EXCHANGE CONTROL.

Manawatu Standard, Volume LVI, Issue 260, 1 October 1936, Page 8

EXCHANGE CONTROL.

The monetary agreement entered into between England, France and the United States will exer-« cise a favourable effect on the world generally. Its main objective is to bring about expansion in international trade, which is now hampered by exchange controls and quotas. Notwithstanding- these handicaps international trade was greater in 1935 than in the previous year, and statistics show that during the first four months of this year there was an appreciable increase as compared with the corresponding four months of last year. With barriers lowered, or removed altogether, international trade should develop by leaps and bounds. International trade is the exchange of goods and services, and as this trade expands more hands must find employment to maintain, the volume of production. Goods crossing from one country to another call the great transport services into activity, and with ample work, reasonable wages, and an improved standard of living in the world, will banish unrest and revolt that has been a feature of the depression. Prosperity and peace are linked, and when the nations realise that prosperous feeling the war-mong-ers will be suppressed.

But a great deal has yet to be accomplished, for exchange controls and quotas are practically universal, and some countries may have to be disciplined to bring them to their senses. If exchange controls are abolished, as they must be eventually, the expectations of the Socialists who have put their own monetary schemes into operation must now be written down as an unlikely attainment. The world will be working back to saner conditions which arc long overdue. The pact is a triumph for the capitalist system. The Socialist policy of control of the means of production, distribution and exchange has proved to be destructive, and even Russia is abandoning that policy and becoming capitalistic. Russia gave evidence of this in her futile attempt to depress sterling exchange in the American market and has had to pay for it. One early effect is the probability that money rates will advance, but that in itself would be an indication of improvement. Money rates cannot advance unless there is a demand for money, and there would be no growth in the demand unless the prospects for using money at a profit existed. The investor and the capitalist will soon come in, aud the Socialists and the credit advocates go out. The world wants sound currencies with all that it means, and therefore the monetary pact is the greatest event that has happened since 1929 when the New Tork Stock Exchange slump developed. There should now go surging through the world a wave of real optimism.