Greymouth Evening Star. AND BRUNNERTON ADVOCATE. MONDAY, MARCH 2nd., 1931, CURRENCY REFORMS.

Greymouth Evening Star, 2 March 1931, Page 4

Greymouth Evening Star. AND BRUNNERTON ADVOCATE. MONDAY, MARCH 2nd., 1931, CURRENCY REFORMS.

PROVERBIALLY, the hour calls for the man, when critical times arise, and the present financial problem has not failed to arouse many respondents claiming that they have a remedy to settle all the bother. Unfortunately, most of the

new schemes are contradictory,—

aggressively so sometimes, —and those who uphold orthodox custom remain calm, and unconvinced. A. recent cablegram from London announced that Air. J. Taylor Peddie, described as “a well-known economist, money reformer, and author of ‘Dual System of Stabilisation,’ had made an important discovery, ’ ’ and that particulars had been forwarded to the Australian Government. The Peddie system is said to permit currency expansion without inflation, and it eliminates deflation, —a valuable accomplishment,

indeed,—but no details were given. The merits of this particular scheme, therefore, cannot be estimated by those not sharing Air. Peddie’s secret, and it will be interesting to note what reception it gets from Air. Scullin and his much-worried Cabinet. So far, the honours of the con-

troversy over currency reform appear to rest with the “old brigade,’’ enamoured of custom and

tradition. However, it is dear that some reform, or innovation, in the

Empire currency system is overdue, and in this respect it is interesting to note the suggestion of Air. J. F. r Darling, one of London’s leading bankers, a director of Midland Bank, one of the “Big Five.” A few weeks ago, a brief summary of his proposals wafc cabled and published in the Dominion Press, but a pamphlet he has issued gives fuller details. Air. Darling has submitted his scheme (nothing secret about it) to experts, and to the

general public. Briefly, he is of the opinion that the British Commonwealth of Nations will be unified with unbreakable bonds of mutual interest, if our gold, the annual output of which comprises 70 per cent, of the world ’s production, were so utilised that various economic advantages could be brought into being, at present unavailable through its dissipation. He is confident, too, that through the rehabilitation of silver, another of his proposals, an olive branch will be offered just at the psychological moment to the peoples of India, which will prove a magic wand as well, restoring to the vast hoards of silver there (as well as in China), a welcome appreciation in value, lost through its demonetisation, to the discomfort and impoverishment of India’s millions of peasantry, and the enrichment of the moneylenders, battening upon them. Mr. Darling spent thirteen years in 4 India, and speaks Avitli authority. In proposing a new money—to be called the Rex—the economic link binding the constituent members of Empire together, he points out that there is no thought of interfering with the present system of coinage in existence, since the Rex is to be a “money of account.” A super-bank is to be established, the “Bank of the Empire,” whose customers are to be the governments and note-issuing banks of our commonwealth of nations'; and including the Bank of England. This super-bank would act as clearing agent to the Empire, just as the Bank of England acts for the London clearing banks, and, similarly, any balance its customers had there would be reckoned as part of cash reserve. The Bank of the Empire would be prepared to buy gold at a fixed minimum price, paying for it in Rex, by crediting one or other of its few but important customers with the proceeds. Mr. Darling suggests that the minimum price should be one Rex for 113 grains of gold, which is the gold content of the sovereign, which, would cease to be coihed.

It is further proposed that the Bank of the Empire, under certain well-defined condit ions, should be in a position to retain, full control of any gold situation arising, through reserving the right to raise the price of gold for both, selling, and buying. It could thus conserve the ■ Empire’s stock of gold, preserving with it the full credit advantages of such operations. Again, through having large stocks of gold at its various offices throughout its eon- , stituent customer countries, the Bank of the Empire could facilitate the movement of gold at a much less cost than at present. Mr. Darling compares the old bi-metallic systems of coinage to the feat some daring riders attempt at circuses—that of standing on two horses as they gallop along. All goes well until one of the horses either goes ahead too far, or falls too much in the rear. Then the horseman comes a cropper. Mr. Darling has every confidence in his scheme of the “New Bi-metallism.” The suggested sterling ratio of silver to gold is to be 20 to 1, and the Bank of Empire can purchase silver at that rate, paying in terms of Rex, , which, it will be remembered, is 1 “money of account.”

We must leave financial experts to say what the merits and defects of the “Rex” proposal may be, but to the lay mind it appears to have possibilities. Air. Darling is no “amateur,’’ and would not launch “wild-cat” proposals. The silver-value question is now being keenly discussed in*various conn- 1 tries, notably Britain and the United States, hence Air. Darling’s scheme is doubly opportune.