Evening star., 1933-07-02
BY SIR ARTHUR SALTER,
Member British Economic Advisory Cou


T ONDON-With the end of its
third week the Economic Con-
ference has reached its most
IL critical stage. The anxiety
which marked the second week.
after the encouragement given during
the opening week by the war debts ar
rangement, has deepened. The whole
WORK of the conference Is now domi-
mated by the position Of exchange
During the week the dollar exchange
has fluctuated widely. The Dutch
guilder has been threatened and there
has been much speculation as to whether
all gold currencies would not be forced
off their standard one by one. This
would. of course, introduce a new ele-
ment of confusion into the whole world
situation commensurate with the re-
suits of the fall of sterling in Septem-
ber 1881. and the fall of the dollar in
April last And the efforts of the prin-
cipal delegates this week have been
concentrated on dealing with this i'm
mediate danger.
40 realize the significance of the pro-
Sosals in which these efforts have cul-
minated it is essential to understand
the main differences in the points of
view and the causes on which they
originate.
They depend partly on the internal
relation between costs - including
among these in particular debts and
fixed obligations-and prices in each
country. and partly upon a differing
experience as regards imitation In the
past.
America has not gone through the
dangers Of imitation, and 1t has an in
tolerable burden of internal debts and
liked obligations. Therefore the pri-
mary object of American policy, to
which everything else is subordinated,
is to effect an upward movement of
prices which will relieve the burden of
fixed charges on industry and agricul-
ture. All public psychology which at
tends and assists recovery, centerS
around this upward movement of prices;
1t cares little for the value of the dol
lar in terms of gold or foreign cur
fencies.
Different Standard.
The experience and psychology Of the
continental gold countries are abso-
lutely the opposite. Countries like Ger
lose all its value, or as in France,
four-fifths Of its value, have come to
regard currency fixed on gold as the
only barrier against complete chaos
and confusion.
They are completely skeptical Of the
possibility of raising prices by none
tary means except by currency depre-
ciation. which would threaten them
with the diSorganiZation they remem-
Der from the years of the war.
Public confidence and all that de-
pends on it, investment, lending, the
stopping of boarding and so on, turns
on the security of gold currency. Sim
ilarly, everything that promotes the
stability of world trade or the reduc-
ton of exchanges depends. for these
countries, on the stabilization of ex-
change.
They would like to see some rise in
world prices as a result of. but not as
a means of. bringing about recovery
OF trade. But they do not desire the
rise of internal prices to remove the
internal disparity between costs and
prices.
The position of Great Britain is in.
termediate. Britain desires some in
crease of internal prices to help enter
prise support its fixed-charge burden
and bring prices above costs, feeling
that further reduction of costs is politi-
cally and socially impossible.
Moderate Increase.
At the same time Great Britain does
not want more than moderate in
crease; it hesitates to pursue vigorous
" the means required to achieve even
that increase; it is keenly conscious OF
the dangers of any form of imitation
that is not strictly controlled; it would
regret to see new element OF con-
fusion introduced by driving present
gold currencies off their stand, and 1t
realizes acutely the dangers of the new,
competitive currency depreciation.
The dominions and sterling area
countries are more or less in the same
position as Great Britain, with perhaps
q rather more positive desire to take
the measures required to help prices
up by monetary action. Britain, there
fore, with the countries that follow her,
is hesitant between the pull of two op-
posite forces and nf1uences-America
and the countries of Central and South
ern Europe These European countries,
led by France, are trying to get her to
peg on to the franc, whatever the dol
lar is. She can do this under present
conditions, for if the dollar continues
to fall it might hold down or even fur
ther depress her level of prices.
Great Britain cannot follow the
American policy and dollar completely,
for that would mean new currency dis
organization in relation to Europe.