"THE MEANS TO PROSPERITY"

Evening Post, Volume CXV, Issue 102, 3 May 1933, Page 8

"THE MEANS TO PROSPERITY"

Great hopes centre on the World Economic Conference, but few people have a clear idea of the means which the Conference hopes to use to attain its aims. There is a general idea that it will deal with tariffs and prices and take steps to lower the first and raise the second; and that, before it does this, it will have effected at least a partial settlement of the war debts and reparations issue. But how are prices to be raised? Mr. J. M. Keynes wfote for "The Times" in March a series of articles under the title "The Means to Prosperity," discussing this very pojnt. One positive statement he made was: "There is no means of raising world prices except by an increase of loan expenditure throughout the world." Britain could contribute to this by increased foreign lending or by increased loan expenditure at home, which Would have a similar effect by. raising the demand for both home manufactures and imports. But British action alone would not give sufficient relief. "I see no reliable prospect of a sufficient 'rise in world prices within a reasonable lime," wrote Mr. Keynes, "except as the result of a substantial, and more or less simultaneous, relief of taxation and increase of loan expenditure in many countries." • The World Economic Conference should devise some joint action to allay the anxieties of central banks and relieve the tension on their reserves so that they would be free to promote loan expenditure and raise prices. For this purpose the settlement of war debls and reparations was, first of all, indispensable. ' ' To provide more adequate reserves of international money so as to allay the anxieties of central banks and .treasuries, Mr. Keynes proposed a new gold-note issue to a maximum of 5,000,000,000 dollars controlled by a board elected by the participating Governments.' The" gold-notes would be issued to the participating countries in proportionate quotas based on their respective gold reserves at some recent normal date, but no quota would exceed 450,000,000 dollars, and the govern^ ing board would have power to vary the. proportion for special reasons, as, for example, with silver-using countries. The gold-notes would be made acceptable as t the equivalent of gold, but would not pass into circulation. They would be held only in central banks and treasuries and as reserves. They would be international money. .An ■ . opportunity would be afforded by this issue of securing the abolition of tariffs and quotas imposed to protect the foreign balance and of removing exchange restrictions. In a word, the aim of the new gold-note issue and its controllers would be to restore confidence and remove those obstacles to trade, production, and consumption which have been erected because pifear. • The plan has aroused interest and discussion. Sir Josiah Stamp, referring to it in the course of an address in Glasgow* said the idea of

international action as 'advanced by Mil Keynes had not been seriously considered in financial circles, and it was quite certain that when it was put forward serious objections would be1 raised to it by other countries. But the measure of their desperate need would be the measure of their willingness to consider it. The times were ripe, he added, for a courageous advance in a direction of a self-retiring scheme attached automatically to the world price level in this emergency. Sir Josiah implied that the problem was psychological. Had Britain sufficiently proved that she could and would balance her Budget, and could she now afford, to draw a little upon the balance of psychological confidence without endangering it? That is, indeed, the problem everywhere. Is the ability to control finance so proved that spending and lending can be renewed without rousing new fears? ___• "•