Evening star., 1933-08-13
SWEDEN MANAGES MONEY
WITHOUT GOLD STANDARD
Currency Value Kept Constant in Rela-
ton to Cost of Food, Clothes,
Rent and So Forth.

dex Immediately after the departure
from the gold standard. There had
been indices before, but they worked
much more slowly. Now the Riksbank
organized particular department,
which is In constant touch with the
various institutions working out the
primary material for the other indices
Special care is taken in weighing the
figures for the individual commodities
according to their importance in ma.
tional consumption. An analysis will
show home produced goods, on the
whole, have fallen in prices as expressed
in kroner. while imported goods have
risen.
Discount Rate Raised.
The actual development has been
something as follows: Directly on leav-
ing the gold standard the Riksbank
raised its discount rate to 8 per cent
the highest Sweden has had in modern
times. Fear Of imitation was then COM
mon. and the Riksbank wanted to
check an unwanted monetary "expan-
sion" Gradually the bank rate has
been lowered-with a temporary rise
during the Kreuger crisis-and Is now
time. The intention now is to encour-
age moderate expansion, and proposals
fer big public works recently have been
passed.
Meanwhile the Riksbank has been
active on the exchange market. After
the fall Of the krona Swedish capital
lists sold good deal of foreign securi-
ties-making a profit by the rise of
the foreign currencies. A fair part OF
the foreign exchange which has thus
found its way into the country Is now
under control of the Riksbank, which
has been strengthening its reserves by
acquiring as well holdings In London
and Paris.
The problem is to make these bal
ances active. The government schemes
for large public works are intended as
one means to this end.
There is no doubt that the Swedish
banks are we'll able to take up the
short-term bonds by which these enter
prises are going to be financed, and
to meet similar demands from extra
neous sources as well.
Easy Money Policy Not Enough.
But" says Prof. Beckhart, my i'm
preston is that while there is justi-
fable satisfaction over the negative
results so far obtained-removal of
the def1ationary pressure Of a tight
price level within the country-there
Is certain degree of disappointment
at the positive results: The appica-
ton OF the available capital to pro-
ductive uses, the flotation of new Sc
curities in the money market. This
shows that an easy money policy Is
not in itself enough to rectify the po-
sition"
The effect of the public works
scheme remains uncertain. The as
sumption is that the general economic
position Is going to improve. If we are
now in reality on the upturn, this OBJ
vously would be the right moment to
spend money on productionally useful
work-for instance, road building-with
the expectation that 1t will be possible
to recoup when the general economic
level has risen sufficiently
The Swedish experiment has shown
that prices can be kept stable over q
fairly long period-but whether indefl-
nitely, we do not know. So far the
Riksbank has not been up against the
task of keeping the purchasing value
Of the paper currency constant in the
face of a strong tendency towards a
rise of the general price level.
On the whole it can hardly be imag-
ined that such task could be dis
charged by one single country. It
seems probable that a large block OF
paper currency countries, such as the
ceed, but that demands q firm none
tary agreement between q number of
countries. This agreement has not yet
been brought into existence.
Copyright. 1893, by North American News
paper Alliance, 1nc,)