RESTORING FINANCES.

Taranaki Daily News, 30 March 1921, Page 6

RESTORING FINANCES.

HON. A. M. MYTRS’ VIEWS. PRODUCTION 1N EUROPE. The financial situation was discussed recently by the Hon. A. M. Myers, who has just returned from a lengthy visit to England. “The circumstances in every country,” he said, “compel us to direct serious attention to the restoration of finances as soon as ptfesible to a sound basis. Artificial measures designed to defeat the working of economic laws cannot be supported for long, since they must lead to adverse results. Great Britain and America, under the stimulus of war conditions, have greatly increased their power of production, but they cannot find buyers for their manufactures owing to the impoverishment of the devastated countries in Central Europe. The gold standard, as existing before the war, has practically gone, and in its place there exists controlled currency, an expedient requiring most careful watching. I believe, however, that the gold standard will be re-established before many years. As twin causes of high prices are monetary inflation and under-production, and as increased money supply, unaccompanied by an increase in the supply of necessary goods, would achieve nothing except further disturbance and readjustment of price levels, every effort must be made to increase production, thus creating real capital. Various schemes for the rehabilitation of the (European purchasing power are therefore all in the direction of restoring her productive capacity in order to convert into banking security assets’ that various countries may offer as a pledge. “I cannot help remarking,” added Mr. Myers, “that one of the outstanding features which impressed me was the important part played by the banks in the great financial difficulties which presented. themselves’ for solution both during the war as well as under peace conditions. There is a feeling among quite a large number of people that the banks are simply cautious, conservative institutions, whose interests are inimical to the best interests of the community. The important part they played during the war and up to the present shows, however, how erroneous such opinions were. Their customers were leaning on them more than ever, owing to advances having been made on account of Government loans, high taxation, and the great leeway to be made up because of industrial stagnation during the war. We must realise that the banks had also to face the fact that the gold standard as it existed before the war was gone, and that its place had been taken by a controlled currenej', an expedient which needs-, as already stated, most careful watching. But the gold standard, will, I believe, be re-established before many years. The banks, as a whole, fully realise the grave responsibility that rested upon them) and exercised the greatest discretion in their advances to customers and in restricting accommodation in the best interests of the nation. It is, indeed, generally recognised that the soundness of the policy of the leading British banks and their consequent strength and solidity played an important part in the restoration of London as the financial centre of the world.”