WORLD PROBLEM

Evening Post, Volume CXIV, Issue 126, 24 November 1932, Page 14

WORLD PROBLEM

SEARCH FOR SOLUTION

fc STEWART RETURNS

CANCELLATION OF DEBTS

Agreement or default"

. The Minister of Finance (the Hon. ■.W. Downie Stewart) returned to i Wellington by the Rangitane from London this afternoon.

In the course of an interview with a "Post" representative, he made some interesting observations on the world financial situation.

: "My visit to England was very brief but full of interest," he said. "I renewed acquaintance there with a number of the men I had met at* Ottawa, and was fortunate in meeting many prominent men in the world of finance and ■politics—as well as some economists of -world-wide fame. .

"In anticipation of my arrival, Sir, .Thomas Wilford had kindly arranged a succession of interviews with many im-portant-men in the City, and the result :.was that every day was filled with interest", as most of the discussions related directly or indirectly to problems affecting the welfare of New Zealand. If I had spent months instead of weeks in London I could not have accepted half the invitations I received to meet individuals or groups of men who are deeply impressed with the overwhelming and urgent necessity of finding some solution to the present depression which is threatening the whole fabric of our financial, industrial, and * agricultural organisation. "At Ottawa I had the good fortune to have many, talks with Sir Henry Strakosh and Sir.George Schuster, the Finance Minister for India, and others, and these contacts were renewed and extended in London. I also met Mr. Montagu Norman, the Governor of the Bank of England, Mr. J. M. Keynes, the noted economist, and Sir Basil Blackett. MB. MONTAGU NORMAN. "Mr. Montagu Norman is, I suppose, the storm centre' of world financial policy at tho moment. -Ho was one of the first to call on me on my arrival, and the Mast to say good-byo ►—he is'regarded by some as tho saviour of Europe and a financial genius of the first order-—by others ho is considered as the main obstacle to any radical policy aimed. at raising world prices. Lord Snowden, in reviewing a. recent biography of Montagu Norman, endorsed the view that he is the greatest, statesman in Great Britain since ' the war, and, praises his vision in undertaking the gigantic task of restoring the financial stability of the ruined countries of Europe as an essential preliminary to restoring prosperity in Britain. Snowden apparently holds the view that credit expansion serves no useful purpose in a period of trade depression, and says: "It is not credit that- is needed to-day, but markets. When the markets are open credit will be forthcoming." Keynes also recently paid a striking' tribute to Norman, although he does not always agree, with lis policy. He declared that Montagu JNorman was a, great master in the details of his technique and a great public servant disinterested, chivalrous, ' arid devoted to the public interest. OPTIMISM IN BRITAIN. . "There certainly seemed to be more optimism and confidence in Britain than in Canada or America,, The outstanding success of the huge conversion loan was a magnificent demonstration of the spirit and determination of the British public. "On the other hand, in Canada and America everyone seemed nervous and apprehensive. An American in New York said to me, 'We are not accustomed to hard times , and we don't stand up to them.in the same dogged way the Bri'Msh do. We have over 10 million unemployed now, and by next ■winter w.e may have, up to 16 million unemployed. What is to happen then no one knows.' ~. , _"I did not meet many industrialists in Britain, but those I did meet were cheerful and confident—particularly the motor traders and manufacturers. "Many prophecies are being made of an optimistic nature, but as against that only the day I sailed a leading -figure in the financial world told me that in his opinion things will get worse before they get better. A RACE AGAINST TIME. "Both at Otta>wa and in .London I took every opportunity of emphasising the fact that all the debtor nations are engaged in a race against time and that unless effective means are adopted without delay for raising the world level of prices, not only will the debtor countries crash, but the whole system of modern capitalism will do the same. . Those who want.proof of this should read the speeches of Sir Schuster and others at Ottawa. / [' ' The present,. depression has not, previously, been 'equalled .in severity, not only in industrial disturbances— both primary, and secondary—but also in the upset it has caused in the'3ud- ' getary positions, and the international relationships of. the different countries of the world. In fact, a number of Governments have had to face bankruptcy together with, complete economic and political collapse. This aspect of the depression is closely related to the legacy of national and international iudebtedness arising from the World iWar, as well as to the heavy fall in commodity prices, which has so greatly increased the real weight of all debt burdens. So far economic remedies lave been applied more from a national than an international standpoint, and: ; world trade and commerce as a whole has suffered. • ■ "It is fortunately, however, becoming more manifest that international cooperation must be successfully achieved if we are to maintain the world as a highly organised, and interdependent society, arid find a way out of the crisis. AGREEMENT OR DEFAULT. - "It is generally agreed that the first real step toward the world's revival -lust clearly be the relieving of Govern- ; ments from, obligations which they are unable to fulfil. This means the cancellation on a considerable scale or the reduction of inter-governmental debts in order to re-establish the solvency of national economic systems, and so pro- ' vide a fresh foundation on which general prosperity' can be built. The time appears to be at hand when, if this does not come by way of international agreement, it will come in the form of default. -"I had no time to visit Geneva, but 'great importance is-attached to the. disarmament question, on which inter- - national discussion has been centred - for some time. Unfortunately progress toward disarmament is so slow as to be - almost negligible. But if a real solution of this problem could be arrived •t there is hope for a speedy clearance of the reparations and debts questions. iome progress has already been achieved at Lausanne In respect toJreparations/ and-hopes-arei- entertained'

that at the World Economic and Financial Conference, to be held early next year, progress on international lines wilUbe made in the removal of many obstacles which are prolonging the world crisis.

"On the subject of banking my inquiries have indicated that since the war the tendency throughout the world has been to place greater responsibility and more freedom in the hands of the central banks. In fact, central banking is now looked on as tho natural sequence in the march of progress of the trad.ing banks. The post-war period has also witnessed considerable advance in central bank co-operation, especially since the establishment of the Bauk of International Settlements. Such cooperation is regarded by world authorities to be of extreme importance in instituting and maintaining international control of credit and prices. TO PREVENT RECURRENCE. "Quite frankly, I do not know when the depression will end, nor did anyone I met really know. But I am sure one good result will emerge when daylight breaks, and that is that we will have learned enough to prevent a recurrence of the present paradoxical absurdity of a crisis not of poverty, but of plenty. Many of the best.and most expert brains in tho world are concentrated on. ascertaining how to acquire such a control over credit and currency and methods of production and distribution as will re-establish a proper standard of'living ,which should steadily i improve and keep pace with our growing control over' natural resources.