THEIR MISTAKE

Evening Post, Volume CX, Issue 144, 16 December 1930, Page 11

THEIR MISTAKE

PEGGUNG THE EXCHANGE

SUGGESTED REMEDY

Speaking before members of the Sydney division of the Country Party, Mr. J. P. Abbott, president of the Scone branch, said that the fact that the whole machinery of the Commonwealth was out of gear was shown by the CKeessive number of unemployed, which was 18.6 per cent, for the second quarter of the year, says the "Sydney Morning HeraJd." The ever-increas-ing number of bankruptcies, the failure of Governments to live within their incomes, and the increase of the unemployment iigitre to 20 per cent, for the third quarter, of the year, proved that matters wero not mending. Mr. Abbott, traced the history of the movement of gold. "The very big mistake that the Fedoral Government, the Loan Council, and the State Governments have made all through tho present crisis," he said, "is that, a'tthough the currency of this country hag for months been off the gold standard, they have attempted by means of pegging the exchange, to pretend that the pound note, which is not exchange for a sovereign, is within 8J per cent, of the sterling pound. "For the whole of the exporting industries fhis policy was disastrous. The producers of exports did not receive the price thait their goods were worth in bullion averseas, but they wero paid in Australia, in a depreciated currency, whose value was arbitrarily fixed not by free competition, but by the Commonwealth Bank." • This, added Mr. Abbott, was a double-edged sword to use against the! export<irs. Firstly, they were hard hit by the. fall in commodity prices; and, secondly, they were injured by being robbed, of some benefits which they would have received under a free exchange. The result could be plainly read in tho terrific unemployment and the .stagnation of industry, especially in mel"i'»l and coal mining. "The suggested remedies fall into two kinds," Mr. Abbott went on. "Further huge public borrowings, the protagonist of which school is Mr. J. T. Lang. "This, he said, was no solutioai. Another method was to link the vaJuo of the Australian pound note to nothing and inflate the issue. This he described as being tho "most deadly of all the remedies." lie went on to suggest a method whereby the Australian note would be brought gradually back to a parity with gold. The value of tho pound note could be increased each year by adding to the standard the value of one pound of average Australian wool. After a, period of some eight years, the pound note would be worth 241b of wool. At this rate the wool pound and tho sterling pound would probably be convertible, and then Australia would autoniutii'.'illy be back on a gold standard. Should. Iho wool fall further in value, tlii-ii tin; addition oi! tho vhliio ot: the one pound of wool per annum would continue for a longer period.