Evening star., 1935-04-28

bility and fixity, in 50 far as there is
no need for England to depress her
currency further in order to reap the
advantage of production costs lower
than those of the gold" countries.
She gets those advantages with to-
days devaluation of 80 to 40 per cent.
and can afford to let the dollar retain,
in relation to the pound sterling, a
proportionately greater purchasing
power.
Contrariwise, were the purchasing
power of the gold currencies to be in
creased on the home market-were
the French franc, for instance, to fall
to the figure Of 80 to a pound sterling
instead of II to 70. the British gov
ernment would not only resort to new
measures Of customs protection; 1t
also might be tempted, by means Of
the equalization exchange fund, to re-
store the vanishing premium upon
which its production and trade MAIN
tain themselves. Were this done, the
dollar in its turn might be carried
away In that downward race. In
other words, the policy Of devaluation
would get out Of control.
No Good II All Try 1t.
After all. devaluation, as far as
exports are concerned, is profitable
only If it Is practiced by just a few
countries, however powerful they may
be. AS soon as 1t is pra1iced by all,
1t ceases to be of real advantage to
anybody and can lead only to further
economic dislocation.
Hence the idea that to ward of
that possible aggravation Of the crisis,
a general stabilization of currencies
ought to be provided for by an inter-
national agreement. But there is still
no sign that such an agreement can
be achieved In an international
conference on this subject, every
country would attempt to steal a
march on its rival-that is, to select
whatever gold level would be most
helpful to its own producers and eX-
porters or, II 1t could not do II, under
the pressure of the creditors interests
at home it certainly would deny to
others the right to secure such an
advantage for themselves.
In the home politics OF each nation
currency stabilization always gives
rise to the bitterest controversy that
can be imagined, because 1t sets con-
tending groups of interests fighting
one another. Transferred to the in
ternational plane, that controversy
would be still more vehement 1t
would reach the same degree of acer-
bity as the disarmament discussion.
Central Authority Needed.
Even assuming that all sectional
| interests are brushed aside as Sordid
and unworthy of governmental con-
Sideration, the problem to be dealt
with Is truly formidable. How is it
possible to invest all the great cur
rencies in the world with practically
the same purchasing power and to
make sure that they will be managed
so as to retain it? There are so many
answers to that riddle: A central
authority must be set up to accom-
plish the work or, alternatively, an
! individual country must be allowed,
In practice, to act as a substitute. VINO
can really expect that in the disturb
| ing condition of this world the van-
ishing international spirit" can sud-
denly be rekindled and gather enough
! strength to achieve such a stupendous
| victory?
Such prospects are very far re-
moved. The only approach to them
can be detected in the sterling area"
and it is well known that the highest
financial authorities in London are
| confident that establishment Of
their prewar hegemony sooner or later
will be tolerated by a worn out eco
nomic civilization as the only hope of
! salvation.
But before the issue can be seri-
ously examined national reconstruc-
| tion upon more or less autonomous
lines must have made more hea adway
| and the terrible international con-
fiicts which loom so big on the sky
line-involving. as they do warlike
/ possibilities-have been disposed of.
In the immediate future all avail
able signs point to the consolidation
and extension of monetary and eco
| nomic nationalism. A dismal devel-
opment, but how can it be avoided?
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