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Hokitika Guardian, 27 December 1930, Page 4

T.x an article dealing with gold production and the level of prices, which appears in the annual international banking number of The Statist, a searching analysis is made of a problem which to-day is as important as it is controversial. It is not surprising that the interest taken in the problem of our standard of value should be increasing in view of the advent of one of those major fluctuations in the level of prices which have punctuated the economic history of the world. Such changes have been, and are at the present time, detrimental to the even progress of economic development. The disastrous rea.ctioi'p of the slump in prices are self-evident. Yet there are those who still pretend to believe that we are not witnessing

the consequences of a general appreciation in the value of money and that, as far as monetary policy in concerned, the host course for the authorities to follow is one of laissez faire. Their argument, that the main influence on prices at the present time derives from the greater productivity fo the world, may bp. quite valid ; but tlveir deduction that consequently such influences should be allowed to work wholly unchecked without any endeavour being made to compensate them bv corresponding changes in the “money” side oi the pric‘ equation, is illogical. Mankind cl mows a. monetary standard to facilitate its economic intercourse and progress. Stability is one of the prim requirements expected ol a standard whether it be of length, -weight or value. If a monetary standard proves too inelastic to adjust itself to increased in the volume ol world trade it must make way for another. Will Hip gold standard have to be discarded? To this question 'Hie Statist makes a reasoned answer. arguing that I he gold standard hoh’s within ilself all tbe virtues of the idea! slag ,third, but that if those attributes are to be ’brought out the gold standard calls for intelligent, international management. It cites figures and reproduces a clifiirt tiePently published bv the gold delegation of tbe League

of Nations’ Financial Committee showing how in the past changes in price level have coincided wth changes in the relative deflation that faces Die economic world owing to the gradual exhaustion of the world's gpld deposits. How can this danger be averted ? The Statist enumerates and .supports a number of recommendations—the concentration of monetary gold in the reserves of the central hanks, an international lowering o‘ reserve ratios, increased economy of gold by an extended use of cheques, giro transfer and other hanking facilities, and a wider understanding and application of advantages of the gold exchange standard—which, if adopted, should go far towards making the gold standard a ritn.blo basis of value «.« well as an instrument designed to maintain stability of exchange.