CURRENCY AND PRICES.

Poverty Bay Herald, Volume L, Issue 16497, 1 August 1924, Page 7

CURRENCY AND PRICES.

1) EFLATION I)ANGEROUS. LONDON, July 13.—Discussing, the of a- return to gold currency, ilie Financial Limes says that apart from an extension of the system of licensing gold exports, which would lead to abuses and unfair advantages in bullion transactions. tbe only road open for a restoration to gold or dollar-sterling parity, is that involving a reduction of the general level of prices in Great Britain, relative to that in the United States. This approximation in values might occur through a rise in American prices, unaccompanied hv a rise in British ; or, secondly, a fall in British prices without any reductions in American. The first is by no means improbable in the near future, and the second is receiving marked attention; but, if adopted, it must be implemented by deflation in Great Britain. “Rasl experience has shown,”. ’ the "Financial Times states, “that deflation travels with a horde of pestilential offspring—trade depression, unemployment, social disorganisation, and industrial disputes. It is impossible to say what degree of deflation would be required to bring about dollar-sterling parity, but it, would be necessary to effect a 10 per cent, reduction in British prices, and it is doubtful whether an advance in the Bank rate of discount to 5 per cent. would l accomplish this. “Britain's choice lies between a rapid enforced return to the gold standard, with its unavoidable concomitants, and a more gradual return, as conditions permit, with the probability of ;t steady trade revival unhampered by restrictions imposed for purely monetary reasons. “It would appear that the more expedient, course for Great Britain is not to take panicky measures to press for a rapid return to the gold standard, but, while sedulously avoiding anything savouring of monetary inflation, to await more general progress unattended by the evils of deflation.”