A Puzzled World.

Waikato Times, Volume 111, Issue 18524, 2 January 1932, Page 12

A Puzzled World.

(By Harold Cox.)

AT A TIME when all the world is both puzzled and perturbed by economic difficulties, it is very interesting lo come across a book, 200 years old, which deals with many of the problems now facing us. This book was written in English about 1730 by a merchant of the City of London [named Canlillon, but it first appeared in in a French translation published in 1755 ("Essai sur la Nature du Commerce cn General,” traduit de l’Anglais. Londres, chez Fletcher Gyles dans Holborn, MDCCLV.). There is little surviving information as to Cantlllon’s personality, and, except for a brief reference in Adam Smith's "Wealth of Nations" to the views of "Mr Cantillon" on wage rates, the book does not seem to have attracted any attention until more than a century later. In 1881 Stanley Jevons wrote in the “Contemporary Review" a powerful tribute to its merits, and described it as the Cradle of Political Economy. His appreciation of the value of Cantillon’s work is warmly endorsed by Mr Henry Higgs, who is responsible for Ihe republicuiion of the original French translation, with a pngc-by- page rctranslalion by himself Into English. An 18th Century Sago. When Canlillon wrote in the early dlghlccnth century, England was mainly an agricultural country, but her manufacturing activities had already begun, and Cantillon states that of all the nations of Europe England supplies nfost cloth to foreigners. With a clear outlook on economic problems lie bad no toleration for beggars, and strongly condemns tho Mendicant Friars who "take from poor people in charities the subsistence which ought to fortify them for their labour." Ho also emphasises the importance of prudent expenditure so that wealth may accumulate —"The point which seems to determine the comparative greatness of States Is their reserve stock above the yearly consumption.” That is of obvious importance at Ihe present time. Dealing with tiie question of wages and growth of population, Cantillon says: "The increase of population can be carried furthest in the countries where the pcoplo arc content to live the most poorly," and he goes on to suggest a doubt "whether it is better to have a great multitude of inhabitants, poor and badly provided, than a smaller number much more at their ease. The book contains chapters, which might almost have been written to-day, on the nature of money, on the working of the exchange between the different capitals of Europe, and on lltc balance of trade. The author’s testimony to gold and silver as Hie. best forms of money is worth quoting: "Gold and silver alone are of small volume easily transported, divisible without loss,"convenient lo keep, beautiful and -brilliant in tho articles made of them, and durable almost lo eternity." At that time silver was Hie principal basis of coinage in most, countries of the world, and Canlillon refers to tho rise that had occurred in the range of prices owing to a largo intlux of silver from the West Indies. A Ploa for Silver. This example, of Hie relationship between tho quantity of money and the ranse of

Economic Problems Old and New.

prices brings us straight to the question of the gold standard, now exciting world-wide interest. It was the temporary shortage of gold which drove Great Britain off tho gold standard. Are we to go hack to the gold standard as soon as possible, which would mean a general lowering of prices, or arc wc to aim at a lower measure of value for the pound so that prices may continue at a higher level? A similar question affects most other countries, and a very well-written little book on tho subject by an American writer lias just appeared. The writer, Hermann F. Arendtz, calls his book "The Way Out of Depression.” He dismisses the idea of a controlled paper currency, for the sound reason that the controllers cannot be trusted. People "trust metal rather than men." At the same time he Is strongly of opinion that Ihere Is too little gold available for the needs of the trade of the world, and the conclusion ho comes to is . that wc must re-establish silver as a contributory metal. i. Ills definite proposal Is that bars of silver should be legally tenderable at a fixed International ratio in exchange for bars of gold. The gold backing of the paper currency would thus he supplemented by a silver backing, and consequently it would be possible to put into circulation a larger quantity of paper money. £ > Is There Enough Gold? Ij. There is admittedly at Ihe present time < f a special argument, which Mr Arendtz \ stresses, for tho rehabilitation of silver, y y namely, Ihe fact that tho inhabitants of U India and China still hold enormous quant!- \ j lies of silver, and that a rise in the value of . j this metal would increase their power 10, | purchase European goods. j• Whether bis main argument that there:, is’a world deficiency of gold can bo fully < sustained is more doubtful. A very valu-t .• able discussion of this issue is to be found in a substantial volumo of “The Inter- .! national Gold Problem,” just Issued by the i Royal Institute of International Affairs, re- . producing a series of lectures and speeches delivered at Chatham House by prominent ■ economists. $ ' Willi a few exceptions, these economists reject the proposition that the world’s supply of gold is insufficient for the world’s needs. Their general view is that many of (lie hanks could, with their existing gold reserves, considerably expand the. credits tlier arc giving if trade conditions were favourable, and' I hat if larger total credits should he needed that object could be secured by co-operation between the banks of different countries. On the’other hand, these authorities on financial problems mostly agree Ilian ,there is a mal-distribution of gold. France and America have ton much; oilier countries have 100 little. Here wo get hack to Ihe difficulties created by reparalions and war debts, and also by the desire of creditor countries l<> receive payment In gold rather than in goods. More than Over is there need for the careful study of economies if wo arc la solve the problems now puzzling the world, and each of the liirce aimvc referred to provides useful contributions to that study,