EUROPE’S FINANCES.

Star (Christchurch), Issue 19986, 29 June 1920, Page 6

EUROPE’S FINANCES.

EXPERT SEES REMEDY.

RE-ESTABLISHING INDUSTRY.

“Remember one thing: if there is any tiling going to pieces to-day, it is prophecy; not the civilisation of the world,” said Mr A. D. Noyes, the editor of the New York “Evening Post.” who spoke on “ The "World Economic and Political Readjustment,” at the Empire Club luncheon in New York recently. As Sir George Paisli is the economic and financial authority of Great Britain, so is Mr Noyes the authority on these subjects in the United States. But, to Mr Noyes, Sir George’s scheme of a great League of the Nations currency and credit la as visionary as the international loan suggested by Professor Maynard Keynes, and, on tho whole, substantially the same. “A VERY RADICAL SCHEME.” “As 1 understand it,” said Mr Noyes, “ Professor Keynes would not lend a- penny to the present Governments of Europe. His is a very radical scheme, and somewhat ridiculous. That would be simply the grossest form of coercion on the part of the bankers, and, in reality, of a foreign nation interfering in the internal affairs of another. Keynes is very indefinite. Ho suggests that one billion would ho necessary for food and material for reconstruction. Another billion would ho needed for reorganisation. It is a little fantastic. Mr Noyes sees tho solution for the whole problem—even if it is a. slow solution—in the preliminary memorial of the bankers of the international countries that will ho lending the money, which was issued after their recent conference at The Hague. They have called a- conference for May. “ What I expect they will do immediately after they meet,” said Mr Noyes, “will bo to tend- out im investigating committee, to see what is the absolute rainimum necessary to rehabilitate Europe. We have no intention to lend the countries what they imagine they want. The important Jliing about this conference will be that only tho bankers of the countries which will lend the money will he there. The Bank of Holland his called the conference; and representatives from England, United States, Holland, Denmark. Sweden,-. Norway will attend.” STOPPING CURB I! ENCY INFLATION. The terms the financiers will exact will bo drastic but reasonable and just. “They have laid down their intentions in the memorial,” stated Air Noyes. “There will be ijb chance lor a- social and economic future for any country that- does not agree wholeheartedly to them. There are three things that all countries expecting loans must do : (I) They must stop tho inflation of the currency by- paper money, and meeting tho expenses of the Government by these paper notes. (2) They must lay drastic taxes on the people and not shirk tho issue. (3) They must get busy and re-establish their manufacturing industries. “ The bankers and financiers have no intention to lend indiscriminately. They will give what they think these countries need on tho condition that they pay for it by high taxes. They aro not going to get it, either, for 4 per cent. They will have to pay for it the samo as England has paid, and buckle down to work.” ENGLAND IS NOT DRIFTING. The trouble is that every nation except England, is drifting. But England, over since last year, has been taking her currency in hand; has been reducing her paper money, and making stringent plans to increase her gold supply. There are three thing;, however, in tne opinion of Mr Noyes that England will have- to do before her sterling will safely resumo par. England will have to (1) reduce tier paper currency and correct the inflation which has been so great. (2) Accumulate a largo stock of gold for redemption purposes. (3) Correct the balance of foreign trade. We did all of thoso things in 1873 after the great financial panic—all, except reduce our currency. Because we thought ourselves poorer then, we stopped importing so heavily, and, as the prices had come down, we could begin to manufacture and export. NOT CAUSING BOLSHEVISM. Instead of tho fiat of tho financiers causing Bolshevism and political disturbances in the European countries, Mr Noyes believes that it will strengthen them. They will ho able to show tho people the terms and tho consequences. They will grumble about the heavy taxation, but will get down to hard work eventually. ihe increase of the English- pound sterling on the Now York market just lately from 3.18 dollars in February to 3.95 dollars is attributed by Mr Noyes to England’s determination to meet the £50,000.000 which falls due in October by cash payment and by the selling of American securities which the Americans thought E-fig-land did not possess. “ England had virtually the whole share of this great loan which was floated in 1915,” said Air Noyes. Now there has been a great deal of speculation iu New York as to how she would Meet it: whether she would meet it by raising another loan or pay it off by drawing on her exchange and let it go to any figure it would. I hat was why the exchange broke so with such extreme violence at the first of tho year. But tho British Government- announced that she would do neither; she would moot tho loan and pay it off iu cash. England has been selling American securities which wo thought had all been pledged for tho United Kingdom bonds issued in 1916-17. It lias been n surprise. Thus she is establishing credits for hersdt in America. SHIPPING GOLD TO AAIEPJGA. , The great gold shipment of ten million to N" cw York recently lias had great influence on America, says Air Noyes. It is important because it England sends ten millions she is not only partly meeting the 500 million French loan, but establishing a ten million reserve, and by tho usual banking practice is entitled to seven times that amount in credit. That is a. thing that must never bo forgotten. “The 'stories -of shipments from Loudon of 200 millions of gold iu the near future, and of 25 millions to he brought in a British battleship are preposterous,” says Mr Noyes. Such amounts aro not necessary. What wo want arc moderate amounts of gold. What they want is credit. They arc getting them and will continue to got them. “It is estimated,” lie says, “ that two thousand millions were given in credits by the United States to England and Europe on tho last year's trade of tho United States. But England will never get back to par until she gets her currency straightened out. She cannot pay in goidhntirely for a long time, “ because sho would run tho chance of completely denuded of her supply ‘if s ] lf , met all the paper notes that might bo presented. . “ Any straight-thinking American citizen is absolutely ashamed of the fiasco of the Peace Treaty,” said Air Noyes plainly. “It is the result*of Presidential politics.” Both the reservist party and the President were to blame, in his opinion; tho President for scorning a fair compromise with the mildly rcservationist party; the committee for the deliberate ana needless offensive tone. As a result the Senate is in a dilemma, not seeing how a separate peace with Germany can he effected, without- making for the identical terms of the Versailles treaty.”