MONEY AND BUSINESS AFFAIRS.

Manawatu Standard, Volume LX, Issue 249, 18 September 1940, Page 12

MONEY AND BUSINESS AFFAIRS.

POST-WAR PROBLEMS

(By “H.J.K.”)

One of the problems that will have to bo laced alter the war is tho stabilisation of world currencies. At present there is a welter of paper money in circulation, somo of it sound enough like British and American bank notes, but most of the Continental paper currencies are worthless. They cannot be called fiduciary issues, for tho issuing countries will be unable to retire them and give value. Both Germany and Italy are in such a position, and rvhat must happen in their case is that there must bo a lot of writing off of bad debts.

Yet if the economic balance is to be restored in any degree, and international trade revive, flic mpney systems of the world must bo placed on a sound basis, and with some relation to one another ao before tho last war. This would involve a return to the gold standard, in order that there may be a yardstick for measuring values. Iliis would offer #o great difficulties, for it would bo dependent upon the gold content of the principal coin of each country. The leaders of the nations have the experiences of the last war to guide them, not so much as to what should be done as to what should not be done. After the last war the primary producers were the hardest hit by falling prices, while industrial costs were slow to move downwards. In order to help the producers several countries manipulated their currencies. Franco, for example, reduced the value of the franc from lOd to 2d in relation to the pound sterling. Tho purchasing power of the dollar was increased by raising the price of gold from 85s to 140 s, practically doubling its value. Tho only gold currency that remains unchanged as regards gold content is the British pound sterling, but its value has risen with the advance in the price of gold. To try to meet the situdiibn which was complicated by the war debts many countries made strong efforts to build up oneyvay trade; that is, to export as much as possible, and import as little as possible, ahd this was achieved to some extent by exchange control and import restrictions. Although there was no tampering with the British gold sovereign, Britain went ‘‘off gold”; that is, Bank of England notes were not exchangeable for gold which should be the case with a sound currency. Going off gold has not meant abandoning gold coins, but as stated it meant the inconvertibility of notes into gold. It is most probable that Britain will exercise a dominating influence in deciding peace terms, and one may be sure that Britain with' her long experience in trade and currency will work for freedom of trade, stable money, and honest adherence to contracts; that is, good faith. The crazy-quilt pattern of trade and finance that followed upon the last war must not bo repeated. Tho troubles of tho last war were due to government interference, although that interference was meant to be helpful. The best policy to adopt is to allow economies to take their natural course. Economic laws are at ail times endeavouring to restore a balanced position. Til’s means that costs and prices must be in harmony with one another and with the rest of the factors that enter into tho economic system. If the authorities in the various countries exercise moderation and interference as little as possible with economics the position would soon right itself. The main function of governments in the post-war period would he to exorcise the greatest economy in public expenditure with a View to reducing taxation. The less money the State takes from the pockets of the taxpayers the more will the latter have to spend, and it is the spending by tho people and not by the State that makes for progress. It is the people who must develop the resources of the country, expand trade, increase .production. and thus drive for prosperity. That is the function of tho people, and if they are not hampered, restricted, or weighed down with fecal burdens they will push the countrv forward. If v> to he hoped that in the" r>ost-war period politicians will confine themselves to the task of finding wavs and means of reducing taxaUcn. and not spend their efforts in new_ “shouts” which would prevent tax reduction. After the last war new taxes wove imposed and increased during the depression, and many of those taxes remain to this day notwithstanding that our export income for several years lias been on a high scale.

INDIA'S COINAGE.

Tndia, like most countries in the East, makes use of the white metal. as coinage, and up to quite recently tho silver content of the coins has been eleven-twelfths silver, and one-twelfth alloy. Now tho half rupee coins arc reduced to one-half silver and one-half alloy. Though the Government of India has larger stocks of silver it is considered necessary in view of the recent rapid absorption for hoarding to conserve silver resources as far as possible. In view of the increasing simultaneous demand for quarter and half rupees, it is felt that it would be extremely wasteful to turn out large quantities of half rupees of the present fineness. . The war has brought prosperity to India and it is claimed that India is the arsenal for the Empire from the Mediterranean to the East. Hoarding is an age old custom with the Indians, from Raialis down to the humblest coolie. The Rajahs hoard gold and silver and precious stones. When Europe went off gold and England also, and tho price of the metal soared, rising from 85s to 125«, the Indian chiefs released some considerable part of their, hoards. It is said that over £350,000.000 jvas so released and this helped the Indian Government in its exchange operations and debt payments. Now gold is being, hoarded again, to he released on some future occasion. In Arabia and Asia Minor silver coinage is used, the Arabs being familiar with the Austrian thaler.

Flax Gradings. i Gradings of hpmp last monlh; all in Auckland, totalled only 52 bales, as against 575 bales in August of last year, a decrease of 523 bales. No tow stripper tow, or stripper slips were graded last I month.