MONETARY POLICIES.

Waikato Times, Volume 118, Issue 19632, 19 July 1935, Page 11

MONETARY POLICIES.

AN INTERNATIONAL REPORT,

EFFECT ON UNEMPLOYMENT.

“ The countries which kept their exchanges at parity fared, with one or two exceptions, decidedly worse in 1934 than those which had depreciated their currencies.” This is the broad inference which emerges from an examination of unemployment statistics, which the director of the International Labour Office deals with in his report to the next International Labour Conference. Mr Harold Butler examines the employment and economio position of different countries in terms of rough currency groups, without, however, assuming that currency has necessarily been the only or even the decisive factor in determining It. He begins this analysis with the countries whose currency has depreciated since the beglning of the depression. He first takes the case of Japan, which clearly shows the best employment record at the present lime. He continues with Sweden, where the combined effects of an increase in exports, a cheap money policy, and a programme of publio works has enabled the country to make a remarkable advance. Then he successively mentions the position of Denmark, Finland, Norway, Portugal, Great Britain. United States, Canada, Argentina, Brazil, Chile, Mexico, Australia, New Zealand, China, India, and Czechoslovakia. The director of the International Labour Office next discusses the cases of the Netherlands and Switzerland, whose currencies still retain the prewar gold content; then that of those countries whose currencies suffered depreciation in the early post-war period and which were naturally reluctant to repeat the operation:—Belgium (the report was written before the recent monetary changes in Belgium) France, Germany, and Poland. Mr Butler gives Germany separate treatment, owing to tho particular characteristics of its economic reorganisation, as well as the Union of Socialist Soviet Republics, whose economic and social structure is as different from that of other countries as to render inapplicable most of the tests applied to the rest of the world.

Money on Easy Terms,

From this survey it is evident that tho countries whose currency depreciated since the depression have managed to reduce unemployment to a greater or less degree. It may be asked, however, whether tins result has not been less by depreciation itself than by the policies of internal credit expansion, cheap money, borrowing for schemes of national development or making money available on easy terms for private enterprise which abandonment of the gold standard made practicable.

Deflationary policies which, with the exception of Germany, have been followed by all the countries which havo maintained their currency in a fixed relation to gold, seem to have been less successful in combating unemployment.