THE Wairarapa Age MORNING DAILY THURSDAY, APRIL 20, 1933. INFLATION IN AMERICA.

Wairarapa Age, 20 April 1933, Page 4

THE Wairarapa Age MORNING DAILY THURSDAY, APRIL 20, 1933. INFLATION IN AMERICA.

An apparently growing demand in the United States for currency inflation holds interesting and important possibilities. In Washington, the Speaker of the Senate had predicted confidently that a currency inflation Bill will be passed this session and there are anticipations of an Administration plan “ looking towards a swift combating of deflation.” As to the lines likely to be followed in developing a policy of inflation, or “reflation” a» some advocates prefer to call it, there is still some vagueness. Proposals that the United (States, Britain and other nations should combine in a policy of bimetallism, under which silver would be established in a fixed ratio of value to gold, do hot seem tv be gaining effective favour. The adoption of a silver base for currency perhaps holds greater importance as a means of enlarging trade with the silver-using countries of the East than as a contribution to the solution of the general monetary problems of the world. The interest of the present situation in America is that there is a developing demand for inflation on some basis.

It is highly probable that in any’ policy of this kind, the United States Government will endeavour to secure collective and concerted action by a group of the leading nations. Authorities of standing, amongst them Sir Arthur Salter, are agreed in holding that no one nation can go very far alone in the direction of “reflation.” The expressed opinion of Sir Arthur Salter is that international action must be taken to raise prices unless the world is to deteriorate into a collection of e closed economic units, national, regional or imperial,’ Success in the project of raising world commodity prices by international measures of currency manipulation is a thing devoutly to be wished by producing countries like New Zealand. Indeed, it would appear that nothing else than an increase in world prices will now enable these countries to achieve economic salvation and to escape some kind of composition with, their oversea creditors. Some fears have been expressed that international measures of currency inflation, or reflation, would leave primary producers, and countries that depend chiefly on primary production, as deep as ever in difficulties, by Raising prices universally and so increasing costs as well as returns. This view,, however, appears to overlook a number of important factors, amongst them the position and real weight of existing debts. The total problem is exceedingly complex, but if the admittedly great difficulty of raising commodity prices can be overcome, this need not necessarily entail the raising of working and living costs in a corresponding degree. The movement now in train in the United States is of hopeful import for producing countries like New Zealand as well as for others, assuming that the leading aim is, as it should be to secure concerted international action in raising world prices.