TWO OPINIONS ON CURRENCY

Evening Post, Volume CXIV, Issue 27, 1 August 1932, Page 6

TWO OPINIONS ON CURRENCY

It is reported that there are two schools of thought on currency at the Ottawa Conference. One' advocate? action by the "sterling group" of nations of which Britain vis the leader, and the.other believes that there must be -international action. This division of opinion .corresponds with the division in' the economic world. Professor Cassel has strongly urged action by the sterling group to secure a common monetary policy with a higher price level. ; He advocates this,'however, not as a complete remedy, but as a first'..-Step, After suck action there'.should be collaboration to bring,about a rise in gold prices, and for this purpose co-operation with.'the';United States should be sought in order to raise the American price level.' Such co-operation.is not an indispens- [ able condition for raising the British price level (Professor Cassel wrote recently), but it would greatly contribute to the stabilisation of the dollar exchange, and besides a rise in prices in the United States would be-of immense '-importance'as a stimulus'to production and as a necessary prc-requisito for restoring prosperity to that country and to' the .world. . . .If Great Britain and the United States unite themselves in" a definite and rational monetary policy they are so strong that the rest of the world would soon-have tq follow their lead. ■ " It is to be noled from this that Professor Cassel does not look to the sterling group of nations alone for the remedy, though he looks to them for a lead. The British Empire, moreover, is not the whole, of the sterling group; in fact it is not all on sterling. South Africa holds to gold and Canada has a currency midway between gold and sterling corresponding to .her trade position between Britain and the United States. If, however,.complete unity of the Empire -on a currency policy were achieved it would still be desirable to assure the co-operation of other important sterling countries—though that should not present great difficulties in view of the celerity, with which Britain's departure from gold was .followed last year. If this were done, and were followed by an agreement to collaborate with the United States in raising the level of gold prices, substantial progress would be made towards removal of monetary obstacles'to world trade. But this is not necessarily sufficient. An able writer stated recently that monetary policy could only provide an efficient handmaid for trade. If the nations effect an improvement in monetary policy so that they may have the means to buy and sell, and then maintain and even raise the. tariff barriers and restrictions which hinder buying and selling,' the last state of the world will be no better than the first. Monetary policy is not magic, though many people at present imagine it to be so. ... ."■ "■: