Manawatu Evening Standard. FRIDAY, JULY 29, 1932. EMPIRE MONETARY POLICY

Manawatu Standard, Volume LII, Issue 204, 29 July 1932, Page 6

Manawatu Evening Standard. FRIDAY, JULY 29, 1932. EMPIRE MONETARY POLICY

The question of an Empire monetary policy is now receiving- considerable attention at Ottawa. At first it liad to g-ive way to the urgent business affecting- Empire trade, while for another good reason it was not advanced earlier—the desire of the Dominions’ Ministers to discuss the matter privately with the responsible British delegates. An earlier message from Ottawa this week reported that Mr Bruce had met Mr Neville Chamberlain and had stressed the urgent necessity, from the Australian viewpoint, of “doing something definite” at Ottawa on this question. Australia, he is stated to have said, was determined to pay the interest on its loans, but Britain must realise that if Australia encountered additional devastating reverses, such as bad seasons and droughts, the Commonwealth, with all the will in the world, could not possibly meet its obligations. Mr Bruce advanced this as a cogent reason why the question of currency and an Empire monetary problem should be dealt with in a serious way. The Currency Committee of the Conference, with the Canadian Minister of Trade and Commerce (Mr Stevens) at its head, is now functioning and, following a review by each country’s delegate of its exchange and currency position, special subcommittees will explore the subject. The view of the British Government on the subject was stated last month by Mr Baldwin, when he said it would be necessary to consider the interrelationship of the various currencies and monetary standards of the Empire, with the object of promoting conditions most favourable to mutual trade intercourse.

The subject of an Empire monetary policy is discussed in the London Times Trade and Engineeringl Supplement. The experience of the past decade, therein it is stated, has made clear to the world that no nation has been able to replace the steadying 1 power of the British people in world finance. Great expectations are therefore being held out by the meeting at Ottawa. “The best encouragement Great Britain can give to these expectations is to cement the bonds of financial partnership between the members of the Empire family, thereby providing both an example and a rallying point for the rest of the world.” The general objectives of an Empire monetary policy, as stated by the writer, are (1) the recovery of the level of Empire prices to a figure at which production can be carried on with reasonable profit and the excessive burden of debt charges mitigated from its present intolerable severity; (2) the maintenance thereafter

of stability in the structure of Empire trade and currency, to avoid violent fluctuations in employment and the purchasing power of Empire currencies, and (3) to guide the flow of investment capital into Empire channels. With regard to the first paragraph the position in New Zealand does not require elaboration. Our exports at June 30 last were valued at ,£35,546,573, a fall in value of a little more than £12,000,1)00 compared with 1930, and nearly £21,000,000 when the 1929 figures are taken into consideration. But, as the Meat Producers’ Board shows in its annual report, while farm production costs have fallen somewhat, they are still considerably ahead of the 1914 index, while the export values are much lower. In other words, production costs are lagging behind and the decline is far from compensating for the serious fall in the ntaional income. Other countries within the Empire are in a similar position, and they look to a stabilised Empire monetary policy to help in raising the level of prices to make production profitable. As regards the third paragraph, the writer in the London Times points out that the basic facts of existing commercial relations cannot be ignored. Well over half of Britain’s exports go to foreign countries; nearly 50 per cent, of her vast overseas investments have been mado outside the Empire, and nearly £200,000,000 of her annual receipts of invisible items are directly or indirectly dependent on the commercial prosperity of the world. These facts explain the cable message from Ottawa that the aid of foreign Powers will have to be invoked in order to procure a comprehensively' successful agreement on currency. In view of the different Empire currencies having varying gold values, a uniform currency unit is held by certain economic authorities to be beyond the realm of attainment, but this, they say, does not preclude the possibility of reaching an agreement upon a currency system for the Empire. In the opinion of the writer previously mentioned, the problem should be approached from the point of view of strengthening the links of the existing underlying financial unity, leaving it to time and experience to deepen the intimacy of the relation thus established.