Wairarapa Daily Times [Established Over 50 Years.] THURSDAY, 16th MARCH, 1933. STABLE PRICE LEVELS.

Wairarapa Daily Times, 16 March 1933, Page 4

Wairarapa Daily Times [Established Over 50 Years.] THURSDAY, 16th MARCH, 1933. STABLE PRICE LEVELS.

Sir Basil Blackett, a director of the Bank of England, and of cable

companies and wireless companies, is an advocate of planned money, and, through planned money, of planned industry. Why “Planning?” it may. be asked. Gold in nineteenth century was the basis of money, and by its means was created a self-regulat-ing system which it was believed worked automatically. It is true it did not keep prices stable. They fluctuated, though, as we know fluctuations now, within narrow limits for short periods, though over a long term the fluctuations were wide. It is patent now that the comparative smoothness with which the gold standard w'orked in the nineteenth century and in the opening years of the present century was due to the fact that the principal creditor nation, Great Britain, made no attempt to interfere with its automatic selfregulation. In the third decade of the present century, with two other nations large creditors, and with these nations at the same time preventing automatic regulation, the standard broke down. As the world is placed to-day, the choice seems to lie between stabilisation of national prices and stabilisation of exchange values of currencies. Sir Basil Blackett notes that the par of exchange is a familiar phrase, but that no one ever speaks about the par of prices or the parity of the price level? He asks “Why?” A stable price level does not mean that the prices of each separate commodity should remain stable, but that though there would be fluctuations in particular prices, the general level of all prices would be stable. The advantages of stability of this character, if it were possible, need no demonstration. Sir Basil Blackett believes that it could be obtained by monetary action. There could riot be stability in the world price level, because nations would have to surrender one of their principal sovereignties, the control of their currencies, to a super State. For that the w'orld is not ready. His way of approaching the problem may he learned from the sentences : “There are many evidences that the surest way of advance towards a harmonious world order is from isolated national economic groupings. The coming together of the nations of the British Commonwealth for economic co-opera-tion at Ottawa is only one, though the most striking and the most hopeful of the movements towards economic association, which are taking place at the present time.” Sir Basil Blackett’s proposal is that each national economic unit should have its own local currency, and should declare its

intention to keep the internal purchasing power of that currency stable and maintain a constant price level, and that the nations of the world assembled at the International .Monetary Conference should undertake to co-operate to the best of their ability in giving’ practical effect to this declaration, each within its own domain. Prices would be kept at a constant level in each country through the Central Bank of the country making available or taking away credit to achieve the object sought. If this were done in each of the principal countries, although the constant price level would not be necessarily the same in each country, but would be so arranged _ by each Central Bank as best suited the conditions of its people, the currencies in exchange operations would be relatively stable.