NOTES AND COMMENTS.

New Zealand Herald, Volume LX, Issue 18381, 23 April 1923, Page 6

NOTES AND COMMENTS.

CONSERVATIVE FOLICY.

A definition of the policy of the British Government was given recently by Sir Philip Lloyd'-Greame, president of the Board of Trade. The Conservative Government was returned, he said', because the country wanted a plain policy and plain principles. They had been sneered at because Mr. Bonar Law used the word "tranquillity." "But tranquillity means getting into a condition where there is a real chance for everybody to work together for the common good of our country. , We want tranquillity to- recover our industries, restore our shattered forces, and for people to work out their own destiny. That is not idleness. ft is achievement. It is not reaction, but real progress, and our party to-day need not be ashamed that it is pursuing a policy of security and confidence abroad, at home, and throughout the Empire." In regard to the Government's foreign policy, he remarked that it was plain and consistent. It was a policy of appeasement. He alluded to the efforts which had been made to settle the question of German reparations, and repudiated the suggestion that ' Mr. Bonar Law's object was to let Germany off. The proposal • was that Germany should be compelled to accept certain obligations, and that if she did not carry them out she should be subject to the most extreme sanctions that could be devised. As to Empire and Dominion and Colonial policy, he said the great motive of the Conservative Party should be to carry out and develop Joseph Chamberlain's dream, which he did so much to achieve. To-day there were greater opportunities for us in our Empire than ever, and -we should go steadily forward and grasp the tremendous possibilities.

THE POUND AND THE DOLLAR. Confidence and good feeling between nations are pleasant, but are not enough in themselves alone to account for the rise in value of the pound sterling from' the lowest point of about 3.20 dollars per £, up to to-day • when it will purchase four dollars and seventy cents, said Mr. Robert Benson, chairman of the Merchants' Trust, Ltd.. in his annual address. Obviously there must have been more sellers than buyers of dollars, and mere buyers of sterling than sellers, to account for the phenomenal rise. Cable transfers and bills of exchange tell no tale, and the visible debts and claims between Great Britain and the United States traceable in the figures of exports and imports do not explain the facte. I would suggest that the chief causes are that Americans have been sending capital to London. Moreover, London is the clearing house for all Europe in matters of exchange all purchases in the United Stages of marks, francs, lire, etc., are paid for by remittance to London, and contribute to the strength of sterling. It was calculated by the economist of the Chase National Bank, Professor Anderson, that the debt of Europeans to Americans in 1920—over and above the indebtedness between Governments — 3,500.000,000 dollars! The temptation to ! American creditors to i buy sterling was / great. The/e was . money in it, and they had the dollars; but who sold them the sterling ?.In the course of the long rise, as fast as one American took his profit another replaced him, and so it has gone on till there is only a possible' profit of about 3£ per cent. left. But what about the possible loss! We have been assisted by the conversion of. a considerable amount of private debt out of dollars into the ; more comfortable medium of sterling, and the British Government, which needed, and still needs, dollars to pay interest, has had a unique opportunity to buy .dollars and sell sterling at ever higher-and higher prices. Transactions are so numerous and the speculation is so enormous that sterling has again become the biggest market^ in the world. Immense sums can be carried in that market, and Americans are carrying for us part of our debt to themselves. I do not presume to guess whether, or when, the position ! will be reversed, and America become a' seller." instead of a buyer of sterling. For the present the only stabilisation wo can expect is afforded by the breadth and momentum of that market. ,

' THE BASIS OF PROSPERITY. _ The dependence of primary producers on ■ international conditions has recently been emphasised in the magazine published by the National Bank of Commerce in New York. ' At the outset,, it states that the American farmer is more directly concerned with the international market than is the American manufacurer, and it proceeds to examine the matter from the American viewpoint/presenting conclusions that obviously apply with no less

force to any country dependent on primary production. Many American farm crops, including several which rank ,highest in value, are not cash crops but are to a very large degree raw materials for production of other more marketable products. Nearly 85 per cent, of the corn ■.crop, the most valuable of all the crops, is consumed on farms, the bulk „of s it /being fed to cattle and hogs, which are marketed. On the other hand, a very substantial part of the great cash crops which provide the major part of the monetary incomes of the country's farmers, are exported. Thus, in the year ending June, 1922, nearly one-third of the wheat crop, 35 per cent, of the to-„ bacco production, 14 per cent, of the hog products and a-half of the total cotton crop and excess carry-over were marketed abroad. When so considerable a proportion of the country's major cash crops is exported, it is clear that conditions of foreign demand and" of competitive foreign sources of supply necessarily exercise a marked influence in determining the values, not simply of. the y crops exported, but through their inter-relations with other crops, of a good part of American agricultural output. It follows that foreign conditions of demand and supply are of the utmost importance to agricultural producers. The fact that the value of the agricultural output is in very large degree determined in the international market, means that the agricultural prices are the basic prices to which in the. long run tho prices of other commodities and servicer must be adjusted. This does not imply that agricultural prices cannot rise— improvement in the past year proves that they can. It does mean that the' values of farm products are determined on the basis of the realities of the world situation. As a whole, American agricultural producers make up the most important group of consumers of American manufactures. The volume of their purchasing depends on the ratio which the: price of what they buy bears to the price which they receive for their crops. The latter is based not on local or national, but international conditions, largely beyond 1 the control of the farmer. It follows that the sound basis for prosperity lies in the adjustment of prices of consumption goods generally on levels in harxiony with the prices of farm ==Dducts. // :,