GOLD STANDARD

Evening Star, Issue 18809, 6 December 1924, Page 5

GOLD STANDARD

RRSTORATiON POSSIBILITIES. PROFESSOR SEGAR’S VIEWS. An address on foreign exchanges and the question of restoration of the gold standard was given at an Auckland Chamber of Commerce luncheon by Professor H. W. Segar. The speaker said the present position was that New Zealand currency was at a premium compared 1 with that of Britain. Thus dominion banks had a credit hi London and not here, as there was 0 balance owing to them in England. New Zealand was not receiving enough imports to compensate for exports and the borrowin'- abroad. The question had been raiscd° whether it was any nee introducing the '"old standard. He thought this was the *worst time for introducing finch a radical change, as it would have an exaggerated effect and was not considered advisable unless very carefully controlled. There were three remedies for the present situation. One was to encourage imports and diecourage exports, which exchange waa doAnother way waa to stop borrowing abroad, and raise local loans, though this would tend to raise the rate of interest. A third was to expand local credit, hut that meant inflation and increased prices. Professor Began said, he had grave doubts about the practicability oMbe restoration of the gold standard in England. The national debt was appalling, and even a small war would make it impossible for England to face the financial situation. In that case she would haw l ® to repudiate part of the national debt or inflate currency. In New Zealand, however, the position was different, and restoration quite practicable, because New Zealand had heM sufficient gold in reserve all along. A return to the gold standard was not made here at the close of the war, eo as to maintain exchange on a par with Britain. Seeing that steady exchange had not been maintained, there was no reason why New Zealand should not adopt the gold standard in reasonable time. The alternative to a gold standard was a paper currency. In that case the mdex number representing the average of prices would he taken and the currency would he so managed as to keep that level constant. That would mean a regulation of credit,