HOOVER’S COMMENT

Hokitika Guardian, 21 December 1932, Page 5

HOOVER’S COMMENT

DEBT QUESTION

COMMISSION SOUGHT.

(United Press Association—By UJectrio

Telegraph—Copyright;

WASHINGTON', December 19. In his message- to Congress, President Hoover stated: “It is certain that itlie most urgent economic effort still before the world is the restoration of price levels The undue and continued fall in prices and trade obviously have many origins. One dangerous sequence, however, is visible enough in the increased difficulties which are arising between many debtors and cred-ii-oms. The values behind a- multitude of securities are lessened, and the income of the debtors is insufficient to- meet their obligations. Creditors are unable to undertake new commitments for fear of the safety of the present undertakings. It is not enough to say the fall in prices is due to decreased consumption, and thus the sole remedy is adjustment by reduced production. This is in part true, but 'decreased

consumption is brought about by certain. economic forces, which, if overcome would result in a great measure of recovery from depression, "Any competent study of the causes of the continued abnormal levels of prices would at once establish the fact that the general price movement is world wide in character, and international influences 1 therefore hav e part in them. Further exploration in this field brings us at once to the fact that price levels have been, seriously effected by the abandonment of the gold standard; by many countries, and consequent instability and depreciation of foreign currencies. These fluctuations in themselves, through the uncertainties they create, stifle trade, cause invasions of unnatural marketing territory, result in arbitrary trade restrictions, and ultimate diminished consumption of goods followed by a further fall in prices. The origins of currency, instability and depreciation reach back again to economic weaknesses, rooted in the world war, which have culminated in many countries in anxieties in regard to their financial institutions, the flight of capita], and- denudation of gold, with consequent jeopardy to the currencies. These events have been followed by restrictions on the movement of gold and exchange, in frantic efforts to protect the-ir currencies and credit struc- ! tures. These steps have again reduced. consumption and! diminished

prices, and ar e but- parts of vicious cycles which must- be broken at some point,, if we are to assure economic recovery. We have abundant proof of the effect of these forces within our own borders. Depreciation of foreign. currencies lowers the cost of production abroad, compared with our costs, thus .undermining the effect of our protective tariffs. The prices of agricultural and other commodities in'- the United States -are being seriously affected. Thousands of our workers are being thrown out of employment through the invasion of such goods.

“I concur in the conclusions of many thoughtful persons that one of the first most fundamental points of attack is to re-establish the stability of currencies and foreign exchange, thereby to release an indefinite- number of barriers against the movement of commodities throughout the world. I am well aware that many factors which bear upon the problem are purely domestic in many countries,, but the time hag come when concerted action between th e nations should be taken in an endeavour to meet these -primary questions. The gold standard is still the only practicable basis of international settlements, and monetary stability so far as the more advanced industrial! nations are concerned. The larger use of silver as a supplementary currency would aid that stability in many quarters of the, world.

‘‘ln any event, it is a certainty that trade and prices must be disorganised : until some method of monetary and exchange stability is attained. It is for the. purpose of discussing these and other matters we have joined in the world economic conference, where means and measures for turning 'the tide of business and price levels through a- remedy to some of these destructive forces can be fully and effectively considered, and if possible, undertaken simultaneously between the nations. The reduction of armaments also has a bearing upon these questions. The stupendous increase in military expenditure since and before the war is a large factor in the world-wide unbalanced national budgets.

Discussions in respect to both the debt questions and the world eco nomic conference, cannot be concluded during rnv administration, yet the economic situation in the world ncoossitaiteis preliminary work essential to its success. The undertaking of the questions should not he delayed until after March 4. I propose, therefore, to seek the co-operation of Presidentelect .Roosevelt, in the organisation of machinery 'for advancement of consideration of these problems. A year ago T requested Oongress should authorise tho c reation a r a debt commission to deal with the sB nations which wore bound to ar; -e. Congress did not consider this wise. In the situation, as it developed, it appears necessary for the executive to proceed. Obviously, any conclusions will be the subject of approval by. Congresa.”

A world conference on armaments and money as wed as on war debts, was proposed by the chairman (Air Borah), of the- Senate Foreign Relations Committee, in approving the action for debt review, suggested by Air Hoover. Republican and Democrats alike endorsed the tenor of Air

Hoover’s message. The President reiterated his views against cancellation or reduction without adequate compensations. He said it woulhl “meet with niv hearty approval,” if Congress should decide to re-establish the debt commission.

Congressional opposition to any such step is so strong, however, that the chief executive voiced no hope that the previous recommendation of his ever would he- fulfilled. The President only negatively excluded from the proposed discussions the nations which defaulted. Mr Roosevelt declined to comment on Air Hoover’s message.