MONETARY REFORM

Nelson Evening Mail, Volume LXVI, 30 January 1933, Page 9

MONETARY REFORM

CASSEL VERSUS ATMORE (To the Editor) Sir, —Mr Atmore evidently holds a very high opinion of Professor Gustav Cassel, the eminent Swedish economist; for in every lecture and article lie gives us some more or less irrelevant quotations from his works. And indeed Cassel is a name to conjure by since he is without doubt one of the foremost writers of the present day on economic subjects and especially on monetary theory. So recently as October last Cassel published a small book of only 117 pages entitled “The Crisis in the World’s Monetary System.” In it he explains what ip his opinion are the causes which have brought about the present disastrous slumps. There are in this little treatise several novel points of great interest to students, but for the most part Cassel describes the sequence of events that led up to the present catastrophic state of affairs on much the same lines as a large number of English and American writers. It would in any case have been well worth while to draw the attention of your readers to this cheap but excellent little book. But I am specially tempted to give it prominence because Cassel is the authority to whom Mr .Atmore is so fond of appealing, and yet Cassel in this short treatise gives the strongest possible support to my main criticism of Mr Atmore. He is indeed a Daniel come to judgment. It will be remembered that my chief criticism of Mr Atmore s speeches was based on the fact that he treated the slump as purely a currency phenomenon and practically ignored such important and fundamental causes as (1) the payment of war debts, and (2) the prevalence of high tariff walls. Now Cassel goes further than 1 did in attributing importance to these factors. Again and again he reiterates the conviction which on page 90 he makes as impressive as possible by the use of italics. This weighty statement which I trust Mr Atmore will carefully note is as follows: — “The present crisis is a direct consequence of the wav debts and of the maldistribution of gold connected with their payment.” And how does Cassel suggest that the slump can be cured 9 By compensated dollars, Guernsey market hall schemes, printing hundreds of Bradburys, and so forth ? Cassel says that the cancellation of the war debt! is the first great essential, for “there is no ground for believing that the effect can be overcome before the cause is removed.” The second great cause of the slump he finds (just as I suggested) in “all the super-protectionist measures invented in recent years,” i.e., tariffs, quotas, artificially raised exchanges, etc. But he points out that these protectionist measures were in their turn largely forced upon the nations by the payment of war debts and reparations. In the preface and elsewhere Cassel does indeed state that “the main evil of the War Claims was the deflation to which they gave rise.” But he is equally emphatic that the war debts must be cancelled before the deflation can be dealt with. Once cancellation is accomplished it must be “followed immediately by measures to stop the process of deflation and revert the movement of prices.” These measures are not, however, to be those advocated by Air Atmore. They are to be carried out (as I suggested) “by the concerted action of Great Britain and the United States” and are to take the form of extended bank credits. .But Cassel recognises that even these Baiik credits will be of no avail unless people recover sufficient confidence to make use of them. Keynes, Stamp, Salter and many other authorities have expressed very much the same opinions as Cassel. But if these eminent men are right, as is at least highly probable, then Mr Atmore’s views about the crisis are completely out of perspective. He sees things upside down and back to front. But this brings us to a serious aspect of the question. On page 59 Cassel deplores the willingness of people to listen to “false prophets,” and speaks of the “immense dangers to which a country’s economy may be exposed by the spread of unsound economic doctrines.” Is there no warning for Mr Atmore here? Like Keynes and other economists, Cassel scathingly denounces the Federal Reserve Board of U.S.A. for its folly m aggravating the world’s troubles bv its stupid deflationary policy, especially m 1928. But here he introduces a novel suggestion which almost took my breaift away. Messrs Field and (presumably) Atmore also believe that the Board was nominated by a pack of unprincipled German Jews bent on achieving the world’s destruction. But Cassel goes perhaps to the other extreme. He attributes the mistaken policy of the Board, not to American rascality, but to American puritanism! With your permission I will answer “Beta’s” questions to-morrow. —I am, etc., GAMMA. Nelson, 30th January.