WELLINGTON NEWS

Hokitika Guardian, 12 October 1931, Page 6

WELLINGTON NEWS

THE WORST IS OVER. (Special Correspondent). Wellington, October 9. Those who have followed the trend of economic events, which have moved with remarkable rapidity since the formation of the National Government, will gladly reach the opinion expressed in the Alidlancl Rank Akmthly review that ‘‘the worst its over and the best to tome.” The worst was passed when Britain shook herself free from the gold standard. Ever since April 28, 1925, when Britain reverted to the goid standard, and started the process of deflation, the nation voluntarily imposed burdens on itself -and honourably fulfilled all its obligations. Other nations also reverted to the gold exchange standard, butthey did so by first inflating. Before the war about 25 French francs were equal to the pound sterling, but when France resumed the gold standard the new franc was only worth about 2d, for over 124 francs were equal to the pound sterling. But the 2d franc paid the debts that incurred in 10d francs, and the lenders were .thus heavily penalised. Britain endeavoured to .restore the pound sterling to its pre-war position and has failed through no fault of her own, but because of the unwarranted panic of Continental Europe, and partly because of the help extended to Germany, causing some of her assets to become frozen. But that by the way. Britain went off the gold standard on September 20 by -the decree which prevented the export of gold. Foreigners with credits in 1/ondon were thus unable to withdraw those credits in gold. Britain is carrying on with a paper currency, although for the service of legitimate foreign debts gold is available The Chancellor of the Exchequer made that clear when dealing with the amendment to the Bank Act. Abandonment of the gold standard has resulted in the £ being worth about 15s in dollar exchange, and this lias acted to some extent like a tariff for it gives some protection to British manufacturers who have been able to send goods to protectionist countries. It was reported not long ago that British made cotton textiles had been exported to the United ..States notwithstanding the high protect've tariff of that country.

Furthermore the export trade of the United States and France has been badly depressed, causing an increase ot unemployment in those countries together ~-un huge deficits in the National Budgets. The position in the United States js particularly bad. There is no system of unemployment insurance in America, the municipalities being charged with the duty of ministering to the poor. Detroit, the seat of America's motor ear industry, was recently reported to be spending £160,000 a month on unemployment and was at the end of its borrowing powers. But the worst is over so far as the Brtish Empire is concerned. The abandonment of the gold standard has intensified the need for international collaboration, and active steps are being taken in this direction. It will be remembered that some days back AI. Laval, the French Premier, and All' Briand. .the Foreign Minister, visited Berlin to discuss the economic position. This was the first visit of French statesmen hr the German capital since the Franco-German war, and it will be remembered further that it was decided to form a kind of Economic Committee of French and German representatives. I,asi week Lord Reading, the British Foreign Minister, went to Paris ajt the invitation of the French Premier, to discuss the economic .situation.

The French Premier himself Laves for Washington on October 16, his visit being piade on the invitation of Piesident Hoover, and when the two meet economies and armaments are bound to be the main subjects of discussion. In tin. meanwhile it is significant that gold to the value of £6O millions is leaving New York for Europe to strengthen the reserve of the central banks. The loss of this metal will not inconvenience the United States, for the gold ‘holding in that country is enormous. Direct collaboration and co-operation must be the next move of the leading nations, ail'd" as that is in sight one justified in beiievmg that the worst of the slump is over. Good times are ahead.