THE WORLD CONFERENCE

Otago Daily Times, Issue 21984, 20 June 1933, Page 8

THE WORLD CONFERENCE

TO m£ editor.

Sib, —The most important conference in the history of the world is now in progress. The decisions reached will affect every human being; for there will be either, on the one hand, war and the destruction of mankind, or, on the other hand, the expansion of trade, the product of such being based on the labour cost thus in effect allowing nations to develop and extend according to their desires.

Every country’s delegates will be expected to look to • the interest of their respective people. Inherent in every delegate will be the desire to do the best for his country. One wonders in these days of democracy how many of them are capable of understanding the effects of their actions. New Zealand is represented by the Prime Minister (Mr Forbes) and Mr Masters. The abilities of these gentlemen put in relation to the remainder of our legislators are fairly well known. Their honesty and their intention to do the best for their country will not be doubted by those who know them and have dealt with them during the difficult times which we have passed through and are still with us. As to their ability to understand the seriousness of the objects of the conference and its effect on the people of New Zealand there must be a doubt. May Ibe allowed to state the most important matter affecting the welfare of New Zealand and which, if not dealt with intelligently, will prove disastrous for many generations. The main objectives of the conference, according to Sir Thomas Wilford, are: (1) A higher price level, (2) suitabie balancing of currencies, (3) removal of obstacles of trade. A few moments thought given to these three items will show the difficulty confronting our delegates. The first item immediately reflects itself in a conflict between the buyers on the one hand and the sellers on the other. A higher price level for the sellers means a lower one for the buyers. As sales are done through the medium of currencies this leads on to the second point—suitable balancing of currencies—in other words, the value of currency. In what way and by what method is this objective to be attained, and what are going to be the results on our people is the question. Before attempting to give an opinion and answer to the question, allow me to point out what has taken place during the last few years ; and„is still taking place. To do so it will be of interest to quote from your issue of June 21, 1928, Under the heading “The New British Pound,” you write; “Dependence on other countries is especially obvious in the case of New Zealand where the legal limitations on the note issue have long ceased to have any practical significance, and where the bank authorities apparently, and quite wisely, regulate the note issue to ensure approximate exchange paid with London, or, what comes to much the same thing, movements in New Zealand price levels -which are more or less parallel to. movements in English prices. Under these circumstances an outsider indeed finds i it difficult to understand the precise importance of part of the gold reserves which we still hold. Certainly, changes in British currency policy have a more decided effect, on the welfare of the ordinary New Zealander than any moderate changes in the volume of cold reserves would have.” The above quotation is true in every respect, and the condition of our country shows distinctly the dangers inherent in the “value” oi the currency being managed or controlled as is being done at the present time in New Zealand. It further shows the necessity of a country’s currency being allowed to find its real “value,” i.e., the labour cost to produce the currency. This point should be noted by the advocates of the Douglas theory, and also by the leaders of the Labour Party, who are at present advocating “control” as the means of a solution for unemployment. Now, Sir, to deal with the conference, the result of which means so much to New Zealand. The main thing of importance which the foreign exchanges show as likely to take place—and by the way, the foreign exchanges are the finest barometer of -what is likely to take place at the conference—will lie a decision arrived at that sovereign and dollar will be devaluated and that the price of gold will be raised in terms of British currency. _ Britain and, the United States will decide to pay out in specie at the earliest possible moment. In other words, their currencies will be redeemable in gold, and thus they will have what is known as a convertible currency in these countries. This will in effect allow other countries to have a solid foundation on which to “ value ” their currency in terms of British currency. For British currency will be valued by the labour cost in producing gold. At what value will New Zealand decide to place her currency in relation to Britain’s? That is the vital question for the people to decide. Is it to be on a depreciated basis as at present, or on a parity with Britain? , If on a depreciated basis with a convertible currency, the New Zealand gold coinage will be devaluated against Britain’s and future trading will be done on that basis. In real effect, New Zealand’s exports will be taxed to the extent of the depreciated value of her currency. If on the other hand New Zealand decides to adopt the same coinage as Britain —and in the writer’s opinion she should do so—then it is obvious that the exchange that is operating at present will come down. For on a convertible currency it becomes impossible for the exchange to exceed gold points —in other words, the cost of insuring the safe delivery of gold from one country to another. It will be seen, therefore, that the doings at the conference are of the utmost importance to the people of our country. It behoves them to take a deep interest in the conference and its decisions. At the present time our chambers of commerce and manufacturers’ associations and most of our so-called politicians are dealing with matters of small importance compared with the main question of all, that of currency and value. Until this is settled no sound progress can be made, for there cannot be any security in business. The greatest essential for progress in business is confidence and confidence can only be given when the people have a convertible currency. —I am, etc., C. M. Moss. North-East Valley, June 19.