TOWARDS STABILITY

Evening Post, Volume CXIII, Issue 98, 27 April 1932, Page 8

TOWARDS STABILITY

The immediate purpose of the British Government in establishing an exchange equalisation fund of £150,000,000 is to put a check on fluctuations caused by movements of liquid capital. Britain might have weathered the storm and remained on the gold standard last year if liquid capital had not taken fright and fled from the, country. Now confidence has been restored and liquid capital is flowing back. But rapid ebb and flow of capital, leading to great and sudden variations in exchange, are bad for trade. Stability is the ideal, and if this cannot be assured, then steadiness should be sought. A strong equalisation fund will enable the Government to put a restraining hand upon these movements, by buying and selling foreign securities to balance private transactions. This will, in the first place, give an.assurance of fairly stable prices to manufacturers and traders. They will not be embarrassed by variations which will change the basis on which they have accepted orders and entered into contracts. The equalisation of exchange will, however, do more than this. It will, it is hoped, help Britain to take the lead in gradually restoring a better price-level. International action to raise and stabilise the pricelevel was. recommended by the Macmillan Committee. Hitherto attempts to bring about such action have proved unsuccessful, but with a strong lead from Britain to those countries which are in "the sterling convoy" the correction of the disturbing movements of recent years may yet be made .effective: \