WICKENS REPORT

Evening Post, Volume CX, Issue 135, 5 December 1930, Page 9

WICKENS REPORT

COURSE RECOMMENDED

"A lUMITED MEASURE"

The higltfy important question _ of. stability b>% currency was involved! in. a statement , submitted to tiro ActingPrime Minister by- the Commonwealth. Statistician (Mr. Wickens) recently.. References to this statement were made by Mt ; Anstey in a recent speech; Mr. WlckiMis points- out that it appears desirable that definite action should bo taßfcen by Australia to bring about some stabilisation of lier internal prices, says t:feo Melbourne "Age. r To achieve that objective, lie suggests that the readiest mans is by the selection of an equitalile price level, and sucli a reo-ulatioo »±'. the currency that when, the price level .tends to go downwards, from that positions there- should be an increase in th-ip note issue, and that when there is -,'tfio opposite tendency the issue should^ be; curtailed. The detailed b tmis for such a sdicme, Ik said, should be« -worked out. by a committo on whi«l)j' banters, economists, statisticians, and', the- Treasury1 were represented. Whstf;. was needed before any such- detailed action was taken,,or even considered, was the recognition' of the significance* of tho results to which such a couUßtv wonld lead1. One effect would be to, put foreign , exchanges at a higlusu. level even than* that now attained, twit that would be a minor evil, since tifte- stabilisation of internal prices was .of much greater, importance than the* stabilisation of exchanges. Further, the high- exchanges automatically-' furnished export producers with a bonus, and thus, by stimulating export pi eduction, tended towards their own ami'iliilation. CHIEF GOta., The principal objecthlß: of most modern currency reformers •was. the- avoidance of both inflation and deflation, and the attainment if at -ill practicable, of stabilisation. During? and immediately after the war the great, cimrencyevil experience was thali of infliction,, whereby the amount, thasfc is-, the: facevalue, of the circulation i*f most countries became extensively, and; in some cases indefinitely, increase<l. This had the effect -of raising prices i and: in-, general of ■benefiting the deb tors-: in the community, and of prejudicing the creditors. , . • The converse evil, that of deflation, had precisely the opposite cilSect.. Thecreditors were benefited, tuc debtors prejudiced. It was doubtfutf, in. his; opinion, whether inflation wa«3 a worse evil than deflation. With inflation there waa a strong in-eentivi J to continue the process. The inanui ucture of currency appeared so fatally etisy that unless some very definite meai ts--ofr're-cognising its insidious effects Hrer.e instituted the danger might "pcrbjfips,not be realised until too late. Wiijk deflation there was the gloom of falling prices, of extensive unemploym put, of commercial crises, of business failures, and of all those sinister happenings which were-associated with a period of depression. They ]ed inevitably to such a hold-up of activities of the* com.:munity that production was restrtkited,. trade declined, and unemployment con- " sequcntly assumed colossal proportions. CUNLIFFE COMMITTEE. Mr. Wiekcns said that when the :inflation evil was in evidence in Europe after the war the Cunliffe Committee in England suggested in its interiw report in 1918, and reconnnendcfl definitely in its final report in> 1919, that a limit should bo»v fixed to the fiduciary circulation oi3 Treasury notes. The object of the': limitation, which was adopted by the | Government within twelve days of the,1 presentation of the final report, was to cheek the inflation which occurred during and after the war. Australia's problem, however, was the converse of :. that, and involved the checking of the ' disastrous deflation of currency which < was shown by statistics of prices of all kinds to be in operation. I The decline had been so marlccd that i the wholesale price level had fallen by 1 l-7-'r per cent, between September, 1929, I and September, 1930. The retail price ' level for food and groceries fell by lo I per cent, between October, 1929, and i September, 1030, and the price of ordinary shares on the Stock Exchange by 1 more- than 50 per cent, between Sep- < tember, 192,9, and September, 1930. In i all cases the evidence available was J that the declines enumerated were continuing. The persistence and univer- ( sality of this cataclysmic decline, ho < stated, suggested that something more 1 heroic was necessary than the raising ' of exchange rates proposed by the ceo- < nomic committee which recently re- ] ported to tho Cabinet Sub-committee. ■ And, although such a step was inevit- 1 able, it appeared that it must be sup- 1 plemented by definite action to stop the rot which had set in in Anstra- " lian prices of all kinds. s The colossal decline in world's prices ' was due to no small extent to the rapid J return of the leading countries of" the ' world to tho gold st#r*fcird, and to the <

unequal distribution, of the world's: monetary gold—gold' held in: public treasuries and: Banks. Tlic latest fig- ; uresi showed: •that IT.S;A. had' 39.3. per: cent., France H. 9 pet cent.,, andi the TJnited Kingdom. 7.3. per cent., of the monetary gold at the end; of 1928 i Since: then, the position* had! not improved1.. Mxt..ANSTEY'S DEFENCE. '' I have tried to express, the will of the., people as a Irving, forca- whliek should rule the land; in, place; of the rule of bankers far their own; peculiarinterests. '' This was the defence the Minister for Health. (.Mr. Anstey), made to. Ms, own electors, of Bourke in. a- public meeting; in. tlie. Bmnswiek Town. Hall,, of his motion in. the Federal caucus favouring inflation, of. the Cbinmonwealth currency, says the "'Sun-News Pictorial. "'■ The meeting passed the fallowing' motion with only two dissentients:— "That the Federal Government be requesteds to introduce- legislaticmi immediately to nationalise banking, as the control of banking is essential to economic and financial reeonstrue- : tionI.'" i Mr. Anatey made his speech of dofence in support of the motion,, which ; 'was moved by Mi1. E; W. Peters, secI '.retary of tlie Brunswick branch of the. 1 .Australian Labour. Party;. PRANCE'S EXAMPLE. "What is the difference between- Te- : pmliation and! a moratori-um? Both arei •equests for air extension of time'?''-" hetlteclarcd. ilt was1 not until the Labour Party hv'%l declared its position on the: cur.ro. (icy question, ho added, tliat: the bankers discovered that they were able to assist, the Government in convertingthe present loan.. Previous., to that the i*« had been- ;<; I'ot of talk about ruin and desolation. Now they were assisting because they ..feared that the; voice-of the majority,.', sucll as that expressed' in New South. "Wales, would prove too strong for t>W old financial policies.. WH We banking: was left in the hands of pri'ip.'iito enterprise^ no- Labour Govenimcikt would be able to do anything for the*' people. Tho- same- arguments were being, used against its. policy today as., were used when a Government, note issiuv was instituted by the 1910----13 Labo iir Government. To-day's proposals -n'eue only an-, extension of that policy. The Mijirvster claimed that the harm wrought by suggestions of repudiation should no* be blamed on tho people who made- these: suggestions, birt-aiu tho newspapew^which broadcast them.. He1 was of tho opinion that new methods of finance should bo adopted.