SILVER AND GOLD

Otago Daily Times, Issue 21694, 12 July 1932, Page 4

SILVER AND GOLD

STABILISATION OP PRICES. PROFESSOR- CASSEL’S VIEW. Some important pronouncement* 6n: the world’* monetary problems are mad*‘by the eminent Swedish economist. Professor Gustav Cassel, in a discussion of thequestions arising out of the marked fall' in the price of silver in recent year*. : Professor Cassel hold# .'that if the silver question is to' be discussed at. ml. “this must be dons in'connection: with, the gold problem, ■or the still more general question of a rational reconstruction of the world monetary system.” . That the silver question is indissolubly connected with the gold problem will become apparent, he says; “when w* consider the absurdity of regarding the fall in the price of silver as an isolated phenomenon. .Silver has been redtfced.in value in relation 1 to gold* but this fact might equally well be expressed as a rise in the value of gold relatively to thst of silver.” Professor Cassel deal* at some length with this aspect of the fall in the price of silver on such countries as India and China, and also on silver-pro-ducing countries. „ , In summing up,. Professor Cassel remarks that those endeavours which aim at bringing about a marked rißo..in the price of silver "by artificial means must be viewed with suspicion. A rapid rwe m the price of silver in a possessing a silver currency will have the effect of an inordinate rise in the purchasing power of the monetary unit, and a corresponding fall in commodity prices. The world must. have realised by this time what risks are involved in such, a process of deflation. . Above all things, we must be. on our guard against allowing those interests which are connected with a rise in tuo price of silver -to exercise any. influence on the way in which we deal with the incomparably greater problem of a rational reconstruction of ,the world monetary system. From a conservative. point q£ view, that is, in order to maintain the greatest possible continuity, it would, indeed, be desirable to base the future monetary system on, a gold standard. This would involve the concentration of all efforts on a stabilisation of the value of gold, but at a considerably lower level than has resulted from the hot competition of recent times for the gold supplies of the world. It is, however, by no means certain that we shall succeed in these endeavours, nor that adequate guarantees could be afforded for a gold policy which ■ would render possible for the future the use, of gold in the world monetary system, , .. , . .... In that case nothing remains but to sever the last link between this monetary system and the precious metals and to, create a system of money adapted, solely to the genuine requirements of social ecouomic life. The possibility of such, an achievement is now fairly evident, since it has shown that countries on a paper standard have actually succeeded m keeping theig currencies more stable than tne gold countries. If people are afraid .of a development toward a rational and deliberately regulated paper standard - and wish to make one last effort to. maintain the position of gold as a basis of the world monetary system, they should, at any rate, take care not needb?W3£ to com* plicate the problem by broaching proposals for the restoration of silver .to its earlier position alongside of gold in the monetary system. ' ■ . a Such attempts to, solve the problem on the lines of bimetallism are quite hopeless. This is the first thing to .be made clear by an internationad monetary conference, if at such a conference anything is to be viewed in its natural connection with the far greater and more important problem of stabilising the value of gold, in fact, neither the one metal nor the other should be dragged iqto the foreground. For our ultimate aim is to establish healthy conditions for the development of the world economy, and not to secure for silver Or gold any special position in the monetary system which is to be the basis of this development.