The Guardian (And Evening Star, with which is incorporated the West Coast Times.) SATURDAY, NOV. 7, 1936. CURRENCY DEVALUATION

Hokitika Guardian, 7 November 1936, Page 4

The Guardian (And Evening Star, with which is incorporated the West Coast Times.) SATURDAY, NOV. 7, 1936. CURRENCY DEVALUATION

Regakding the devaluation of European currencies, recently, an American banking journal stresses the momentous development likely to arise in the economic situation. It remarks /there are possibilities for . good and evil which are incalculable, bu.t there is also high promise, in view of the affirmations of the United States and Great, Britain , with tpe support of France, that the outcome, .will be favourable, and that through enlightened co-operation the move .will' bo" turned into a step toward world recovery.' If the action of devaluation were a ‘comp'etitive move, it would invite reprisals, as ether currencies would be affected. ( No nation can alter its currency without altering the value' of other currencies. But there must be an end to devaluation,. and the present may be an opportune time to seek for the general benefit. That feeling evidently guided America, and British interests to co-operate. In the States, it was explained the joint purpose was to maintain the greatest possible equilibrium in the system of international exchange, and to use appropriate available resources so as to avoid as ir as possible any disturbance of tiie basis of international exchange resulting from the readjustment of the French currency. It was hoped further, while Britain undertakes to to obtain an unreasonable eompeti•tive exchange Advantage and thereby hamper the effort to restore more stable economic relations. The reference to greatest possible equilibrium suggests a common standard, but this is not possible immediately, and so international co-operation offers the Only .method. The obligation of the Unjitefl States, implies an engagement not to devalue the dollar further, while Britain undertakes to maintain the stability of the pound and not voluntarily to depress it to the disturbance of other currencies. This, while not a return to the gold standard is considered a more promising outlook thqn has been known since the exchanges were disrupted five years ago. It is hoped that the developments will lead in due course to relaxation of quotas, embargoes, exchange controls and other exceptional restrictions of trade which make the transaction" of normal business practically impossible. The full benefits of the currency adjustments can-.

not be realised, and it is even doubtful that the new alignments can be maintained if these abnormal restrictions are continued in force. It is clear therefore that a bolder financial policy must be attempted. New Zealand has its part to play in lowering barriers which affect freer trading. The matter, nevertheless, yetjuires very careful handling fop the reason that those who derive benefits at the expense of the barriers, will require to inane adjustments also. The Dominion policy of reducing hours and increasing wages, admittedly affects production, and- that at a tim© when further tampering with the economic position, might bring in fresh problems. The situation has to be faced to ensure general recovery, and the obligation is on governments to handle the position circumspectly, hut with the goaf of international betterment in sight. s