The Waikato Times TUESDAY, APRIL 30, 1935. STABILISED CURRENCY

Waikato Times, Volume 117, Issue 19563, 30 April 1935, Page 4

The Waikato Times TUESDAY, APRIL 30, 1935. STABILISED CURRENCY

Economists and others are vigorously debating e ® urr ® question. The controversy centres round the gold stan ar . admitted that a Stable international currency is essential oin - national trade, but just what is the ideal monetary order has ye be determined.

A contributor to the Round Table points out that despite the substantial measure of recovery recorded by Britain in t e as wo years, the future depends on the world situation, an a s ow^ little or no improvement. The writer argues that the go san ar can never be an end in itself. It is, however, a means to an end an expedient for securing two main objects of policy confi en and international stability. If the value of these objectives is iecv oned to be less than the harm that the gold standard may do, y hitching Britain to countries whose monetary policy is unsuited o her, or by driving her to a disastrous deflation in defence of her own reserves, then the gold standard has to be to be laid by. But in that case some other means will have to be sought for combining in the most favourable measure the three monetary objectives pub ic confidence, International stability and the avoidance of booms and slumps.

Britain has maintained public confidence through sound banking and sound governmental finance. She has achieved a limited degree of international stability through the coherence of the sterling bloc and the operation of the equalisation fund, and by the pursuit of an expansionist monetary policy a modicum of internal industrial prosperity has been achieved.

Each of these facts, however, has had a less favourable aspect. Prudence in public finance has prolonged a negative attitude towards programmes of Capital expansion into a period when a bolder policy is called for. The sterling bloc is but one group among others, and even within it exchange stability has been the result, not of organisation or of plan, but of the temporary self-interest of its constituents.

The exchange u control ” provoked other and, in a sense, rival national controls, with the result that instead of confidence a new speculative element has been cast into the private exchange markets. As for the freedom obtained for internal monetary policy,, the limits of national reflation have already become apparent. It is bounded by individual and corporate reluctance to take advantage of cheap money in an unstable world; it is bounded by the sluggishness of recovery in international trade, and it is bounded by the incapacity of countries still on gold to join in world reflation.

While monetary nationalism may serve well in seasons of depression it cannot in the long run iron out booms and slumps. No nation can live unto itself, and economic disequilibrium is an international phenomenon and must be tackled with international weapons. Nations have discovered that high tariffs and self-sufficiency are no defence against world depression and afford no assistance in escaping from its toils. ' “

It cannot be too strongly emphasised that the path to national prosperity is an international highway.