A STRONG LEAD

Wanganui Chronicle, Volume 77, Issue 81, 6 April 1934, Page 9

A STRONG LEAD

BRITAIN AND AMERICA THE DEFLATED DOLLAR. Lord Colwyn, chairman of Martin’s Bank, Liverpool, presiding at the annual meeting of that institution, made brief reference to the international outlook, which ho described as still obscure. Dealing with events in the United States he said, when the United States abandoned the gold standard it was thought the fall in the dollar would benefit that country to Britain’s detriment. No such misfortune had occurred, and experience proved that Great Britain had little to fear if the dollar depreciated still further. The methods adopted to promote recovery in U.S.A, differed profoundly from those of Britain, (controlled or organised credit inflation being tho coro of tho United States’ programme. Further, in order to reduce unemployment and revive trade, positive measures of a most drastic kind had been adopted. The soundness of these measures might, ho doubted. It would bo a long time before the public works programme could reach a stage affecting favourably the unemployment question. The financial side of the President’s policy had tho most immediate influon*c4j on the outside world, but tho depreciation of the dollar had not had the deflationary effect on the rest of the world that might hive been expected; neither had it deranged the export trade of other nations to the degree once feared It had nevertheless increased the difficulties of foreign trading and financial operations and postponed indefinitely the restoration of money stability. The British Policy. The policy of Great Britain had boon to concentrate on lowering the rates of interest, the industrial effects of which were invariably good. Building provided the chief example of trade revival, due to reduced cost of borrowing, but there was also a general tendency among railways, municipalities, and the growing imiuitries of the south to take advantage of low rates, and thus revival would be fostered by increased employment and purchasing power. Great. Britain might, thus he congratulated on a policy which should imply the lasting stability of any new position reached in tho coining years. Tho main concern of 1934 and 1935 would be the question of relixing the exchange rate. Any method of establishing a fixed exchange rale resulted in binding the currency policy, ’he price policy, and tho discount rnte

policy of this country to that of those countries to whose currency sterling was linked. The relixing of the dol’arstorling rate would tie the fortunes of Great Britain once more to those of the United States. A slump there would produce a slump here. For this reason especially, the warning was needed that the recovery programme of U.S.A, might yield a far less stable trade position than that of Great Britain. One Stop Rauiaius. Nationally, Great Britain had given a pre-eminently strong lead in experimental adjustment to now conditions. At no previous time in the United Kingdom had there been such low and stable discount rates, nor such stability of prices, nor such assurance that every advance in trade would be consolidated. Ono further important step remained. That, was, with duo discrimination, to unite selected countries, if ’.hoy bad given clear proof of the will to seek revival through methods identical with Great. Britain in tho development of its changed rate control and the reduction of trade barriers. The wider the co-operation under sound methods the greater the assurance of ultimate prosperity. Internationalism alone, and not the narrower view of an entirely nationalistic outlook, could bring us to that state of world-wum well being which was our aim and 2T»ak