NEW U.S. POLICY.

Auckland Star, Volume LXIV, Issue 109, 11 May 1933, Page 14

NEW U.S. POLICY.

EFFECTS ON WORLD.

FIGHTING THE DEPRESSION.

DE. BELSHAW'S VIEWS. "I do not think that America was forced off the gold standard for the same reason that Britain was/' said Dr. H. Belshaw to members of the Auckland Creditmen's Club at a luncheon in Milne and Choycc's Reception Hall, yesterday afternoon. "The main explanation, I think, is to be found in the intention of the United States Government to promoto internal currency and credit expansion to raise priccs." If such a policy were undertaken and the gold standard retained, ho said, the effect would have been an outflow of gold, which eventually would have forced America off the gold standard. Being already in fact off the gold standard —since the export of gold had been prohibited—it was better to recognise it by an official pronouncement to that effect. In that way confidence would be less shaken.

It was not at all clcar what measures were proposed to raise prices in America, but it was clear that there was a definite intention to set prices and produc-tion-moving upward and to liquidate the large volume oi frozen assets. "From this distance," said the speaker, "it would seem that the abandonment of tho gold standard was part of a larger scheme of national rehabilitation. Exchange May Fluctuate. "The world effects aro difficult to evaluate," he said. "The first will be to remove the gold anchor from exchange, which will be more susceptible to fluctuation, unices stabilised by some means similar to that used in the United Kingdom —the exchange stabilisation fund." The second effect would be to enhance the prestige of sterling. Only four countries remained on the gold standard —France, Switzerland, Holland and Belgium. The leadership in finance was again likely to pass to London, so that a movement of funds from the United States to other countries was quite likely. Such a movement of funds would be a factor tending to depreciate United States exchange, a movement which would be increased by the extent _ to which internal inflation in _ the United States was successful in raising prices. "This will reduce the competitive advantage of the United Kingdom and other countries off tho gold standard. This might appear a bad thing, but an increase in American production might quite well provide a market to offset that disadvantage." Further, America's action removed one stumbling block to international action at the London Conference in regard to the stabilising of international currency, since there would now be no great fear that the United States would press for an early return to gold. In her international policy America, while opposing the cancellation of .war debts, would not refuse to consider their postponement and reduction. That in itself was a step forward, as was also the intention to negotiate for tariff reductions. The proposals to restrict wheat production on an international scale, and international bimetallism, Dr. Belshaw said, ho regarded as impracticable.

"Yet perhaps the most hopeful sign is this, that while recent events in U.S.A. have been disturbing to the peace of mind of the world, yet America seems at last to have girt her loins for the fight with depression and the declaration of foreign policy and economic policy has given a lead to the World Conference. 0 It will be a strange and pleasant thine if the United States at long last is to°lead the world back to lower tariffs and free trade."