Evening star., 1937-05-30
SWEDEN'S SECRET
Of RECOVERY TOLD
Governments Monetary Pol.
iCies Can Curb or Cure Ills,
Economist Says.

sary to curb excessive ups and downs
In the business cycle, DR.. Bertil Ohlin
noted Swedish economist, told group
OF Washington economists yesterday
He said currency management to
maintain a stable price level and
deficit financing to stimulate industry
and agriculture has helped lift Swe-
den from the depression to a new
high mark of prosperity
Sweden now faces the problem, he
added, OF curbing possibly excessive
boom and is considering action to
reduce import duties and appreciate
the currency in order to keep prices
from going too high.
Dr. Ohlin, professor of political
economy at the University of Com
merce In Stockholm and an unofficial
economic adviser to the Swedish gov-
eminent, is en- route home after a
series of lectures at the University of
California. He spoke here yesterday
at luncheon meeting under the
auspices of the Academy of World
Economics and the International Re-
1atlonS Committee of the American
ASSOCIATION of University Women,
Guests included economic experts of
American, Georgetown, George Wash
lngton and Catholic Universities.
Brookings Institution and various Gov
ernment departments.
Monetary Policy Credited.
success OF SWedenS economic poll
cles does not necessarily imply that
they should be followed bv other
countries, DR.. Ohlln said. He pointed
out that the depression was much
less severe in Sweden than in the
United States, Production fell off
only about 20 per cent from 1929
levels, he said. and unemployment
reached only 3i2 per cent of the
population. which would correspond to
about 100000 people here.
quick recovery has lifted production
now IS per cent above 1929 levels.
brought higher living standard than
ever before and reduced unemploy
ment to about $4,000 in Sweden, DR..
Ohlin said
He gave the Swedish monetary
" ioi &c snare OF une credit
Tor the quick business recovery there.
He recalled that Sweden followed
Great Britain off the gold standard
IN 1882 and promptly pegged its paper
currency at per cent below the
pound sterling This was a deliberate
undervaluation to stimulate exports
ne SAID. Then the currency was
managed so as to maintain stability
IN prices and consumer purchasing
power. Assurance of stability gave
business men confidence to eypand
production. Another phase of the
monetary policy involved easy money
at low interest rates, stimulating
building and industry generally.
Balance 1t for Period.
Further stimulation came through
deficit financing by the government,
DR.. Ohlin continued. He said Swe-
den's experiences blasted the old the
ory that the government budget must
be balanced a all costs.
Nobody considers it necessary to
balance the budget for one month"
he said, realizing that income and
expenditures are not evenly distrib-
uted. Then why try to balance the
oudget for IL months-a period of
some astronomical but little economic
significance? 1t is much more sensible
to plan the budget for economic pe-
ricds that include both good and bad
years"
Sweden adopted the policy of in
curing deficits through borrowing to
aid industry and agriculture by public
works and subsidies in the depression
period. and accommodating a surplus
to pay out of debt in time of pros
perlty. he said. This policy has
worked so we'll, he declared, that if
the present prosperity continues an
other year the government will have
regalned its pre-depression financial
condition.
Akin to Granary Plan.
He said the agricultural policy in
Volved maintenance of fair prices to
farmers through export premiums and
Government purchase and storage of
surplus crops, under plan similar to
the "ever-normal granary' program
advocated by Secretary of Agriculture
Wallace.
The final test of the Swedish
policies will come, DR.. Ohlin con-
cluded, if an excessive boom material
lies. He said the Government now is
considering means to check boom
tendencies, including reduction of i'm
port duties, appreciation of the cur
1ency and increasing interest rates.
In any event." he declared, 1T is
always better for the Government to
do something rather than let the busi-
ness cycle swing excessively up or down
without control. In depression we
must raise prices, and in booms We
must restrict them If we Just let
things drift, we will get some sort of
ism government"
DR. John Donaldson, chairman of
the Academy of World Economics and
professor of political economy at
George Washington University, pre-
sided at the luncheon.