THREE FOLD PROBLEM.

Wairarapa Age, 21 December 1932, Page 3

THREE FOLD PROBLEM.

It is an assumption here that President Hoover has already made some overtures toward Mr. Roosevelt and that the personnel of the group which is to handle the debt discussions will bo submitted to the President-elect for his approval before appointment. CO-OPERATION SOUGHT. The only mention of this subject in the message to Congress, however, was as follows:—“The discussions in respect to both debt questions and the World Economic Conference cannot be concluded during my Administration, yet the economic situation in the world necessitates preliminary work essential to its success. The undertaking of these questions should not be delayed until after March 4. I propose therefore, to seek the co-operation of the President-elect, Mr. Roosevelt, in the organisation of machinery for the advancement of consideration of these problems. t( A year ago I requested that Congress should authorise the creation of a Debt Commission to deal with the situations which were bound to arise. Congress did not consider this wise. In the situation as it has developed it appears necessary for the Executive to proceed. Obviously any conclusions must bo subject to approval iby Congress. ’ * The President reiterated his views against cancellation or reduction without adequate compensation. He said that it would ‘ * meet my hearty approval” if Congress should decide to re-establish the Debt Commission.

Congressional opposition to any such step is so strong, however, that the Chief Executive voiced no hope that that previous recommendation of his ever would be fulfilled. The President only negatively excluded from the proposed discussions the nations which had defaulted. RESTORATION OF PRICES. In the opening part of his message, President Hoover said; “It is certain that the most urgent economic effort still before the world is the restoration of price levels. The undue and continued fall of prices and trade obviously have many origins. One dangerous sequence, however, is visible enough in the increased difficulties which are arising between many debtors and creditors. The values behind a multitude of securities are lessened and the income of debtors is insufficient to meet their obligations, while creditors are unafole to undertake new commitments for fear of the safety of the present undertakings. It is not enough to say the fall in prices is due to decreased consumption and thus the sole remedy is adjustment (by reduced production. That is in part true, but decreased consumption is fought about by certain economic forces, which, if overcome, would result m a great measure of recovery of consumption, and by this a recovery from depression. Any competent study of kvAl CaU f SeS -° f the contin ued abnormal Ha Vf v WOuld at once establish itn/ f gencral P rice movement is worldwide in character and international influences therefore have a. fart m them.”

, Republicans and Democrats alike en■orsed the general tenor of President over's message. HE MONETARY STANDARD.

further exploration in this field” 1 Mr. Hoover,, “brings us at once the fact that price levels have been seriously affected by the abandonment of the gold standard by manycountries and the consequent instability and depreciation of foreign currencies. These fluctuations in themselves, through the uncertainties they create, stifle trade and cause invasions of unnatural marketing territory and result in arbitrary trade restrictions and ultimate diminished consumption of goods, followed by a further fall in prices. The origins of currency instability and depreciation reach back again to the economic weaknesses rooted in the World War, which have culminated in. many countries in anxieties in regard to their financial institutions, the flight of capital, the denudation of gold reserves, with a consequent jeopardy to currencies.

“These events have been followed by restrictions on the movement of gold and exchange in frantic efforts to protect their currencies and credit structures. These steps have again reduced consumption and diminished prices, and are but parts of vicious cycles which must be broken at some point if we are to assure economic recovery. We have abundant proof of the effect of these forces within our own borders. The depreciation of foreign currencies lowers the cost of production abroad compared with our cost, thus undermining the effect of our protective tariffs. The prices of agricultural and other commodities in the United States are being seriously affected, and thousands of our workers are being thrown out of employment through the invasion of such goods. I concur in. the conclusions of many thoughtful persons that one of the first and most fundamental points of attack is to reestablish the stability of currencies and foreign and thereby release an indefinite number of barriers against the movement of commodities throughout the world. I am well aware that many factors which bear upon the problem are purely domestic in many countries, but the time has come when concerted action between nations should be taken in an endeavour to meet these primary questions. The gold standard is still the only practicable basis of international settlements and monetary stability, so far as the more advanced industrial nations are concerned.

“The larger use of silver as a supplementary currency would be an aid to stability in many quarters of the world. In any event, it is a certainty that trade and prices must be disorganised until some method of monetary and exchange stability is attained. It is for the purpose of discussing these and other matters that we have joined in the World Economic Conference, where means and measures for turning the tide of business and price levels through a remedy to some of these destructive forces can bo fully and effectively considered, and, if possible, un- , dor taken simultaneously between nations.

The reduction of armaments also has a bearing upon these questions. The stupendous increase in military expenditures since before the war is a large factor in world-wide unbalanced national budgets. A world conference on armaments and money as well as on war debts was proposed by the chairman, Mr. Borah.

of the Senate Foreign Relations Committee in approving the action for debt review suggested by President Hoover. Mr. Roosevelt declined to comment on President Hoover’s Message.

War Debts Disarmament And Trade. MR. HOOVER’S MESSAGE TO CONGRESS. OVERTURE TO SUCCESSOR. PRICES AND PROSPERITY. WASHINGTON, December 19. Co-operation with the Presidentelect, Mr. franklin Roosevelt, to secure continuity of American foreign policy, particularly as to war debts, the world economic conference, and disarmament, was proposed on Monday by President Hoover in a Message to Congress. Lacking Congressional approval for the revival of the War Debt Commission the President declared it necessary for him to proceed independently of Congress to set up machinery for further debt discussions with those nations which had not defaulted. He suggested an interlocking of the debt, economic and disarmament questions, and indicated that the Commission on Debts would be appointed by him, some of the members of which would also be delegates to the World Economic Conference arranged for next year, while others would have liaison with present disarmament negotiations.

CANCELLATION TNRVTTAKT.F, VIEW OF MR. W. M. HUGHES. (Received Tuesday, 9 p.m.) SYDNEY, December 20. Mr. W. M. Hughes, upon his return from England, said that no matter what shape the immediate result of the default by France, Belgium, and other nations may ar' the concellation of war debts is inevitable. “I consider," he said, 44 that in face of tho British Notes and the attitude of the defaulting nations, the United States will be compelled to review its position/'