The Grey River Argus. MONDAY, June 19, 1933. THE MONEY PUZZLE.

Grey River Argus, 19 June 1933, Page 4

The Grey River Argus. MONDAY, June 19, 1933. THE MONEY PUZZLE.

11' words were deeds, the London Conference would hold out more hope of relief for the world than it does. But the news, for instance, that America and Britain remain at variance as to which should be allowed to depreciate its money the most is a symptom of continued uncertainty. While suggesting about four dollars parity for the pound, a London financial organ says that on the wages basis in the United States sterling ought to be at 3.60 dollars. Thus there is seen the same old spectacle of the exploitation of labour. It is said President Roosevelt’s immediate use for inflation is national only, the effect having been to raise prices in his own country, whereas his long-time object is declared to be world-wide inflation on a vast scale. Authorities there arc who now deny that more inflation will end the depression. It all .comes back to the matter of distribution. If the masses cannot get the means to buy. the capitalists must merely whistle for a price recovery! The London Conference is supposed to be for reconciling conflicting interests, whereas outside of it the same interests are as busy as ever in the effort to over-reach each other. In trade as in currency matters Governments remain at cross-purposes. None is going to let go its gold. This is probably the explanation of the varied attitudes towards the question of remonetising silver. America’s acceptance of this metal in token of debt from Britain anil other countries is an indication of the disposition in the United States to adopt bimettalism, and this disposition, while ostensibly calculated to increase monetary resources, may result from a desire to retain present gold reserves. Bimetallism has not heretofore proved a durable system anywhere. It requires a fixed ratio between the silver and gold coined, but the tendency is for gold

to increase in value relative to silver, so that in England’s case, when silver was used over .100 years ago for Eastern trading, the gradual substitution of gold for other trading ultimately displaced silver altogether as legal tender except for small change. Last century international conferences with the idea of remonetising silver proved a. failure. The American proposition to-day at London is Io remonetise silver at the ratio of 16 ounces to one of gold. This would treble silver values. The object would be to increase central bank metallic reserves and credit, raising and stabilising prices, and regularising exchanges with silver countries like China. China, however, objects because it would increase her costs, just as Britain objects to any return of the old parity of the pound with the dollar. Meantime, with money generally being devalued in terms of grid, wages will buy less, and the value of gold reserves automatically rises. If America’s were worth £750 millions a jvhile ago, they may soon be worth over £l2OO millions, (hie British objection to silver currency is that the Empire produces less than an eighth of the world output, which last year was IGO million ounces, whereas the two Americas put out about seven-eighths of the total. Thus with a ratio of 16 ounces of silver to one of gold in world currency, there would be an adverse effect on Empire gold producers, who ;are responsible for 70 per cent, of the world output, the bulk of course coming from the Cape. The world gold supply is now estimated at £2600 millions, with an annual addition of £6O millions. It is calculated that for silver to act as a support for gold money, the quantity should be at least ten per eent. of silver in money value of the existing gold stock and of the annual addition. On that basis the U.S.A, proposal, of a 16 to one ratio would call for a reserve stock of 975 million ounces of silver, and an annual addition of twenty-two million ounces. If the silver ratio grew .—'it was ten to one after the war in America, compared with 70 to I now, so much more silver would be needed. The world stock is at present 11,000 million ounces, the world's existing coinage accounting for 4350 million ounces, that of India for 650 million and of China for 700 million. Mexico produces two-fifths of the present output. At the 16 to 1 ratio, with gold at £6 per ounce, silver would be work 7s 6d per ounce. It is pointed out that three-quarters of the silver output now comes from lead, zinc, copper and nickel mines, the increase of the output of which would lower base metal values, and would idle such of those mines as lacked a silver content. Reasons of this nature as well as technical ones would create opposition in British and other countries to the increasing of currency by the use of silver. Meantime America has not only credited ten million dollars to Britain on war debt account for a consignment of silver. but agreed to value the silver at 60 cents an ounce, whereas on the market the value is little more than half that figure. The United States Senate has sanctioned the acceptance of silver as war debt, payment to the extent of twenty times as much as Britain is remitting on this occasion. It is predicted that some loose sort of exchange arrangement may presently be reached regarding the franc, the dollar and the pound, but the indications are that money may continue to be of a variable value, now that America is off gold. It is true that she desires other countries to return to gold and to do so herself, all stabilising at a lower level. The question is as to which shall be enabled to depreciate, or inflate, their currency the most with an eye tp underselling competitors. The tariff truce is doubtless a good idea, and also that of a ten per cent, cut in duties, etc., but to-day the weapons of economic imperialism have extended to monetary debasement, and in that spirit any economic conference is very largely a mere gamble.