NOTES AND COMMENTS.

New Zealand Herald, Volume LXII, Issue 18963, 10 March 1925, Page 8

NOTES AND COMMENTS.

THE MORAL VALUE OF COLD. The improvement in the exchange value of the British pound which he attributed to the decline of the dollar under the pressure of the surplus supply of gold - was discussed by Mr. Reginald MeKerma at the annual meeting of the Midland Bank. Referring to the future, lie explained the meaning of a managed currency, which has been advocated by Mr. J. M. Kayries and others as superior to a currency on a gold basis. Mr. McKenna said it might be said that regulation of currency by the control of credit- would maintain stability, and would also effect a considerable economy as there would be no need to incur the cost of buying and holding gold as a reserve. " But when so much has been said, and it must be granted that it is a great, deal, the case for a managed currency must be regarded as closed," he said. "On the other hand, the gold standard has in existing circum stances great, and striking advantages. In the first place, it establishes an international measure of value, common to the whole world and universally accepted. It it automatic in its operation, but it is not wholly inelastic. In the present state of knowledge and feeling one of the greatest advantages of the gold standard is its moral effect. It is a real advantage to a nation to have a currency founded upon a value which is universally recognised; it inspires confidence and facilitates international transactions. Even if the gold standard were not preferable for other reasons its universality would be decisive in its favour. The argument may, it is true, be founded on psychological and not on economic grounds, but it is none the less powerful, as we have not yet reached the stage where economic considerations alone guide us in judging the desirability of any particular method or system. So long as nine people out of of ]() in every country think the gold standard the best, it is the best. At present there is no single nation, so far as 1 know, which is now off the gold standard that docs not regard the return to it as the most desirable of all financial measures."

REPARATIONS IN GOODS. Reference to the effect of the Dawes scheme on British commerce was made by Mr. Walter Leaf, in his address at the annual meeting of the Westminster Bank. He expressed the opinion that the scheme will work perfectly, so far as the provision of gold marks within Germany is demanded. The security for the loan is of the highest class, and the various mortgages on the railways, industry and revenues of Germany arc such as to en sure that the taxation of the German will not be less than that of the chief allied nations. Germany is accorded, before payments in cash are to be made, a moratorium of two years to give her time to put her economic system into order. "For these first two years it would seem the; our own industry has nothing very serious to fear from German competition," be continued. "It is true that Germany has provided herself, during the collapse of the mark, with a fine equipment for production; it is true also that wages in Germany for skilled workers are very low compared with those in Britain, even in those industries which aro exposed to international competition. On the other hand, owing to the annihilation of working capital, it is with great difficulty that the cash to provide even these modest wages can be found : industries of tiic highest standing have to pay such rates as .12 per cent, per annum for loans, and this forms a very serious charge upon the cost of production. And it is not to be supposed that the German workman will long consent to work for wages which are no more than half what are being paid on this side of the Channel. Probably the first use to which the German manufacturer will have to put. his profits will he some approach to the pre-war standard of living for the worker. And meantime the manufacturer has to import a far larger proportion of his raw material from abroad than was the case before the war. His resources, alike in coal and iron ore. have been very seriously reduced by the Treaty of Versailles. And this extends to the partly worked commodities which are the raw materials of further industry. Germany has a long road to travel before she can become an exporter of goods on a scale which will enable her to pay large sums for reparations. Hut when the two years of recuperation have given way to the unlimited years of reparation, how shall we stand ? Tho creditor nations have at length, I believe, accepted, though reluctantly, the undeniable truth that payment can be received only in the form of goods ; and how tho enormous excess of exports which we are forcing upon Germany is to be absorbed by the world at. large without a ruinous competition with our own export trade is a problem which is now exercising the best brains of Europe and America."'

AN 1M PORTA NT CON FERENCE. Mr. Leaf said an earnest, attempt is being made to ■find a solution of thai problem by common agreement among the nations of the world. "The. organisation which is grappling with this thorny question of international economics- the Intermitional Chamber of Commerce--is a young body, only live years old, but it has a, good record behind it. and is destined, I fivl sure, to better that record. The question of European reconstruction was debated at the Congress in Rome in March, 1923, and long and earnest discussions at that meeting led to the unanimous passing of a resolution which may. i believe, be regarded as the paieilt of the Dawes Committee, and which laid down as the basis of reconstruction the principles which were adopted in the Dawc.-, Report. The International Cham

her has appointed a powerful committee In study the outcome of the Dawes Report. and its effects upon commerce, in the belief that, a frank and open discussion among all the nations interested will be the surest way of arriving at an effectual concord such as will form a foundation for co-operation in the future. The committee is awaiting a report from a small committee of experts of the highest rank: and it. is our firm hope that i;, will be in their power to submit to the next Congress, to be held in Brussels in June next, the essential elements leading to a solution of the great problem of the receipt of reparation payments."