INTEREST AND PRICES

New Zealand Herald, Volume LXX, Issue 21454, 30 March 1933, Page 9

INTEREST AND PRICES

VIEWS OF AN EXPERT LONDON. March 3 "The the scheme is that expenditure on public works may only lead to undesirable redistribution of existing national income, without stimulating prices of raw materials, or increasing the purchasing power of primary producing countries." In these words Professor T. E. Gregory, of London and Manchester Universities, commented in ttie Financial Times upon the thesis of Mr. J. M. Keynes, famous economist, that the only means of raising world prices is simultaneously to decrease taxation and increase loan expenditure. " The growth of enterprise financed by public money resulted in a tendency for fixed interest and securities to replace equities involving rigidity of charges on t enterprise," said the professor.. "Stronger countries are able somewhat to combat this by conversion, but the weaker cannot, and for that reason foreign overseas loans should contain a clause that interest shall vary with the rise and fall of the general price level. "The basic rate should be low, and rise in years of prosperity. Mr. Keynes rightly urges the suspension of sinking funds. Debt redemption should be reserved for times of budgetary surpluses^