CHEAP MONEY.

Auckland Star, Volume LXVI, Issue 47, 25 February 1935, Page 4

CHEAP MONEY.

EFFECT ON COMMERCE

"There is some force in the bankers' argument that cheap money by itself can only create conditions favourable for revival, and that in the presence of deterrents, such as international trade restrictions, cheap money is not enough to attract fresh borrowers or to drive revival very far," writes the "London Economist." "There is even some ground for the fear that so long as general trade conditions remain adverse, cheap money may stimulate speculation rather than genuine business activity, and recent developments on the Stock Exchange have tended to support this view. Hence, while it would be wrong to suggest that cheap money has had no good effects, cheap money alone cannot create prosperity.

"Whatever criticisms there may be, it is only fair to add that almost alone among the banks of the world, the British banks have discharged to the full their primary duty of safeguarding their customers money throughout the crisis. Nor must we forget that without a sound banking system it would have been impossible to restore confidence, to institute a regime of cheap money, or to bring about even the modified, trade revival which has so far taken.place in Great Britain,"