WORLD INFLATION

Waipa Post, Volume 44, Issue 3178, 17 May 1932, Page 3

WORLD INFLATION

CURRENCY AND THE GOLD STANDARD.

In a chapter on "Currency and the Gold Standard" in his new book, "Back to Prosperity," Professor Stephen Leacoek discusses tho effect of inflation on foreign exchange and the advantage it bestow 3 upon the foreign exporter. "Now, if all the outside world would sit and do nothing about it," he remarks in a sprightly passage, "the fall of the pound would work wonders for British trade and industry The first consequence of an inflation of currency are as cheering as the first sequences of taking brandy and soda. There is nothing like it. The only problem in both cases is how many do you take and when are you to stop. The fall in exchange would mean that if the British exporter could sell to a Canadian or American purchaser at the customary price in gold dollars and turn it into sovereigns, he would make at current prices a very handsome profit on the gross sale, extra over and above all ordinary profits. This wouM be fairyland. On the strength of it he would expand his business. This would stimulate employment. This would cut the dole. This would lower taxes. This would increase business profits and that would expand business further. In short, the House that Jack Built is not in it for the concatenation of consequences. All this provided the foreigner would sit still, and yet, even if he did, the fairyland would be too bright to last for ever." The author says the effect would be to bring wages, prices and profits back to their old level, but through the stimulant. "Suppose," he adds, "the pound got stable again, more or less, at four dollars and wages and prices adjusted themselves to that. What a temptation to drop it down to three and a-half dollars. Or if it got stable at three and a-half, to drop it down to three. The second glass of brandy. Eh, what? Come along. Thus it was in France that the franc went bumping down from step to step. You have got to stop somewhere, but you needn't stop just now. There is the whole danger and the trouble of inflation money and a shifting standard, and it.is enough, in the minds of many people, to condemn the whole thing."