MONEY AND PRICES

Dominion, Volume 27, Issue 17, 14 October 1933, Page 6

MONEY AND PRICES

A large part of the discussion in the House of Representatives on the World Economic Conference was devoted to monetary problems. Possibly this is a reflection of the widespread interest tn the country in this aspect of the general problem. . Mr. G. D. H. Cole, the British Socialist, professional economist and author of “thrillers,” recently offered art explanation of the public predilection for currency schemes. He said it was obviously tempting to attribute the (economic) evil to monetary causes, which looked as if they could be removed without a sharp break with the existing economic order, and its complete supersession by a different system. At the Conference there was a large body of opjnion, including the Dominions and India, which favoured measures to raise the general price level as a cure for current ills. In the end Great Britain joined in an Empire Declaration affirming this objective, an affirmation that re-stated the policy adopted at Ottawa and went further in some respects. For instance a general definition was framed of the. extent to which prices should be raised. “Any price level would be satisfactoiy, runs the Declaration, “which restores the normal activity of industry and employment, which ensures an economic return to the producer of primary commodities, and which harmonises the burden of debts and fixed charges with economic capacity.” It can be seen from this how much it is hoped to achieve by monetary action. Hence it is rather’ surprising that in the debate in the House this objective was not more specifically examined and that closer consideration was not given to the adequacy or otherwise of the measures for realising it. The policy has been satisfactorily enunciated but are the means for giving it practical effect as satisfactory? Britain’s policy is to rely upon the effect of making money cheap and plentiful and upon the regulation of supplies. . The Dominions agree with the former but not with the latter. Britain could claim that in the twelve months since June of last year the rise in sterling wholesale prices had been 12 per cent, and in sterling prices of primary products, 20 per cent. If the rate of price appreciation can be maintained, the object should be achieved. But Britain asks, and the Dominions should ask themselves, whether prices can be maintained in face of unlimited and unregulated supplies?