FUTURE OF GOLD

Press, Volume LXXVIII, Issue 23752, 25 September 1942, Page 5

FUTURE OF GOLD

MONETARY POLICY AFTER WAR

VIEWS OF SWEDISH ECONOMIST (N.Z. Press Association— Copyright.)

(Rec. 11 p.m.) LONDON. Sept. 23., The role of gold after the war was discussed by Dr. Jacobsson, the Swedish economist, at a recent Swiss bankers' conference. He said that during a visit to America he had found widespread doubt about the usefulness of the monetary policy so far pursued. The question was openly asked whether it would be wise to reintroduce a currency system which had proved unsuitable, and whether it was worth while to unearth gold when Germany had shown it to be quite possible to solve her unemployment problem ana to rearm without it. Germany had expanded" her credit without producing the inflationary effects which had been regarded as inevitable, while the devaluation of the Reichsmark had been avoided by expanding purchasing power and adjusting costs and prices. The German “economic miracle” had not consisted in the expansion of credit, but in the achievement of saving and the maintenance of equilibrium, and also w new and unorthodox exchange restrictions and trade control. Dr. Jacobsson emphasised that it wai a mistake to believe that credit expansion alone would be sufficient to achieve the desired results. During the war most countries had adopted the price control and other measures used in Germany. Would the system practised during the war be continued in peace time, seeing that it would involve Government, control over the entire economic system? Dr. Jacobsson thought it . premature to answer this or to estimate the part gold would play after the war. While there was now no full gqld standard in any country, gold retained its role as a standard of value. He declared that after the war more importance would be attached to costs and prices adjustments than to monetary measures proper. Money authorities unable to carry out the adjustment of costs themselves would require the support of other factors in economic life, including workmen’s unions. . . No currency or economic system could function without a high degree of discipline. Only a wisely constructed and managed economic system could assure orderly currency conditions. . The “Financial News” expresses the opinion that Dr. Jacobsson's warning that an expansionary credit policy does not in itself make for prosperity should be noted. “He has not taken account of the obvious deterioration of the German system in the current year," says the “Financial News.” “His reminder that gold, even in war time, has retained part of its functions, iff timely.” ________