CURRENCY DEPRECIATION

Poverty Bay Herald, Volume LX, Issue 18067, 19 April 1933, Page 2

CURRENCY DEPRECIATION

“RACING DOWN THE HILL” STRUGGLE OF NATION? The International Chamber of Commerce has Coined a picturesque phrase, “rawing down the hill,” to describe the Struggle of nations to depreciate their currencies and so gain advantage over each othrar in world trade. In a review of a movement published in the latest issue of the official journal the chamber claims that it is necessary to inaugurate a movcv.neut for a general return to gold. Unfortunately, it adds, marrying currencies to gold is hot unlike human marriage; it is easy to say “Yes,” but the arrangement will break down unless certain collateral conditions are. observed.

The many proposals eagerly canvassed in regard to monetary policy, the chamber states, give the impression that there is still not a sufficiently general understanding of the importance of au international standard of value. When the common standard is abandoned and the urrency divorced from gold there is no harrier to n competition in depreciation nimng the various countries, and voluntarily or involuntarily they move in that direction. In an isolated instance a depreciation of currency gives the country in question a temporary advantage by way of an export premium, hut the moment the same thing is done by others it becomes a race in currency depreciation, the only absolute limit of which would be the worthlessness of all currencies.

“Under a condition of currency instability the transaction of normal business through accustomed channels becomes difficult, uncertain and costly,” the chamber proceeds. “The lack of gold relationships between the various currencies of the world turns normal international 'business transactions into a gamble. It. creates further Government interference with the free passage and exchange of goods, and provokes sudden arid abnormal tariffs and other harriers. Sterling fluctuations last year oil one, occasion wiped out, on another occasion doubled, the 10 per cent, general duty imposed by Great Britain in March, 1932. The effect of depreciated currencies oil the United States tariff, and on the wholo industrial structure of the country which is linked thereto, may he judged from the fact that imports from depreciated currencies countries for the first half of 1932 fell only 7.7 per cent, below the quantity for the corresponding period of 1931, while imports from gold par (countries showed a decrease of 34.6: per cent. Seven depreciated currency countries showed an actual increase,”

“To this situation.” the review adds, “there seems only one answer. It cannot be a general sative qui pent down the bill of universal currency depreciation. ft can only be the pursuance of a policy of international co-operation and mutual concession in dealing with the causes of trade disorder and currency confusion, and of measures which will arouse confidence rather than alarm in capital and put idle currency and (credit to work again,”