EQUITABLE DISTRIBUTION.

Putaruru Press, Volume VI, Issue 264, 29 November 1928, Page 1

EQUITABLE DISTRIBUTION.

The distribution of an unused and costly gold surplus among those countries having a deficiency of gold is a matter for general rejoicing, unless the gold acquired is unwisely used either to inflate or deflate currencies and price levels, Professor Irving Fisher, of Yale University, says in an article in The Commercial, international half-yearly review, published by the Manchester Guardian. “It will be a net gain tio the world if this buried treasure is used to restore stability of prices and business confidence in the countries with unstable currencies,” Professor Fisher writes. “Itb will relieve the United States of the grave and costly responsibility of holding the surplus gold erves of the world out of use in order to prevent disastrous inflation. So long as these surplus gold reserves are lying in our land they constitu e constant menace to stability in our own and, consequently, in other countries.

“The fact that United States banks are in possession of such a large part of the world’s gold supply gives them the power to control very effectively the price levels in other countries This is not a desirable situation, and it has called forth much caustic criticism from European writers. It would be much safer as well as more economical, to distribute the gold supply mere equably among the nation* of the earth, thereby destroying the power of the United States or of any other nation to bring about world inflation or deflation, either ’ intentionally or ignorantly. Professor Fisher suggests as the next step to promote world financial development an international monetary conference. “Now that France, the last of the major political and economic powers, has re-established l the gold standard at a reasonable 1 price level, an international monetary ; conference should, I believe, be called at the earliest possible date for the purpose of working out the final and by far the most) important currency reform of all—the standardisation of the value of gold in terms of goods and the final stabilisation of money and prices.”

Speaking of America’s evports of gold, Professor Fisher declares; “The export of gold has had a directly dis turbing effect upon prices and business, because it has affected business confidence.

“Indirectly business may be further affected through the re-establish-ment cf the gold standard in France and the strengthening of the gold standard of Great Britain, Italy and the Argentine. If prices are kept l stable in these and other countries business confidence will be increased and we may look forward to expanded production and trade. Prosperity may begin either at home or abroad, but it cannot remain to contSinue it must spread beyond the boundaries of any one country.”

Since Professor Fisher’s article was written, Spain has made partial arrangements for the stabilisation of the peseta, through a banking credit said to be for fifty million dollars, arranged with the Midland Bank, Ltd., of London, and J. P. Morgan and a group of associated banks in the United States. The return of Spain to the gold standard, or at least the establishment of a fixed value for the peseta, is an important step in the direction noted by Professor Fisher in his article. World commerce has now reached a stage where it is being practically carried forward on an established gold standard.