THE GOLD STANDARD

Taranaki Daily News, 29 September 1930, Page 7

THE GOLD STANDARD

WRITING DOWN THE POUND. _ . \ INFLATION PURE AND SIMPLE “The experience of the world during the last fifteen years has surely shown that inflation is worse than the disease it attempts to cure,” said Professor. A. H. Tocker, Canterbury College, Christchurch, commenting on a suggestion that the sovereign be written down to 15s within New Zealand. “It is theoretically perfectly possible to write down the value of the £ to 155,” said Professor Tooker,/“but the result would bo a premium of 25. pel cent, on the price of gold in New Zealand, and a rise in the neighbourhood of 25 per cent, in all prices in the Dominion, including those paid for our imports and those received for our exports. It would mean a similar addition to the cost of meeting interest on debts held overseas. “Unless wages were raised it would mean a decrease to the same extent in their purchasing poWfer, and also in that of all fixed incomes —in fact, it would be-inflation pure and simple, and would set our exchanges on London and elsewhere at new levels, and would probably occasion a temporary boom in New Zealand. “If' stabilisation of any kind is needed this is certainly not the way to achieve it. There would be many troublesome adjustments to make before prices, production and trade found their new equilibrium. We should find ourselves in difficulties calling for a fresh writing down to, say, 10s, and the process would go on indefinitely. “New Zealand is at present very close to tho gold standard which prevails throughout most of the world. The adjustments necessary to set her j.ouse iu order arc slight compared with the troubles that would probably ensue upon such a devaluation of currency as is suggested.”