AN INCENTIVE TO DEFLATION

Taranaki Daily News, 10 May 1921, Page 3

AN INCENTIVE TO DEFLATION

Discussing the currency the Statist says that for the United Kingdom there is an incentive to deflation operative in the case of no other country in the world. “Formerly we were indisputably the premier financial centre of the world; now, as a result of the great change necessitated by the war, the United States is in a position to dispute our supremacy in this regard. Our pre-war position was primarily due to our world-wide reputation for financial stability, and to the fact that we were always able to maintain a free gold market. Now the value of our currency is subject to the same influences that render the credit of the devastated countries so unstable, and we have no longer a free gold market. The United States, on the other hand, by a vigorous forcing down of prices has been able to consolidate its currency on a gold basis, and there is everywhere an assurance of a- certain and stable value for its note issue. If we also do not restore a free gold market in London, with specie convertiblity of the paper money, we must be prepared to yield to the United States the position of financial supremacy in the world of the future.”