TOPICS OF THE TIMES

Southland Times, Issue 21091, 24 May 1930, Page 6

TOPICS OF THE TIMES

Steady adherence to principles and unfailing loyalty to his Leader and his party have won for Mr Forbes the highest political office in New Zealand (says the Wellington Post). He will receive and deserve the congratulations of all who have worked with him, for he has won their esteem by his honesty and his staunch support of the retiring Prime Minister. But loyalty to a leader, though a most admirable quality, is not a sufficient qualification for leadership. In other qualities essential to the head of a Government, Mr Fotbes has yet to prove his capacity. As Minister of Lands in Sir Joseph Ward’s Cabinet he made a good beginning. He set himself the task of expediting the subdivision of large estates and the extension of land settlement. In this task he had the aid afforded by his leader’s bold financial and land-taxing policy. Yet it cannot be said that the results are remarkable. Perhaps it is too early for a final judgment. Allowance should be made also for the depression of primary production by lower prices. Nor has Mr Forbes achieved much as Acting-Prime Minister. But here again he can point to the difficulties of deputy-leadership. He has had neither free opportunity nor full responsibility. Now that he has succeeded to the leadership, he must stand or fall on his own merits. Considering the magnitude of his task, the difficulties which he must encounter, and the weakness of, the party which he leads, we are more inclined to offer him sympathy than congratulations. Steadiness he has, but strength is needed. His own example of loyalty may serve to keep his small band together, but courage and initiative are required if the Government of the Dominion is to be established on a broader and firmer basis. The test for the new Prime Minister will come when he has to review the principles for which he and his party stand, and consider how far those principles operate to, hinder the unification of the moderate political forces of the Dominion.

“The appreciation of gold, or, what is the same thing, the downward trend of prices, has become a serious menace and, if allowed to go on unheeded, must inevitably check enterprise and retard economic recovery,” said Sir Charles Addis, a director of the Bank for International Settlements, in discussing the • service available to the new institution as a “rallying point” for central banks. “What we are suffering from now is not low prices, but falling prices. It is not the low level, but the persistent fall which is crippling industry ahd taking the heart out of the business pioneer. During the last five years prices have fallen by 25 per cent., and of a check to the fall there is as yet little sign. Indeed, the rate of decline last year was higher than in any of the preceding years under review. Various explanations have been advanced to account for this untoward phenomenon, and no doubt several casual agencies have been at work. But it is indisputable that one of them is the monetary factor, and it is with this particular cause that central banks are directly concerned. Insofar as the persistent fall in prices is due to monetary' causes, to some maladjustment of the international monetary machine for whose efficient working the central banks are responsible, it will not avail them to plead that other causes are at work for which they are not responsible. What then is to be done ? Obviously we must economize in the use of gold. And here the Bank for International Settlements can help the central banks in several ways.

. . ..The bank has no power-of note issue, and can only redistribute credit. It cannot by itself create credit, but it can do so through central banks. It may be objected that tjiis may lead to inflation, but, after the powerful dose of.deflation from which we are still suffering, there is tio need for anyone to be alarmed into a panic if a moderate dose of temporary inflation should be applied, by way of what the doctors used to call an alternative. We need have no fear that there is any danger of inflation being carried too far in the hands of the governors of the central banks on the board of the Bank for International Settlements.”