DOWN TO BUSINESS

Rotorua Morning Post, Volume 2, Issue 255, 20 June 1932, Page 4

DOWN TO BUSINESS

Whose is the failure? Civilisation in the old world to-day is trembling on the brink of disaster. The pall of Bolshevism hangs heavily over Europe, and millions of unemployed raise an angry clamour in America. Not because there is a famine or a shortage of the necessities of life such as may have caused a crisis in by-gone days, but because there is an over-supply of all the manufactures and commodities which are required in our complex system of living. It is not because the people are unwilling to consume the products but because they have not the wherewithal to buy them. When, in 1920 and 1921 the call came to produce, produce, produce in order that the ravages and wastage of war might be repaired, the people of the nations from the captains of industry and primary producers down to the humblest labourer, set to and worked. The result was that by 1926 the wastage had been overtaken and by 1930 it had been left far behind. Now in 1932, the people have awakened to the fact that while they have been busy attending to the job of producing, the equally important job of distributing the goods, or providing the medium of distribution, which was left to the statesmen and financial leaders of the world has broken down badly and the depression is the result. The failure is to be laid at the door of these men who have measured 1932 requirements by the yard stick of 1892, and have kept the world tied to 1 a monetary system hopelessly | inadequate for modern requireI ments. For many years gold has been the basis of our monetary system and it has proved a fairly satisfactory medium. It is the one commodity whose value has remained nominally fixed, but there are factors concerning it which have produced tremendous irregularities in the price levels of the world. One of the greatest of these, in modern times, has been the hoarding of gold by certain countries. With gold as the basis of exchange, this has had the effect of paralysing industry through the restriction of eredit. The world's great trouhle is that there is not a sufficient purchasing power, which means money or credit, and if this could be increased in conformity with the supply of manufactures and products, then more buying would be possible with consequent opening of trade channels and more employment It is not suggested that the gold standard should be ahandoned as there must be some common basis of value, but it is possible that the value of golc may be fixed by internationa agreement, the value being determined by the general price level of commodities. This migh ; mean that the price levels woulc. be lifted, say 40 per cent. by the process of valuing gold at 40 per cent. less than the present price. This course presents tremendous difficulties, but no more tremendous than the difficulties,

with which civilisation is facec. to-day through the break down of international trade. Signs are not wanting that the statesmen and financiers are coming to grips with the problem, and, in this connection, the cables have brought cheering news during the last few days. The most important announcement was the British. Chancellor's statement at Lausanne that Britain is prepared "to wipe the slate of war debts proVided otheT countries will do the same. Mr. Chamberlain declared that Britain was convinced that only by radical and drastic measures could they restore that confidence which is necessary to lubricate the wheels of credit. While at Lausanne, the Chancellor was dealing with the question as it affected the world1, in London the Acting-

Prime Minister, Mr. Baldwin, was even more outspoken on the position as it affects inter-Em-pire trade. He said that the Ottawa Conference would have to consider the inter-relationship of the various currencies and monetary standards of the Empire with a view to promoting conditions most favourable to mutual trade intercourse. The expressions of a determination to grapple with the currency problem on a large scale, are perhaps the most hopeful aspect of the present 'world position. One thing is certain. There can be no real and lasting prbsperity and no sound rehabilitation until the currency system is adjusted to present day conditions. The sooner the statesmen get on with the job, the sooner prosperity will return. ■