The Auckland Star: WITH WHICH ARE INCORPORATED The Evening News, Morning News The Echo and The Sun. WEDNESDAY, APRIL 19, 1933. GOLD AND SILVER.

Auckland Star, Volume LXIV, Issue 91, 19 April 1933, Page 6

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

WEDNESDAY, APRIL 19, 1933. GOLD AND SILVER.

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

One of the proposals put forward as a basis for new monetary policy in America is the extended use of silver, and it is hinted strongly that President Roosevelt will discuss with Mr. MacDonaJd and other foreign representatives the desirability of returning to a bimetallic system. America would stand to lose by such a change through a fall in the value of gold, and the same applies to all countries which have .large stores of the precious metal. Against this loss must be balanced the gain to the world which would result from a substantial rise in prices through extending the basis of currency, and through improving trade conditions between the East and the "West. In view of the apparent conflict of interests, it is necessary to emphasise that, if a radical change is to be made in world currency, the new system must be devised, not in order to raise or lower the value of metal, but to improve conditions for finance and trade. If silver is to be coined in greater quantity it must be to raise prices and not to serve the interests of those who produce the metal, nor must the advocates of a gold standard be swayed unduly by their old allegiance. The situation with which the world is faced to-day is that a few countries, of which the United States and France are the. most important, retain the gold standard; that many others, of which Great Britain is the centre, have currencies based on sterling; and that China alone uses silver as full-powered money. It has been argued by currency reformers in Britain that a return to silver would give a stimulus to trade with China, the results of which would be incalculable, and also that prices would be steadier, once a new equilibrium was reached, if gold and silver were tied together. The question immediately arises what should be the ratio. In America the 16 to 1 rate favoured by the late Mr. Bryan is mentioned, but this would bring a considerable rise in the value of silver in relation to gold. Under the bimetallic system as it operated last century, such overvaluation would tend to drive silver from use wherever it existed as currency, and for flliina. the effects might be sudden and disturbing. In most countries, however, there should be little danger of such trouble, because metallic money is no longer in general use, but is held in banking reserves. Certain it is that the changes in the habits of the people over the past quarter of a century in the use of money should make a bimetallic system more workable and less costly than it was. These and other considerations will no doubt be weighed in the present deliberations at Washington, which are a preliminary to discussing the whole question at the World Economic Conference.