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Hokitika Guardian, 13 December 1930, Page 4

Thruf. are many explanations for the f variations in price levels, and leading bnnkinp authorities are paying a good deal of attention to currency in circulation as one of the operating causes to create the effect. Th'e , troubles are not confined to a few (countries, but are almost world general. Credit in circulation in the way

of paper money must have the gold hacking under the present system, and many consider that the level of prices is governed in the main 'by the volume of gold currency available as a hacking. A late pronouncement has been made of this aspect by .Mr Reginald McKenna, till lately a foremost politician. As an influential banker and an ex-Chancellor of the' Exchequer. Mr McKenna speaks with authority, and he practically endorses the view that the general fall in prices is due, at least ah a contributory cause, to “the diminution in the supply of monetary gold.” This, in turn, lie attributes to The fact that more than twice the amount of gold produced in the lost year or two lias been absorbed hv two countries, the United States and Franco. It is possible that Mr McKenna has not made sufficient allowance for the fact emphasised by Cassel and other authorities, that the annual output of gold is, in any ease, not keeping up with the world’s commercial and financial requirements. But Mr McKenna certainly holds that this difficulty of hoarding “dead” gold could be got over by international agreement, and the world’s, best hope for the abolition of the existing commercial and industrial depression still lies in some form of international co-operation, which, by rationing the gold supply, would distribute currency ‘in accordance with the world’s needs, and wo’ld thus stabilise prices, or at least automatically cheek their fall. .Tf Mr McKenna is right in respect to world finance, the same principle would apolv to the finance of the separate oountrPa, It has been ailleo-. ed that Sir Otto Niemeym- when be reports on New Zealand finance, will recommend a pooling of the resources of tho banks, ns a means to stabilise credit. A centralised or reserve bank is said to bn jp likely suggestion, whence credit null he operated. This does net seem impracticable, and is a step towards a degree, of nationalisation by which New Zealand as a whole would derive a benefit from the oorrenov within its confines. There would he less “dead” gold, lo” it would he possible to r;*e it to,a fuller degree by the general business of the eountr r . Hold of po"w is not, the f„U so'otlnn 'of the difficult rrooosition. If it were, the United States with all its hoarding l of gold should be in a better plight industrially and financially than it is. France js a better example of the utilisation of the credit from its gold resources, and nnemnlovment in that country negligible almost. In the United States, there, ’’s a very serious and even critical situation. Perhaps it is that the wealth of the country is not organised as it might he for the credit of the country. There, there is talk of a reserve bank also such as is likely to he suggested for New Zealand to organise national resources in gold for the general benefit, An easier position in r prrard to credit properly secured would he helpful to any country at this juncture, and it does not seem unlikely that the on the matter in the air will sooner . than lator find some practical replication with a view to remedying the stringent position.