The Press Tuesday, August 9, 1932. Cautious Optimism.

Press, Volume LXVIII, Issue 20620, 9 August 1932, Page 8

The Press Tuesday, August 9, 1932. Cautious Optimism.

For the first time in many weeks the news about the crisis can be read with pleasure Stocks are booming on the New York exchange; Lord Irwin thinks the economic storm is beginning to blow itself out; Sir Ernest Benn, normally the gloomiest of prophets, invites people to "indulge in a little " sober, modified optimism"; and the Economist finds that "the evidence of " the stock and produce markets con- " firms the impression created by the " statistics of production activity " generally, that the steepest phases 6f " the depression are past." As American general stocks are notoriously unstable, it would be wise to wait a month or so before putting a favourable interpretation on Wall Street's eudden burst of activity. But the three optimistic opinions, though very carefully qualified, are encouraging, if only because they show that at least a few responsible and well-informed people have found something to be optimistic about in a prospect which is still sombre. It is probable, too, that the market improvements noted by the Economist are due to the psychological effects of the Lausanne Conference and the more favourable attitude of the United States towards debt revision rather than to measures actually taken to remedy existing economic maladjustments. Lausanne showed, not only that European Governments at last realised the conditions of recovery, but also that they were prepared to subordinate national interests to a common policy. It is essential to remember, however, that the Lausanne settlement was conditional, that it can still be wrecked by the United States, and that in any case to cancel reparations is to remove only one of many obstacles to recovery. " The supreme " task for the nations _ in the next " twelve months," says the Economist, " is by co-operation to remove the over- " hanging menace of armaments, to " achieve some measure of monetary "stability, to cut away the thicket of " tariffs and trade restrictions, and to "allow the commerce of the world to " flow again in normal channels." Even this ambitious programme will not cure the depression; it will merely relieve the acutest pressure and enable the world to begin diagnosing the industrial as opposed to the monetary causes of its plight. " There is now "no possibility of reaching a flomial "level of production in the near " future," said Mr Keynes recently. " Our efforts are directed towards the " attainment of more limited hopes. " Call we prevent an almost' complete " collapse of the financial structure of " modem capitalism t" The struggle for liquidity on the part of'institutions and Governments has already brought such a'collapse in the Danube Valley; and unless it can be arrested there is hardly a creditor country that will get through the next two years without defaulting or declaring a moratorium. When that has been done the economists can discuss at their leisure the future basis of currencies, the desirability of "reflation," and the rationalising of production.