NOTES OF THE DAY

Dominion, Volume 26, Issue 70, 15 December 1932, Page 8

NOTES OF THE DAY

Monetary theorists will have plenty of facts to study and try to explain when the present crisis is resolved and currencies return once more to a stable basis. For one thing they may be puzzled to account for the vagaries of the pound sterling. By the payment to-day of about £l9 million in gold to the United States, the metal basis of the pound is reduced by about 14 per cent, but, in face of this fact, sterling continues to rise. Apparently the psychological factor has strengthened British credit more than the loss of so much gold has weakened it. Great Britain is paying her debt on due date. Once again credit or confidence has proved more powerful than the physical quantity of money material. Other instances of this dominance have been noted from time to time. To suppose, therefore, that money can be used as a mechanism with which prices can be manipulated at will is demonstrably fallacious. There must be confidence that it is good money, that it stands for something, and there must also be confidence that it can be applied with profit.

Like a breath of fresh air in a stagnant room come the confident words spoken by the veteran chairman of the Auckland Stock Exchange, Mr. G. C. Creagh. He speaks of the “growing spirit of confidence and hopefulness for the future.” No doubt there will be many who will sneer that they have not noticed it and, indeed, optimism has been conspicuously absent in recent weeks. But it should not be forgotten that from the middle of June to the middle of November there occurred a broad and well-marked upward trend. Political confusion and indecision has since administered a distinct check but Great Britain, for one, has not stopped to look back. She is not minded to turn into a pillar of salt. The people who are wringing their hands most to-day are those who before the slump were credited with the gift of business or financial imagination—plungers in fact. Their gift was really a curse, being a lack of true imagination which envisages the state of things as it really is. There are others who possessed sane minds and called up steady images. They saw the trend and they follow it still. With Mr. Creagh they can speak with quiet confidence for they know—and there is all history to confirm them—that the bottom never completely falls out, that enough buoyancy is always left to float up out of the trough.