The Auckland Star. WITH WHICH ARE INCORPORATED The Evening News, Morning News, The Echo and The Sun. WEDNESDAY, JULY 22, 1931. THE LONDON CONFERENCE.

Auckland Star, Volume LXII, Issue 171, 22 July 1931, Page 6

The Auckland Star. WITH WHICH ARE INCORPORATED The Evening News, Morning News, The Echo and The Sun.

WEDNESDAY, JULY 22, 1931. THE LONDON CONFERENCE.

For the cause that lacks assistance, For the tcrong that needs resistance. For the future in the distance, And the good that we can do.

When the British Prime Minister, opening the financial Conference at London, described this convention as marking a turning-point in the world's history, he was far from exaggerating its importance and the great possibilities that it involves. For the first time since the Wai- all the Great Powers are prepared to co-operate in the financial reconstruction of Europe. If they succeed, a new era of progress and prosperity will date from the London Conference. On the other hand, if they fail, the consequences must be so disastrous that we may well leave them for the time being to the imagination. Never in modern history have more momentous responsibilities been entrusted to the discretion of such an international gathering, and the whole world must wish the Conference success in handling the formidable task that it has undertaken.

In explaining the purpose and intention of the Conference, Mr. Mac Donald rightly laid stress on one aspect of the world's financial problems -which is too often ignored. It is universally acknowledged that the depression from which the Avorld is suffering is clue chiefly to the fall in prices. But the fall in prices presses with special intensity upon all debtors. When a debtor has contracted to discharge his obligations by paying back a fixed sum at a fixed rate of interest, and the prices of all commodities fall before the debt is wiped out, he is compelled to produce and sell an evergrowing quantity of commodities to satisfy his creditor. In other words, during a period of falling prices, all debts automatically increase. Thus, as Mr. Mac Donald explained, the world depression has been a grievous ordeal to Germany, "both as an exporting and a debtor State/' When it became evident that the Germans could no longer sustain this crushing burden, capital began to leave the country, thus intensifying its financial difficulties, and Mr. Hoover's proposal for a moratorium came as an almost miraculous intervention to save not only Germany, but possibly the whole of Europe, from impending financial ruin.

It is important to note that even France is now convinced of the necessity for saving Germany from bankruptcy, and it is on this ground that the French Government has agreed to participate in the Conference. A strenuous effort Is being made to prevent the intrusion of political issues, and this course will certainly be supported by the United States. It is most desirable that the Americans should be satisfied on this point: for the ultimate success of the Conference depends almost entirely upon them. From their point of view the presence of an American delegate at the Conference is a serious divergence from their traditional policy and a generous concession to the needs of Europe. But the American Government has already given proof that it proposes to play more than a formal part in the proceedings. For Mr. Hoover has followed up his offer of a Moratorium with a suggestion for international co-operation between the world's central reserve banks to put Germany's finances on a sound footing and to ensure her future solvency. If this policy can be carried to a practical issue, it will secure all the objects which Mr. Mac Donald has commended to the Conference, and it will open up a new path to hope and safety for a distracted world.