The Guardian And Evening Star, with which is incorporated the West Coast Times. FRIDAY, MAY 4, 1934. DEPRECIATED CURRENCIES

Hokitika Guardian, 4 May 1934, Page 4

The Guardian And Evening Star, with which is incorporated the West Coast Times. FRIDAY, MAY 4, 1934. DEPRECIATED CURRENCIES

Ihe definite announcement made in respect to maintaining the New Zealand exchange rate will cause further thought to be given to the currency issue, a subject a special Parliamentary committee is now grappling with. Tiie world at large is juggling with the various monetary systems obtaining, and until there is some satisfactory stabilisation plan matters financial will remain very much at sixes and sevens. The failure to reach 'an international agreement at the London Conference seems to have been the starting point for the present general variation in former currency values now yoilig on. There is, however, some hope of the United States dollar and British''pound being brought more into line, and if that came to pass a basis might be fixed for, a general, readjustment of international money values.'/ As it is, values are fluctuating-.'- from . day to day,* and the unsettlement' combined with the artificial .efforts to equalise prices and production are having a bad effect on world trade generally. Gold still remains the supreme standard for measuring money and trade values, but most countries are of necessity juggling with their currencies so as to maintain trading,'relations which in turn bring employment and its accompaying degree of prosperity. Czechoslovakia, a producing country of considerable output, is one of the latest to devalue its money. The action was opposed by the bankers, but the popular demand would not be refused. So the Premier announced it was necessary to support the export trade in its difficult competition against other exporters selling already in depreciated currencies. The Ida cl of greater nations was followed, and a cut of about one-sixth in money values was made. The action at once aroused a protest from neighbouring countries, Germany in particular said the depreciation will cause wage, cost, and price reductions in loe-1 industries, and intensify the competition in outside markets which the German industries must meet. While Prague considered its action defensive, Berlin voted it as an offensive—and this is a 'typical example of the demoralising in.fluo.noei of currency charges. The effect is far reaching 'and creates a fresh set of circumstances which call for other remedies to meet them. In the same way Austria and Italy set about a, monetary reorganisation to protect their trade position. On a former occasion Mussolini decreed a reduction in wages and prices to help trade, and carried it through with a measure of success, and the experiment is likely to be repeated. Other countries are no loss active in manipulating their currencies when necessity calls for the action, and that being the general practice there is at once a clue to New Zealand action in maintaining the rate of exchange. Apparently there can be no real stability , till gold returns as the common stand- j aid. There is universal confidence in j the commodity, and with such a base world prices tend to remain on a common level. It would appear, therefore, J that artificial methods to supply or j take the place of gold are doomed to j failure. Something in which confidence can he reposed in the first necessity and until the financial experts rc'acli an agreement on that point the variation of currencies will coninuo and have its upsetting effect on world trade. Stability founded on an accepted security is what is wanted to restore real world trade