Evening Post. THURSDAY, OCTOBER 8, 1930. STABILISATION : A NEW ERA ?

Evening Post, Issue 86, 8 October 1936, Page 8

Evening Post. THURSDAY, OCTOBER 8, 1930. STABILISATION : A NEW ERA ?

Every change in tariff, every quota (quantitative limitation of imports), and every change in the value of a country's currency create new vested interests. Almost inevitably there are some people who not only accept such change as a working condition (which all people must do) but who adapt themselves to it, and who object to the disturbance of their business resulting when the Government that made the change seeks to reverse it or even to modify it. It has been known for generations that to impose a tariff on imports is easy, to withdraw it is difficult; and the present generation has learned that the same remark applies to quotas and to the artificial depreciation of currency. A depreciating Government fears to reverse. Still more remarkable, the political eclipse of a depreciating Government, and its replacement by a Government of overwhelming strength and pledged to remove the depreciation, result, after nearly twelve months, in things being exactly "as you were." The November General Election in New Zealand seemed to make it absolutely certain that when the Empire Commerce Congress met in October, 1936, the British delegates would not then be able to reproach New Zealand with discounting Ottawa by a postOttawa manipulation of 15 per cent, additional exchange on sterling. HThat reproach, at any rate," the Labour voter would have said last November, "will be off our conscience." But he would have been wrong. After nearly a year of the Labour Government the whole 25 per cent. remains. Instead of the pledged substitution of price guarantee for exchange New Zealand has both, so the British delegate who applied the word "nefarious" to New Zealand policy was really very moderate. He might have said "doubly nefarious." For the moderation of the criticism let us be thankful.

When a new New Zealand Government, voluntarily pledged to reverse a depreciation, balks so badly at the hurdle, it is not surprising that a British National Government, recently re-elected on a foreign policy issue without currency pledge, should feel not too sure of itself or of its neighbours. Though long expected, the French drama, of franc devaluation culminated rather rapid- j ly on the eve of the Empire Commerce Congress, causing the British Government to sit in judgment on its own sterling policy. The British Government has no misgivings on its principle, which is (and has been) to give every reasonable facility to a stabilisation of pound, franc, dollar, and any other currency, assuming the terms to be fair and reasonable. But Mr. W. S. j Morrison antiqipates what Mi1.! Savage has proved by experience— that in matters of correcting currency depreciation, the principle is one tiling and the application of it is another. So much so that Mr. Morrison, who is Financial Secretary to the British Treasury, paid a-re-markable tribute to the strength of the vested interests'referred to above when he stated naively to the League of Nations Economic Committee:

The British Government would be faced by very strong pressure on the part of certain interests in the United Kingdom to counteract intensified competition which would result from devaluation on the Continent. Such pressure would be difficult to resist, and he called upon the other .Governments to help the British Government lin this respect.

When (if) all the currency mistakes of the "post-War period" are corrected, these two sentences will be worth placing on permanent record as a warning to any future Government contemplating depreciation; and might be accompanied by a sympathetic footnote signed by Mr. Savage and Mr. Nash. But the immediate problem is how the British Government is to correct its own currency policy, at a time when the New Zealand Government cannot correct even its opponents' currency policy. Fearing vested interests, fearing action oversea that might prove to be (or might be construed to be) competitive depreciation, the British delegate asks "other Governments to help" in an equitable stabilisation. The appeal is to all Governments, whether nefarious or otherwise. Will it succeed? Not much success lias been recorded to date.

Realism expresses itself in Presi-i dent Roosevelt's statement, cabled today, that "the primary purpose of American currency policy is to protect domestic values." But that does not mean that the need for stabilised domestic values is real and primary, and that the need for international jgtabilisa.tfon is, secondary a^d x$-

the United States is one—now realises that domestic stabilisation and international stabilisation are interlocked; that domestic values cannot be regulated in any satisfactory way apart from international values. The problem now is not self-sufficiency so much as the implementing of a stabilisation to which all will contribute on the principle of live and let live; it is philosophically easy and technically difficult. Already Mr. Morrison and Mr. Stanley 'Bruce differ somewhat as to the approach. The Australian is for "going over the top" and storming the stabilisation heights quickly. . The franc, he thinks, has given the signal to brush aside vested interests; and he is therefore of opinion that Mr. Morrison has "over-stressed the importance of acting slowly as time is now of the utmost importance." But if Mr. Bruce were still Australian Prime Minister, would he be so hot-foot? Anyone noting the change in Mr. Savage's pace may well doubt. When two men with the same' objectives, like Mr. Bruce and Mr. Morrison, differ at the outset in the handling of stabilisation, it is seen at once that the implementing of good intentions is 99 per cent, of the contract. Success is possible, perhaps even probable; not yet certain. Viscount Elibank on Friday said to the Empire Commerce Congress:

1 I cordially welcome the paragraph contained in the Declaration of British Policy issued by the liondon Treasury last week, in which the British Government says - that, of course, in its policy toward international monetary relations there must be taken fully into account the requirements of the internal prosperity of the Empire countries, as corresponding considerations will be taken into account by the French and American Governments.

But the Congress on Tuesday rejected an Australian delegate's tag to the stabilisation resolution, "as far as internal conditions permit." But the verbal form of resolutions and statements (or even of Declarations) will not alter the fact that a country will not do what internal conditions will not permit. The deciding factor is not the words, but the ability of statesmen in various countries to go behind the words and determine how much is permitted by internal conditions and how much is demanded by international trade. In an unstable balance between inner and outer trade, the initiative for the last year has been passing more and more to the outer or international; it is the technical trade expression of the social urge on mankind to come together. The franc situation appeals to strategists like Mr. Bruce, to navigators like Mr. Morrison, and to calculating authorities the world over who realise that self-sufficiency must fail. The signal for an international attack on quotas and other restrictions, as well as on currency restrictions, is raised. An unmistakable symptom is that phrase-makers are busy. Regulative restriction is being converted into the "regulated expapIsion" with which Mr. Nash charmed the Commerce Congress, and soon this phrase may further convert itself into "expansive regulation," then into plain "expansion" as in the days of yore. Perhaps, notwithstanding New Zealand's:standstill in exchange, facts and acts may keep step with phrases.