WORLD FINANCE.

Hawera Star, Volume XLVIII, 31 July 1924, Page 2

WORLD FINANCE.

SOME OF ITS PROBLEMS. STABILITY FIRST ESSENTIAL. Some of the problems of world finance were touched upon by Prof. J. P. Grossmann in an address before the Jvarangahape Road Business Promo- , turn Society a few days ago (the Auck- + n \i ar n states )* The principal trouble m finance since the commencement of the war was fluctuating prices, said the speaker. It was an economic fact that the more'money put into circulation, the higher, prices tended to go. If this fact was kept m mind, it was easy to find what happened to world finance prior to and after the war. At the commencement . hostilities there was a general rise in prices, for the means of production, broke down, being diverted for war purposes. The mere fact that the mechanism of distribution broke down apart from the collapse of the produeas,lsufficient to make prices rise. , the Central Powers and the Allies j urgently wanted more money to prose- ) cute the war. The gold basis, which , had been universally accepted, gave lm nr, to W r ’ W m. lCh W£lS tO be convertible. The amount of money usually available for the worid% ouantf ' VaS a more or less constant quantity, and the way m which a sudden expansion could be effected was to increase the gold reserve. To build this up would have been a long process, and the short cut of issuing paper money was taken. It was in? convertible because there was no reff™ “ ffi?.- The inevitable c^nst Sf 8 °i this action were increase in fime a Tl a contlnuan ce of the subterg • Ihe money m many countries and it L s imp“! nritL iff*, “-?■ ' rlth rise in P • All legitimate commerce beZText^ tlGn r br f e d ° Wn > and there v as extreme disorder m internal trade. convPrt a +i becauSe li} was impossible to convert the money. £25 MO non in S. 0 issued worth of paper monev OoZoO^k a r° k] reeerve of UU,OOO. The Government was forced to continue the issue, the gold reserve fcnppeared, and the.note® eireulSn wZnnL This was quite sufficient to account for the position the country had got into. wa\ f} l nV i l Wro r S .i Wlt i 1 British trade had f “ w ° f the for eign countries VI +S - Wlth , a . M y value. Ad these things being due to inflation •emedv th ° Ught that the lemedy was deflation. Deflation however had ■ worse attendant X foiw m tt t,on n- Palli ” !{ Prices wJuid IhlrJ * i , ealllll K m of money, and there would he commercial depression on a scale the world had never seen nn^ e Inam essential to remedying the l ' was to get stability. Professor Grossmann did not believe that to d n V °+ b 1 po ' ssib]e to get back to the gold .standard as it used to be stored 0 lf : ;aWi:: " «-“« be re: stored. It that could be done it me o "eiil b s 0 „^ firet «™-