The Southland Times. PUBLISHED EVERY MORNING. “Luceo Non Uro.” MONDAY, JUNE 17, 1935. CURRENCY MANIPULATION

Southland Times, Issue 25313, 17 June 1935, Page 6

The Southland Times. PUBLISHED EVERY MORNING. “Luceo Non Uro.” MONDAY, JUNE 17, 1935. CURRENCY MANIPULATION

Tariffs are hooted in some'quarters because they put restrictions on trade, and because they are a weapon of economic warfare which can easily lead to warfare of guns and bayonets. But many people who declare in loud voices that free trade is necessary will cheer lustily currency depreciations and will urge the oncoming of legislative schemes which will encourage the politicians to do more in this direction. Currency manipulation to-day is a weapon of economic warfare. President Roosevelt deliberately depressed the dollar and stabilized it at a new figure. There he is trying to keep it because it will encourage American overseas trade; but there are forces in the United States which would like to see the dollar go even lower so that exports could be sold at a reduced figure. Behind the Veterans’ Bonus Bill, which President Roosevelt managed at last to kill, was the*hope shat the launching of £400,000,000 in new currency for payments to veterans would lead to this depreciation. . While the legislature can depreciate the currency so easily there is danger that it will be done not as a measure of financial service, but to win popular favour. Recently Sir Josiah Stamp said that Britain “Would consider stabilization when currencies went out of politics.” What he meant was that stabilization was impossible until the politicians ceased playing with it in their efforts to curry favour with voters who have virtually no knowledge of finance. Currency manipulation is as much a weapon of econoinic warfare as tariffs are, and the peace to end this conflict must be stabilization as the, Bulletin says: Debtors benefit when their country’s currency is inflated. The tourist trade booms. Everybody with something to sell abroad, or to visiting foreigners with good money, scores. In France in the summer of 1926 £1 brought a gold sovereigns worth of French goods and left nearly £1 in francs over, so the hotels, restaurants and shops of Paris and the provinces were packed with freespending Britons and other moneyed foreigners. But the millions of French citizens who live on. modest the pensioners, civil servants and wage-earners suffered severely as prices rose. Now, with the franc at 75.50, instead of 240, to the £l, it takes nearly 35/- to buy a sovereign’s worth of French goods; French exporters have been hard hit, and the

tourist trade is virtually dead. Inevitably there is a big inflationary vote in France. French Governments live more than most by panderings to voting sections. Until Poincare’s save-the-franc campaign, there was even a non-income-tax-paying section, and it got its head up again to an extent after Poincare went out of office. Because one French Government after another has shirked politically dangerous jobs, the Budget deficit is estimated at £280,000,000, to which must be added the deficit on the State railways of £53,000,000.

France has two ways out: inflation with the evils it brings on the poor and the thrifty middle-classes or Budget balancing with heavy cuts in expenditure and increased taxation. Gold is moving to England, where instead of “cuts” there are now increases in pay and general evidence of recovery. The Chancelloi’ of the Exchequer in his Budget speech said: “Broadly speaking we have recovered 80 per cent, of our prosperity,” and his words must have caused some envious thoughts to rise in France, where, in spite of the large hoard of gold, prosperity appears to be moving in the opposite direction. France had her experience in inflation and currency manipulation. Doesn’t there seem to be a lesson in all this, a warning? No one would dare suggest that England has discovered the method by which all economic trouble can be avoided —no one will do that until he is able to control, among many things, all the forces of Nature—but she has shown that the. quickest way out of the l economic morass was by the slow, laborious course, avoiding the short cuts and the easier routes proposed by eloquent theorists and others “with crazy schemes for grinding leisure and luxury out of printing presses.” Parts of Australia, at any rate, have heeded the warning—when Mr J. T. Lang promised £20,000,000 in new expenditure the New South Wales voter was not caught. In New Zealand there will be glittering promises during the elections; but the electors will remember England’s case, and prefer to leave control in the hands of the people who could not be stampeded by popular clamour and who resisted the printing press financiers.