Evening star. [volume] (Washington, D.C.) 1854-1972, 1932-08-21
WORLD ACTION is URGED
FOR MONEY ''REFLATION'
tightening of Debts and Aid in Restarting
Wheels of Economic Activity Are Seen
as Result of Concerted Policy.

AND last, the Lausanne 2gTeeIlleIll
has put in hand the preparations for
the world conference. 1t is to be con-
vened by the Council of the League Of
Nations, at time and plate, not neces-
sarily at Geneva to be fixed by it. The
time may be expected to be toward the
end of this year: and the place Is likely
to be London. In the meantime prepa-
ration is to begin at once. Two Sub
committees, one composed CT financial
experts and the other of economic eX-
perts. will deal, first separately and then
in joint session, with the two main
groups of questions. Each will consist
of two PRISONS from Great Britain,
France. Germany, italy Japan, Belgium,
and-it is confidently hoped-the
United States, with three others to be
nominated by the League from other
countries. The officers and the general
, available; and this is extremely valu-
able where questions so complex and
SO technical are involved.
Thus there are two great groups of
| questions to be dealt with This is
not merely financial conference like
that of Brussels in 1920 nor merely an
economic conference like that at
Geneva in 1927; it is both combined
Also it may be anticipated that it will
be aimed more directly at binding gov
ernmental agreements, and therefore
immediate action. than those earlier
conferences. For money and tariffs
and such questions are now more
closely related and less capable of
separate treatment than before, and
the urgency is greater.
The -fnancial-group eovers
monetary and credit policy: exchange
difficulties; the level of prices; the
movement of capital" Let us consider
the questions to which the experts and
the conference must address them
selves:
Questions Facing Experts.
| First. is it desirable that we should all
| attempt "ref1ation"-the arrest of the
downward movement of prices and its
reversal? At what point should we fix
our goal? Should it be the level of
| 1929 or some point short of that? Can
we arrive at concerted objective of
| policy? How can we best collaborate in
attaining it? In particular what is the
best form Of understanding between
! countries on the gold standard and
those, now the aiority, that have left
| that standard?
These questions Of immediate policy
must be settled without waiting for a
return to the gold standard of coun-
tries now of it, For obviously no early
return is to be expected. The same
! conference, however, may we'll initiate
discussions as to the conditions upon
which return is desirable and prac-
ticable.
Let me remark briefly that I believe
that concerted policy of recitation" to
determined point would be an i'm
mense advantage to the whole world 1t
would tighten the burden of all debts,
mortgages, etc, and so make many Of
them tolerable and avoid default It
would help to restart the wheels of
economic activity again just as the fall
I of prices has stopped them. The result
might, perhaps, be most effectively at
tanned by making use of the Interna-
tional Bank. But if that is impracti-
cable, each country would be greatly
helped in its own monetary policy If it
knew that other countries were pur-
suing the same course.
The chief obstacle to the present
American policy, for example, is the
lack of sufficient confidence in it by the
American citizen Similarly, If we con-
slider country off gold such as Great
| Britain, the extent to which a national
action could increase prices without dis
astrous results in the exchanges is very
| limited 1t would be great advantage
to both if recitation" could be made
respectable" by a concerted under
standing.
As regards later policy, the best re-
suit the conference could achieve would
be to define the general conditions
under which countries off gold would
return to it or, alternatively would re-
late their managed currencies to the
gold currencies. The first necessity is.
I suggest, that the final objective Of
monetary policy should be agreed to be
that of maintaining a reasonable sta
! bility in the general level Of prices, or
at least of preventing fluctuations due
to monetary causes. The objective
agreed, an expert body could be in
trusted with the task of working out
the methods.
Nationalism Is Obstacle.
It is of course evident that even If
monetary policy can do much, it can
not do everything. 1t can be success
full only if the other conditions for
economic advance are practicable.
Above all, it, of course, is useless to at
tempt to secure a satisfactory world
money in a world that is essentially ma
tionalstic. The object of world money
is to facilitate world trade If world
trade is destroyed by other policies, 1t
| is impossible to maintain an interna-
tional monetary standard, gold or not,
and it would be useless, even If 1t were
not impossible.
The movement Of capital is the next
question mentioned in the Lausanne
text For several years before the de-
preston capital flowed too easily from
one part of the world to another, and
was spent too carelessly; then 1t stop
ped too completely and suddenly. The
task ahead, therefore, is a double one,
to revive credit again and to see that
1t is utilized more prudently
Next, and perhaps most important OF
all, comes the task of clearing away the
economic impediments to trade imposed
in the form of quotas, prohibitions, high
tariffs. This is the work which the
second subcommittee has to prepare.
The world is now at one of the main
crossroads of history. Will it follow
the lure and the will O the wisp OF
self-sufficiency, impoverishing at the
best, and for the most part impracti-
cable? Or will each country, instead OF
the olenched fist, extend the open hand
OF welcome to the riches of every cline
and continent? Shall We proceed
further with the economic nationalism
which has already robbed us Of pros
perity and in time will inevitably de-
stroy our peace?
If the better course is desired, what
is the way back? The first necessity
Is that each government should become
master in it's own house and control
it's own sectional interests. Tariffs as
they are have not only been concerted
in competitive panic; they have been
framed by competitive pressure. Even
purely national policies. if they were
really national. would rid the world OF
host of destructive tariffs that are
demonstrably against the interest OF
the country imposing them.
But more is needed. and international
negotiation must follow if We are to
rebuild world trade. One method is
illustrated by the interesting initiative
of Belgium and Holland. These two
| --I--is- -. x.n.nrni "a radi,na the