The Waikato Times With which is Incorporated The Waikato Argus. FRIDAY, JUNE 3, 1932. TO ACHIEVE PROSPERITY.

Waikato Times, Volume 111, Issue 18653, 3 June 1932, Page 6

The Waikato Times With which is Incorporated The Waikato Argus. FRIDAY, JUNE 3, 1932. TO ACHIEVE PROSPERITY.

A book has recently appeared written by Sir Arthur Salter who has occupied a position In the Secretariat of the League of Nations which afforded him unusual means of observation. Nothing more than extracts are ®o far available but It appears that Sfr Arthur thinks there is nothing more which Europe can do to improve existing conditions- It lies, he.thinks, with America and the attitude which America will lake up Is an unknown quantity. He says that the bulk of the loans made to foreign countries in recent years had better not have been made, though he excepts the loans recommended by the League of Nations and by Central Banks. After the Armistice and for the next few years the United States made extensive foreign loans not only to North and to South America but also to several European countries. These loans are on a different footing from the loans made to Britain for the prosecution of the war, and it is to the loans to the smaller European countries that Sir Arthur Salter refersand says that they had better not have been made.

In the years mentioned there was great wealth in the United Stapes, For the first two years of the war they had been supplying munitions of every kind and also food, to all the countries at w’ar, and had been receiving enormous prices for them. When the war ended many countries wanted to reconstruct quickly. Many people in the United States were able to invest and willing to do so. Unfortunately they had had no experience of the business and great mistakes were made. They were not confined to Europe, for all the countries of Central and South America are in difficulties, and many are unable to pay interest. There is, however, a difference in the position of the American and the European debtors. The American debtors are countries which produce raw materials that the United States is willing to accept. The European countries produce manufactured goods which the United States, as far as possible, excludes. This it was which created the drain of gold to the United States and started the fall In prices that has occasioned distress-

There is no occasion to accuse any one of malignant motives. No financier cornered gold in order to lose his money. No country is to-day richer for having a considerable gold reserve. It is very doubtful whether gold will be retained anywhere as the unit of currency. What we may all be accused of is ignorance, and to that we may all plead guilty. II was ignorance that led the United Stales to lend money to Europe when she was not prepared to take the, interest in goods. It was Ignorance that, led Britain back on to the gold (Standard

at par in 1925, and it is ignorance that leads her to think she can restrict trade with foreign countries and become prosperous. It is Ignorance in New Zealand to think we can afford to tax primary Industries which do pay in order to subsidise secondary industries which do not pay. The list of mistakes due to ignorance is end r less, and the question before us is how they can be corrected. Two proposals have been put forward in Britain, one by Mr J. M. Keynes, and one by a Mr 0. T. Falk, They have much in common, and propose close co-operation between the Treasury and the Bank of England. The first step is to control exchange to prevent it rising unduly through the action of foreign speculators. This will be done through the method proposed in the Budget of a stabilisation loan of £150,000,000. The price of money in London should toe 'brought very low so as to induce investors to put money into stocks and shares. The Bank should announce each week the highest price it will give for gold. Mr Keynes anticipates that economic forces will bring about a rise of prices in France and the United States, as to which It can only be said that the world is watching anxiously for it and has hitherto seen no sign. He thinks the Bank should aim at a reduction in the value of the £ to 3.40 or 3.50 dollars, which would of course give Britain greater exporting power, and would at the same time help countries of primary production. We fancy it will be found difficult to carry out this iast recommendation in face of the constant tendency of the speculator to buy sterling as the indications of Improvement grow. The “ Economist ’’ which reports these recommendations and approves of them utters a note of warning lest it toe thought that Central Banks have It in their power to create prosperity. They can bring about conditions favourable to success, as soon as the first signs appear- We should be inclined to say that the first word must be spoken by the politicians, and politics to-day point to anything but success.