Ottawa Currency Report

Hawke's Bay Tribune, Volume XXII, Issue 205, 13 August 1932, Page 7

Ottawa Currency Report

Evil of Falling Prices must be Attacked International Action Urgently Necessary Britain a Main Factor (Received. 13, 11.10 a.m.) Ottawa, August 12 The heads of delegations adopted the currency committees’ report and authorised its publication. The report states:

(1) That a world-wide rise in the general levels of wholesale price is in the highest degree desirable. The evil of falling prices must be attacked by the governments and by ifidividual action in all cases, whether political, economic, financial or monetary.

(2) That the Governments represented at Ottawa reeori their conviction that international action is urgently necessary. They announce their desire to co-operato with other nations in, any practicable measures for raising wholesale prices. (3) That in investigating how to help to raise prices the Conference recognises that Britain’s central position not only among Empire countries, but in the world of trade and finance makes Britain a main factor in anything that can be done. The Conference therefore welcomes the following statement made by Mr. Neville Chamberlain: —

“His Majesty’s Government desires to see a rise in wholesale sterling prices. The best condition for this would be a rise in gold prices. The absence of a rise in gold prices Inevitably imposes limitations on whaf can be done for sterling. A rise in prices cannot be effected by monetary action alone, since various other factors ■which have combined to bring about the depression must also be modified or removed before a remedy is assured. The British Government, neverthelss, recognises that an ample supply of shortterm money at low rates may have a valuable influence. The Government is confident that the efforts which have successfully brought about the present favourable monetary conditions can and wiU, unless unforeseen difficulties arise, be continued.”

(4) The Conference recommends that the British Commonwealth should act in conformity and in line with the policy indicated in Mr. Chamberlain’s statement as far as lies in their uower. The primary line of action in the monetary sphere towards a rise in prices should be the creation and mainterfhnee—within the limits of sound finance —of such conditions as will assist the revival of enterprise. These conditions are taken to include low rates of interest, and an abundance of shortterm money. The rate of interest on all the various types of loans should be kept as low as financial conditions will permit. It is necessary, at the same time, that these favourable monetary conditions should be achieved, not by the. inflationary creation of additional nieqns of payment to finance public expenditure, but by an orderly monetary policy safeguarded, if necessity should arise, by such steps as will restrain and circumscribe the scope of violent speculative movements of commodities or securities. It must be remembered that the success of such a policy would be hampered and might be nullified by failure to modify or to remove the important non-monetary obstacles, many of which are international in character and which require an international remedy. The British Commonwealth should, nevertheless, take all the steps in its power to increase public confidence, especially in the field of business enterprise, and to facilitate trade.

(5 The Conference recognises the great importance to traders of exchange stability in as wide an area as possible. The complete solution of this problem must await the restoration of the satisfactory working of an international standard. Meanwhile, pending such a solution, the Conference considered the possibility of achieving valuable results in two directions—firstly, by creating an area of stability among the countries regulating their currencies in relation to sterling, and, secondly, by avoiding wide day-to-day fluctuations between sterling and gold. Regarding the fluctuations between sterling and gold, the conference noted with satisfaction that Britain had already established machinery aimed at preventing wide fluctuations in sterling and gold values caused by speculative movements. Regarding the area of stability the Conference recognises the value of countries within tEe British Commonwealth whose currencies are linked with sterling maintaining stability between their exchange rates, and the Conference looks to a rise in the general level of wholesale prices as the most desirable means of facilitating this result.

(0) The Conference recognises that the ultimate air of monetary policies should be the restoration of a satisfactory international monetary standard. Such standard should function not merely to maintain stable exchange rates between all countries but also to ensure the smooth and efficient working of the machinery of international trade and finance. This postulates international agreement among the world’s great trading nations. While certain States represented at Ottawa hold very different views on the question of the most desirable standard, the conference refrains from making any recommendations on the subject in view of the fact that the question will shortly be discussed at an international conference. However, there are several conditions precedent to the re-establishment of any international monetary standard, the most important being: (a) A rise in the level of commodity prices to a height more in keeping with the level of costs, in-

eluding the burden of debt and other fixed and semi-fixed charges, (b) The adjustment of the political, economic, financial and monetary factors which caused the breakdown of the gold standard in many countries which, if not adjusted, would inevitably lead to another breakdown of whatever international standard may be adopted. The conference emphasises that it is of the utmost importance to the future working of any international standard that international co-opera-tion should be secured and maintained with a view to avoiding, as far as practicable, wide fluctuations in the purchasing power of the standard of value. MR BRUCE’S COMMENT. (Received 13, 1.15 p.m.) Ottawa, Aug. 12. Mr S. M. Bruce (Australia) sees importance in the currency report and the British Government’s declaration that a rise in pr;ce levels is essential. It is a good starting contribution and means much to Australia, which is faced with the position that she practically cannot pay her debts. Only recent good seasons have pulled her through. Mr Bruce continued that the policy of low interest rates special significance for Australia because it would give her a chance of converting securities shortly falling due. Mr Bruce considers that Mr Chamberlain has gone a step further than his May speech in the House of Commons. The report removes apprehension that Britain is likely to plunge back to gold before the conditions which necessitated departure from it are remedied. CANADIAN PROPOSALS. JOINT EXAMINATION. (Received 13, 12.30 p.;n.) Rugby, Aug. 12. At Ottawa to-day the United Kingdom and Canadian delegations con; tinued their joint examination of the Canadian proposals. The British delegates also conferred with the Newfoundland delegation. DETERMINED TO GET THINGS DONE. (Received 13, 1.15 p.m.) Ottawa, Aug. 12. Conference business is proceeding with such intensity and earnestness that many Ministers have cancelled week-end trips and are determined to get things done. The Anglo-Canadian and Anglo-South African delegations met the Canadian delegation and discussed possible bilateral arrangements with Australia, New Zealand, South Africa, the Free State, India, Newfoundland and Rhodesia. The spokesman said that things were rather well. British officials deliberated with Australian and New Zealand officials. The British delegation further negotiated with the Australian delegation and announced the first public speech of any delegate to Ottawa. Mr Baldwin on Monday will address the Canadian Club.