The Waikato Times SATURDAY, JULY 1, 1933. THE CRISIS IN WORLD AFFAIRS.

Waikato Times, Volume 114, Issue 18986, 1 July 1933, Page 6

The Waikato Times SATURDAY, JULY 1, 1933. THE CRISIS IN WORLD AFFAIRS.

According to the reports received from London during the past twenty-four hours the course of the Economic Conference has reached a crisis the outcome of which, it appears, will depend largely upon the United States. The issue of currency stabilisation has now taken first place in the minds of the delegates, and until some settlement is reached it is impossible for progress to be made on any other questions. *

In the opinion of the European nations the responsibility for failure at London will be directly attributable to America, which has failed to realise the interdependence of its domestio policy of reconstruction, and its international relationships. In the remaining gold-standard countries, France, Belgium, Italy, Switzerland and Holland, resentment is centred against the steady decline of the dollar and the absence of any assurance regarding even temporary measures for stabilisation.

Coupled with this distrust of America is the suspicion that the pound sterling may decline as a result of the pressure of the dollar. If so, it is not unlikely that these countries, particularly Holland and France, may themselves depart from gold, and in such a case there must be an immediate and successful effort at stabilisation if chaos is to he avoided. Although the situation is fraught with anxiety, there is little likelihood that stabilisation will be delayed much longer. The question is whether it can be secured before a collapse makes it an urgent necessity.

The position of the United States is easy to understand. So long as the dollar was quoted at 3.40, stabilisation at that level placed her export trade under a considerable disadvantage, particularly in comparison with the pound sterling. A domestic inflationary policy served to start the dollar on the way to regaining its former pai’ity with sterling, at a reduced gold value. In short, Britain having refused to come up to the dollar by returning to the gold standard, America had no option, in the interests of her export trade, but to send the dollar down to the level of sterling.

This object has almost been achieved. Yesterday’s quotation of 4.29 i with fluctuations to 4.41, is the nearest to parity yet reported. Purely from the American point of view, it is not illogical to expect that'stabilisation will shortly eventuate. The fact that America is biding her time in order to strike a good bargain in the “ stabilisation deal ” seems to be indicated by the regularity with which her delegation is reporting to Washington for any change in instructions. It remains to be seen whether America will he clever enough to seize the right moment for action.

It must not be overlooked, however, that the question of stabilisation covers a wider field than the mere shuffling for advantageous positions. The main object, after attaining security and permanence in the money market, is to ensure that the interchange of goods between different countries shall be harmonised with their value in terms of labour in the country where they are produced. If certain goods arc cheap in one country and luxuries in another, they cannot he exchanged on a mutually profitable basis.