[?]ERLING MUST BE QUICKLY STABILISHD

Rotorua Morning Post, Volume 1, Issue 30, 28 September 1931, Page 3

[?]ERLING MUST BE QUICKLY STABILISHD

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) restore credit fvaluation threatens 'gxchange stability everywhere $ likely to fluctuate I Rec. Sept. 27, 5.5 p.m.

-By Telegraph — Copyright) .

3 LONDON, Saturday. Ig "Financial Times" says it is ■rjssible yet to attempt to assess 3'e(fects, either at home or abroad ■jjreat Britain's departure from the ■j standard, but the fact must be ■d that the devaluation of sterling fctens the exchange stability of Itically every nation in the |ld. lisa result, whatever lmmediate re■•(ttssions there are in Britain's B'je efforts to secure a balance will I'temporarily paralised. I'Early developments in the sitIjon/' the newspaper continues, [peared to depend firstly on Bether foreign countries are alarmI'bv Britains' altered exporting posIjn and devaluate their currencies Kad of ours; and secondly, on wheJr, if they do Great Britain's deI'aation will progressively continue, liteby eausing international devalIjon competition, resulting in com|;ie financial chaos. ■••There is room for serious doubt

;*to whether the develuation of Imrfing by, say, 25 per cent would iMprove Great Britain's trade bal-X-e to the extent the public at prett>t contemplate and as indicdted by X Stock Exchange quotations for Xustrials. The public thus far has Mi attempted to differentiate beXen exporting companies with a X?h or low ratio of raw material •;{s to total costs of production, al;:agh the former will obviously nefit less than the latter from the (preciated exchange. Thus, the r;$ent minor boom in industrials is ve]y to be subject to considerable jctuation before prices reach a se economic level. "The anxiety of the authorities to revent a premature industrial boom splains the apparent anomaly of the per ccnt. bank rate. This, how:er, has not sufficiently deterred peculators, hence the Stock Exiange's edict that all bargaining ast be on a cash basis. "Nevertheless, many are of the pinion that sound industrial equit;sare now a better investment than St-edgcd securities, as representing partial insurance against the possiiiity of a further flight from the rand. "One fact emerges from the wclter { conflicting theories; until sterling sestablished the Government's creiit cannot be rated as highly as reviously. Therefore, gilt-edgeds iiil continue to be depressed and the jheme for the conversion of the 5 :er cent War Loans will remain imossible."