INFLATION DRAMA

Evening Post, Volume CXVI, Issue 36, 11 August 1933, Page 8

INFLATION DRAMA

NOT UNITY, BUT UNITS

"IRRESPONSIBLE INDEPENDENCE"

When the World Conference failed to achieve international reflation, it left th^e world the. other course "of national reflations, _ each going on its own* This other course represents tho ' * irresponsible independence' *, referred to by Mr. Eamsay Mac Donald when he declared that "prosperity depended on. responsible co-operation -in * monetary; adjustment, and not on irresponsible independence." .'..,. Unfortunately, internal experiments involving tho dollar convinced tho United States Government that it must pursue independent action. Will- these national reflations become inflations? Can they—minus any international brake —avoid'doing so ? > i : The ."Statist,", summing up the^Lon-1 don Conference issue before the die had been cast, considered that, the alternative to international' action was that each nation must, "stagger through tho chaos and confusion, of uncontrolled inflation." Wrote tho "Statist": "It is only a question of making up our minds which of two paths we'toe going to follow. If America persists in her policy of reflation,' us sh© undoubtedly ■wjll, exchange stability; can- bo> reached only by a concurrent pblicy of reflation, or devaluation of currencies ia this country and elsewhere. That is tho first path; the second is to refuseftoi join in tha policy, of reflation, and either to attempt to raise prices by; some process of international, restriction of production) or simply to do nothing about .it at all." Tho failure- of the Conference to take realistic steps to raise prices, tho "Statist" thinks, will, if history is a guide, be followed by the- drifting of the individual countries into inflation. Provious depressions were cured not at* much by readjustments of economic disequilibrium as by the reflationary pro j cesses of nftw gold discoveries or cruder forms of inflation, and it is- scarcely eonceivablo that this depression will prove an exception;' Failing radical measures of relief, it is difficult to believe that countries still nominally on the gold standard will be able to'keep up the tragic pretence much longer. "Concerted international reflation,** the journal proceeds, "open* the possibility, not otherwise available, of maintaining exchange -stability, and if a scheme can be devised for increasing price levels simultaneously sand to roughly ,th_o same extent, the difficulty; over parities of exchange would become of secondary importance. Such a scheme could probably bo most easily; attained by the universal devaluation of, currencies, and however heterodox such a proposal may be, it- merely corresponds with the process which will have to bo undertaken sooner or latev. "Wo aro now face to face,.with the position when we can cither choose, a concerted international scheme of planned reflation back to a given price" level, or allow tho nations to stagger, through tho chaos and" confusion of uncontrolled inflation."