SWEDEN’S MANAGED CURRENCY.

Hawera Star, Volume LIII, 4 November 1933, Page 4

SWEDEN’S MANAGED CURRENCY.

In the United States, as in most other countries, there is in progress, a lively debate as to whether the value of currency can be kept stable by government regulation and the example of Sweden has been cited by both sides. The managed money advocates have pointed to Sweden’s success in keeping domestic prices fairly level while those in other countries have been falling, with discouraging effect on employment and business activity. Now the opposing school in the United States has analysed the Swedish statistics and come to the conclusion that far from having solved its economic troubles through the management of its currency, the country feels the depression like everyone else. “As is often the case, the truth lies somewhere between these two extremes,” says a writer in a recent American exchange. “When Sweden was forced to abandon the gold standard at the end of September, 1931, chiefly by the British example, the first concern of the authorities was to assure the Swedish public that the value of its money would not disappear as it had in Germany and other European countries a decade before. They engaged, so far as lay in their power, to maintain the internal purchasing power of the krona. In other words their first purpose was to allay fear. In this respect they were successful. The cost of living did not go up. In July this year the index number was 153, with the prices of July, 1914, taken as 100. When the country went off gold, the retail price index was 15S. The trouble was more the other way. When the first anxiety had been relieved, it was found that while on the gold standard Sweden, like its neighbours, hail allowed prices to slip too far, and in May, 1932, a policy was adopted that would tend to raise wholesale prices moderately, wbile keeping the cost of living as nearly stable as possible. But in spite of these efforts the wholesale price index, which had gone up from 107 in September, 1931, to 110 a year later, sank back to 105 last March, following the world trend. Since last May it has been rising again. Sweden’s present policy is still to effect a moderate rise in the domestic level of wholesale prices, whether in conjunction with other countries or independently, but its cardinal aim is to to keep the cost of living within the country as even as possible. While it is true that so far the success of its financial policy in keeping prices steady has not saved the country from all the ills of the world-wide depression, it has protected it from some of the effects felt elsewhere.”