graph.—Press Association.l WELLINGTON. Friday. The financial situation ->va-= discussed ii 1-day In- the Hon. A. M. Myers, who has ilist returned from a lengthy visit to Knffland. -The '-in-unistanrfs in every country/ he said, "compel us to direct serious ;i".ti'titiou to the restoration of finances ;i« soon as possible to a sound basis. Mtiiirial measures designed to defeat the ■■nrkinp of economic laws cannot be supported for long, siltce they must lead to adverse results, (treat Britain and \merica. under the stimulus of wer eon- ■ liti'ins. have greatly increased their i u-.vcT of prcliduction. but they cannot i'nd buyers for tlicir manufactures • iwinsr to the impoverishment of the devastated countries in Central Europe. The gold standard, as existing before tho war. has practically gone, and in its ;>lace then' exists controlled currency. .vn expedient requiring most careful watching. 1 believe, however, that the ■_">ld standard will he re-established he lore many wars. As twin causes of hig!\ prices are monetary inflation and underproduction, and a* increased money supply, unaccompanied by an increase in i lie supply 0! necessary goods, would achieve nothing except further disturb nnee a.nd readjustment of price levels, every effort must be made to increase production, thus creating real capital. Various s hemes for the rehabilitation of the European purchasing power are therefore all in the direction of restores her productive capacity in order to onvert into banking security assets that various countries maj- offer as a pledge. ""I cannot help remarking." added Mr. Myers, '"that one of the outstanding features which impressed mc was the imjiurtant part piayed br the banks in the ■reat financial difficulties which presented themselves for solution both during the war a> well as under peace .conditions. There is a feeling among quite n laree number of people thftt the banks are simply cautious, conservative institutions, whose interests are inimical to ;!ie best interests of the. community. The important part they played during the 'iar and up to the present shows, how- <■• er, how erroneous such opinions were. I heir customers were leaning on them more than ever, owing to advances having to be made on account of Government loans, high taxation, and the great leeway to be made up because of industrial stagnation during- the war. We jnust realise that the banks had also to face the fact that the gold standard as it existed before the war was gone, and that its place had been taken by a controlled currency, an expedient which needs, as already stated, most careful watching. But the gold standard will, 1 believe, be re-established faefore many Years. The banks, as a whole, fully realised the grave responsibility that rested upon them, and exercised the greatest discretion in their advances to customers and in restricting accommodation in the best interests of the nation. It is, indeed, generally recognised that the soundness of the policy of the leading British hanks and their consequent strength and solidity played an important part in the restoration of London as the financial centre of the ■world.' .