The Franklin Times. Saturday, October 6, 1934. CURRENCY AND TRADE.

King Country Chronicle, Volume XXVIII, Issue 4606, 6 October 1934, Page 4

The Franklin Times. Saturday, October 6, 1934. CURRENCY AND TRADE.

In a statement made last Wednesday by the British Chancellor of the Exchequer, Mr. Neville Chamberlain, he said that twelve months ago he had made an attempt to. establish a world-wide monetary standard by which international trade might be stimulated, but the world was no nearer to that objective to-day. There is no doubt that one of the main causes of the distress that prevails in all parts of the world is due to the refusal of countries to trade with one another. In some cases the trouble is due to the inability to trade through lack of finance on the part of some countries. In Europe several countries produce foodstuffs from the land —others are chiefly employed in manufacturing. The natural thing for these countries is a reciprocal trade and the provision of an even balance of credits as near as possible. Instead of carrying out this policy each country attempts to become self-support-ing by high tariff walls, with most disastrous effects to the whole world. Some countries are developing their agricultural resources with such limited natural possibilities that make them unsound from an economic point of view, while other countries quite suitable for farming purposes are seeking to develop industries. This policy has its dangers also. Trade between countries has a tendency to promote international goodwill, whereas trade barriers have the very opposite effects, engendering as it does a spirit of intense nationalism. Another cause of the drop in international trade is the violent fluctuations in the excha'nge rate between countries. There has been a worldwide race between countries to depreciate their currencies so as to gain an advantage over one another. One of the main objectives of the World Economic Conference held in London eighteen months ago was to establish an international monetary standard. This was in a fair way of being achieved when the United States dropped a bombshell by refusing to agree to the suggestion. This was followed by another race for currency depreciation, which would not have been so harmful if all countries had agreed on a concerted policy in the matter. One only needs to follow the happenings in the United States during the last five years to realise the fallacy that money represents wealth. Here is a country holding nearly 50 per cent, of the world's monetary gold, yet the trade of the country is stagnant and the unemployed can be numbered by millions. The value of the dollar has been cut I

down and enormous credits issued, yet there has been no improvement in the state of the country, and industrial strife has been more prevalent than ever. Of all the countries in the world Great Britain is the only one that has made any recovery from the depression, for the simple reason that she is fostering trade with other countries and striving to maintain that trade on an even balance. It has been the policy of Great Britain for the last half-century to stabilise her foreign markets and provide financial assistance when necessary. The policy of the United States has been quite different, for by demanding payment of the war debts in gold the United States impoverished her foreign markets, and many countries were forced off the gold standard, making further chaotic conditions in world currency. How much longer this drift in world currencies will go cannot be prophesied, for it has got financial experts puzzled, and all countries seem powerless to arrest the drift. At the present time Great Britain is surfeited with dairy produce and meat from all the producing countries. This would not be the case if Germany and other European countries were open to take some of this produce, which they actually require. The return of some measure of international trade would make an enormous difference to the good of every country in the world, and it is to be sincerely hoped that there will be a return to reason in this way. In this matter a lead must be given by the United States, which set the standard for tariffs, and is largely responsible for the chaotic conditions of the world's monetary system.