STABILISING OF CURRENCY

Otago Daily Times, Issue 21775, 14 October 1932, Page 7

STABILISING OF CURRENCY

A CENTRAL RESERVE BANK The control and organisation of banking within countries of the Empire were dis~ cussed by the conference. These arc not the subject of a specific resolution or recommendation. The view was taken by some that action in such matters was the responsibility of the respective Governments represented at the conference. However, it was certainly the general opinion that some form of central control, such as that usually obtained by means of a central or resrve bank, is important and essential. v New Zealand is almost unique in the British Empire in being without a responsible brganisation of this nature. The mobilising of credit to ensure its most effective use, and the stabilising of our currency in terms of sterling at the appropriate level are problems in which the machinery of a central bank could ma<« tenally help. _ I do not by any means imagine that it would solve all our lems.After* discussions at Ottawa with most competent authorities I am satisfied that the creation of a central bank in New Zealand will be a step in the right direction. Not all the results of the Ottawa Conference can be expressed in terras of Customs schedules and tariff changes. The conference afforded an opportunity for discussion and for agreement on many matters in which our countries face common problems. I refer to some of these. RAISING THE PRICE LEVEL POLICY OF CO-OPERATION The representatives of all Governments were emphatic in describing the collapse in commodity prices, unuprecedented in its suddenness, as the most serious aspect of the depression. This has wiped out margins of profit, causing industrial stagnation and unemployment. It has rendered fixed monetary obligations intolerable, and has necessitated most drastic measures of adjustment. By general agreement, first the rasiiug of the general price-level, and then its reasonable stabilisation, must be our objective. Ways and means of achieving this were discussed, and a policy of co-operation Vith the United Kingdom was agreed upon. It is emphasised that the decline in prices in New* Zealand, as elsewhere, has been more marked in wholesale than in retail prices. This disparity, the widening gap between wholesale and retail, is of first importance in discussing measures to restore prices to a profitable level. What we seek to restore is the wholesale price level. And a rise in this does not necessarily mean an increase in the cost of living. In every country in which prices have recently collapsed it can be shown that at least a partial restoration of the wholesale price-level can be achieved, not by raising retail prices, but by closing in part the additional gap that has recently appeared as, between wholesale and retail prices.