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Hokitika Guardian, 19 March 1924, Page 2

Continuing the discussion of Mr .McKenna’s address, the financial review goes on to say that where difficulty may ■bo found in following the chairman of the .Midland Bank is in his statement if there is more money, trade is stimulated, and if the amount is reduced, traed is depressed. In this somewhat sweeping statement the speaker might with advantage have differentiated between home trade and foreign trade. An increased supply of money would certainly stimulate the former, but. as stated by Mr McKenna, if the supply is increased indefinitely with a view to keeping trade booming, prices will soar indefinitely; innumerable social evils will he suffered, and ultimately the extreme depreciation of the currency will gravely impair the power to trade. On the other hand, a reduction in the supply of money, which brought prices down to the pre-war level, would mean a continuance of trade depression and of unemployment. Such factors could scarcely influence the volume of foreign trade, the causes of the depression in which were mentioned in the early part of Mr McKenna's address—-namely, the destruction of unaccustomed markets through the economic breakdown of : large part of Europe, political disturbance or uncertainty at home and abroad and violent changes from one type of demand to another at the close of the great war. Still, Mr McKenna considers that if there is to he an increase in the total of employment, that is, a greater volume of trade, the hanks must obtain additional cash resources, and this can only be effected by the Bank of England letting out more money. At the meeting of Barclay’s Batik, on January 23, the chairman. Mr F. 0. Goodenough, dealt with the American debt credit policy in relation to trade and a capital levy. Mr Goodenough apparently does not consider that the American debt question should not have been settled, remarking that no one who has visited America can fail to realise the gain to British credit and British prestige from that settlement,

or the loss that would have been incurred by both if our liaibiEtv had been questioned or had been met in any other way. Moreover, the adherence of Great Britain to the principle of the honourable fulfilment of contracts in which lies the greatest guarantee for peace, is of world-wide importance. He expressed the decided opinion that British credit stands firmer to-day than at any time since the war, and that ns to the intrinsic value of tne pound there can bo no doubt. As regards a capital levy, even one ostensibly designed for the purpose of cancelling debt, be said that such would entail violent deflation and having regard to t-lie position which British credit holds in the economic organisation of the universe would have a world-wide effect.