The Daily News. TUESDAY, FEBRUARY 17, 1920. THE ECONOMIC SITUATION.

Taranaki Daily News, 17 February 1920, Page 4

The Daily News. TUESDAY, FEBRUARY 17, 1920. THE ECONOMIC SITUATION.

That the delay in restoring settled conditions in Europe is increasingly and adversely affecting the economic position of the British Empire, as well as of foreign countries, is exemplified by the anxiety which is evinced at the growing extent of the danger. Till the peace treaties have been put into force the world cannot settle down, nor can production revive as it should. This is the more serious because Mr. Hoover (United States Food Controller) calculates that if it does not revive swiftly, the population of Europe will have to be reduced—through starvation or emigration—by one hundred million sduls, and Mr. Hoover has worked on the food problem with regard to the population of Belgium and North France since the, start of the late war until he mastered it from A to Z. It is interesting to note that Mr. Austen Chamberlain (British Chancellor of the Exchequer), when replying to a deputation of prominent men recently, .who urged that international action should be taken to restore the economic stability of the world, said that the attitude of the United States Government was of the first importance, but he doubted whether it would be possible to obtain their participation in an international conference on the economic situation. At the same time he distinctly proclaimed that the Brk tish Government could not support or participate in any scheme involving any addition to Britain's liabilities for expenditure in America. This attitude is quite intelligible in view of the fact that for more money to b,e spent by Britain and her Allies in America would simply 1 aggravate the present evil. The amount of money advanced by the United States to the Allies during the war was close upon two thousand million sterling, mostly by way of food and munitions, so that America is directly interested in obtaining as much- more trade as possible, owing to.the,great advantage obtained by way of exchange rates. It is, therefore, imperative to call a halt, and in so doing the British Government is acting wisely and well. Two important aspects of the economic question were touched upon in a practical manner, at a recent, conference in London of manufacturers, producers, and employers. In the first place it was decided that manufacturers ought regularly to allot a fixed portion of their output for exportation regardlesß of home demands, wit,h a view to the restoration of exchanges. Before the war the value of the sovereign was equal to five dollars, while today it represents three dollars and forty cents. Naturally this unfavorable position needs adjusting as soon as possible, and it can only be accomplished by selling to, instead of purchasing from, America. Except as a matter of convenience, the suggestion of the American Consul at Sydney to sell to America in dollars, is of no value, as the vendors would certainly take care to fix the price of goods after taking into consideration the disparity in the exchange. The frhole problem is governed by the necessity for greater production of raw material and manufactured goods. Mr. Balfour, speaking in the House of Commons last week, emphasised this point when he stated that Britain's greatest contribution to the solution of the economic. problem would be "to maintain intact and build up her great industrial systems, around which the whole se- | enrity of Europe really revolved." [ Another point that he emphasised aa being a factor in the grave situation of a great part of Europe .was that labor . produced much less at the present time than before the war, although receiving largely increased pay for a shorter day's work. Economic laws can no more he violated with impunity than can the laws of nature. "We see this exemplified to our cost at the present time in ; the ever upward trend of the cost' of living. Salvation from economic disaster depends On industry, yet industry is icing curtailed | instead of expanded. Manifestly if this is continued there will come a serious reckoning sooner or I later. Apart from the adverse ex- ( change, there is a depreciated cur-, rency. It is one of the many curious results produced by the war, and the manufacture of paper money in Europe to pay for it, that to'-day there is one spot at which the frontiers of France, Italy, and Switzerland meet, where the British pound note has three extraordinarily different values'in francs. On the Swiss side its value is only nineteen francs; on the French side it is worth fortythree francs, while on the Italian side it exchanges for fifty francs, yet, before the war, the pound was worth twenty-five francs in all three countries. What adds to the chaos is that these values are perpetually changing. The same

complication affects business dealings with the United States. There are certain cures for this exchange trouble, and both must he applied in combination—much larger production of goods to exchange abroad for the commodities we need to import, and the stoppage of all wasteful and unproductive expenditure. New Zealand should take this to* heart equally with Britain. Restoring the economic stability of the world is neither an abstract nor an academic question, but a pressing reality that is vital to progress and prosperity. ./ '!