DEALING WITH DEPRESSION

Evening Post, Volume CXV, Issue 144, 21 June 1933, Page 9

DEALING WITH DEPRESSION

CHEAP MONEY INDISPENSABLE,

CHAMBERLAIN'S PLEA TO BANKS OF WORLD FIRST STEP TO TRADE RECOVERY CO-ORDINATION IN CREDIT POLICY ' ' (British Official Wireless.) 3 (Received June 21, noon.) RUGBY, June 20. At the Economic Conference today the Chancellor of the Exchequer (Mr. Chamberlain), speaking in the sub-committee of the Monetary Commission, which is considering immediate measures for dealing with world trade depression, declared that cheap money was indispensable for trade recovery, and urged the banks of the world to reveal their money policy for trade and industry. He recalled that since October, 1929, wholesale commodity prices expressed in gold had declined one-lhfrd, and raw material prices from 50 to 60 per cent. As long as traders thought prices were going to be still worse, they would not embark on business operations. Therefore any action which had the flavour of deflation en the part of the central banks would be extremely injurious. "We attach," he said, "importance to the suggestion that the intentions of the banks should be stated so that all the world may know the purpose and policy which they intend to pursue. We are not to regard a cheap monetary policy as constituting by itself a remedy for all evils that afflict the world. But cheap money in the financial centres is an indispensable background against which the economic recovery of the world can take place. Dear money or even, in the present conditions, moderately dear money is a handicap to world recovery. I want to emphasise the extreme desirability of a co-ordination in credit policy between the leading central banks. If those banks pursue policies which lead in the opposite direction or even if they adopt different methods in trying to achieve lhe same end, we shall not secure what we want." He added that ■governments should see their central banks . had the powers required to preserve an open credit policy.