The Waikato Times. SATURDAY, APRIL 22, 1933. AMERICA LEAVES GOLD STANDARD.

Waikato Times, Volume 113, Issue 18927, 22 April 1933, Page 4

The Waikato Times. SATURDAY, APRIL 22, 1933. AMERICA LEAVES GOLD STANDARD.

With the renewal of the embargo on the export of.gold, and the official announcement by the Secretary of the Treasury, the United States has now definitely abandoned the gold standard. The fact that there has been no sudden demand upon the country’s gold holdings, and no untoward . movement in foreign exchange discountenances any suggestion that t e action was necessitated by any form of pressure. The action is apparently an intentional part of the State policy, and among e wild statements which have been circulated from various quarters it is possible to discern definite evidence that the action was delib- i erately planned to meet certain contingencies. The allegations by the American Speaker, Mr Rainey, that there was a'“ planned campaign by foreign nations to heat down the United States commercially ” is an exaggeration of the position and is not borne out v by thet facts. The existence of a deliberate antidollar “drive” is also rather an over-statement than a true estimate of the position. The very fact that America is the great creditor nation, and that she has consistently refused to accept payments other than in gold, has resulted in a strong demand for this commodity. The additional fact that the bulk of the world s gold is located in America has necessitated a steady demand for American funds in order that these obligations may be met.

At the same time, it is not to be denied that America had what were to her very definite grounds for the action which has been taken. Since the inauguration of the Roosevelt administration, American official opinion on the need for currency stabilisation has been well known and frequently stressed. More recently there have been signs that opinion in Europe was not united on this important topic, and President Roosevelt has, tq use the vigorous idiom of his country, “ called for a show-down.” In depreciating the United States currency, he has removed one of the last anchors of the foreign exchanges, and at one stroke intensified the urgency of the need for world stabilisation.

To borrow the metaphor of the drowning man, America is no longer standing on the bank ready to pull the submerged ones to safety, but has leapt into the water in order to inspire a wholesale effort at self-help. The more immediate effect which is to be expected from the American action is to stress the need for world inflation of currencies, in order that commodity prices may be improved. As we have previously stated, the dangers of inflation are too well known for such a policy to commend itself to any individual nation, but Mr Roosevelt has approached the, problem from an entirely, new angle. .

By depreciating its own currency, America has paved the way for a general policy of inflation, in the success of which the cooperation of all countries may play an important part. Thereafter the securing of world currency Stabilisation, according to American opinion, will he greatly simplified. In its practical effects the single action of America will not produce very momentous results. While an immediate rise in foreign exchange is to be expected, and has indeed already commenced, and while commodity prices will receive a temporary stimulus, the lasting effects from this alone will not be as beneficial as inflationists may hope.

Mr Roosevelt, impatient of delays abroad, is determined to achieve his aims, and since world co-operation is essential for this he has produced a stroke of statesmanship which will compel prompt action on the part of other countries.