CRISIS IN AMERICA

Taranaki Daily News, 29 May 1933, Page 9

CRISIS IN AMERICA

SIGNIFICANCE TO WORLD. CURRENCY PROBLEM EASED. The remarkable series of financial and economic developments tbat x has taken place in America in recent months was reviewed by Dr. H. Belshaw, professor of economics at Auckland University College, in an address at the luncheon meeting of the Auckland Creditmen’s Club in Milne and Choyce’s Reception Hall yesterday. The recent banking troubles and.' the prohibition of the export of gold were reviewed, the lecturer tracing events to April 20, when the gold standard was officially abandoned.

It was not clear what measures would be taken to raise prices, but a sum of 11,000,000,000 dollars was being provided for a number of projects. Among these were the refinancing of farm and home mortgages, new public Xvorks for unemployment relief and the reorganisation and relief of the railroads. A farm relief bill was also proposed for restricting production and guaranteeing prices. These measures did not all mean the expansion of currency and credit, but for the most part a liquidation of assets.' The Government meant to encourage indus-. try, which represented an immense frozen asset. . . The effect of America’s abandonment of the gold standard would be to remove the gold “anchor” from exchanges unless they were stabilised, as in Britain, by the creation of an equalisation fund. The prestige of sterling would be very considerably enhanced. Only four countries—France, Switzerland, Holland and Belgium—were still officially on the gold standard, and even some of them not entirely so. The leadership in finance was likely to return to London, and a movement of funds from the. United States to London might be expected. There would probably be a depreciation of American exchange, depending upon the extent of the internal inflation. This would increase the competitive advantage of Britain and other countries in trade, but it would be offset by an increase of manufacturing in the United States. America’s action had removed an impediment to international action by the World Economic, Conference toward currency stabilisation, and there was no fear that she would insist upon a general return to the gold standard. France was now the only large Power standing out, and to that extent it had become easier to frame a world currency policy.