BRITAIN'S TASK.

Press, Volume LXVIII, Issue 20551, 20 May 1932, Page 11

BRITAIN'S TASK.

WORLD FINANCIAL PROBLEMS. BANK DISCUSSES DANGERS. LONDON, May IS. The "Westminster Bank Review, discussing financial problems, says: "Our return to the gold standard sooner or later is morally certain, but only on conditions which ensure that the standard should not again be called upon to function under impracticable conditions. The world as a whole lias sunk deeper into the trough of depression, while Britain has been preoccupied in tho task of saving her soul alive. "It would be dangerous to ignore the contingency that if the world outside these islands continues indefinitely to relax its grip on the standards of life, it may be impossible to maintain the position iyc have gained with so much effort and self-sacrifice in the past few months." AN ECONOMIST'S OPINION. The abandonment by Great Britain of the gold standard is looked upon by Professor John Maynard Keynes as the possible starting point of world economic recovery, in- an article'in the May issue of the "Atlantic" monthly, I says the "New York Times." Great Britain's policy has already stopped the decline of prices, measured in terms of national currencies, over the large part of the world allied with sterling, and has brought about the abatement of the deflationary pressure in Great Britain itself, Scandinavia, Australia, New Zealand, India, Ceylon, Malaya, East and West Africa, and Egypt and, in substance, in South America, Canada, and Japan, Mr Keynes writes. As a result -of quitting the gold standard, Mr Keynes says, Great Britain is to-day "decidedly the most prosperous country in tho wholo world." Mr Keynes predicts that tho forces released,by Great Britain's abandonment of the gold standard will in time undermine and destroy the creditor position of Prance and the United States. The position of France in this respect, he says, will bo completely undermined before the end of this year and that of the United States more slowly. Asserting that "there is no possibility of reaching a normal level of production in the near future," Mr Keynes declares that "an almost complete collapse of the financial structure of modern capitalism" can be averted by a policy of inflation and by ceasing tho "competitive panic" for liquidity. Mr Keynes suggests that by showing a greater inclination to embrace this policy Great Britain's statesmen and bankers have succeeded in releasing forces which have not yet had time to work their full beneficial effect, but have already exercised a salutary influence. He recommends a similar policy for tho United States. Pointing out that the number of persons employed in Great Britain today exceeds by 200,000 tho number of persons employed a year ago, and which, he says, is true of no other country, Mr Keynes writes:—This has been achieved in spite of the fact that there has been, even during the past year, a further rise in real wages; for while money wages have fallen by 3 per cent., tho cost of living, in spite of the depreciation of sterling exchange, has fallen by 4 per cent. This results from, ..among other things, the fact that Great Britain to-day is once again tho world's cheapest producer as a consequence of gold abandonment. Referring to opinion in tho United States, Mr Keynes declares that "in the United States it is almost inconceivable what rubbish a public man has to utter to-day if ho is to keep respectable. "Serious and sensible banker?, who as men of common sense are trying to do what they can to stem tho tide of liquidation and to stimulate the forces of expansion have to go about assuring the world of their conviction that there is no serious risk of inflation," Mr Keynes says. "What they really mean is that they cannot yet really see good enough grounds for daring to hope for it."