Pound and Dollar—Where is the Balancing Point?—American Home Troubles.

Too Elastic.

This month the outstanding question has been how to restore the measuring value of money. Money used to be a yardstick; it is now a bit of elastic. This change has cut at the root of all valuing. In fact, no one knows what values are. In New Zealand, at the annual meeting of the North Island Valuers' Association, the chairman said it would be “most difficult for anyone to say what land is worth today.” All over the world the same thing is being said about land, commodities, and services. Money has been so unstable that it is most difficult to state values in terms of money. A yardstick that stretches is not much good, and the London conference has been discussing how to take the stretch out of it—how to stabilise money.

Modified Instability.

Hitherto each nation has managed its own currency. But it is postulated by the reformers that the present crisis means international action; that national action by itself is impotent. They hardly hope to create an international currency under international management, but they hope that the nations conferring in London will agree to co-operate so that, by international action, money values, and the terms of exchange, will be stabilised. It is not intended to get down to absolute fixity, and to jettison all the elasticity. “The Times” modestly speaks of “an attempt to confine the instability of the dollar and the pound within certain elastic limits.” But at that moment “The Times” finds that President Roosevelt is loth even to thus far commit himself. Not stability, but a mere modified instability, is the first mark set up, and the first arrow flies wide. Perhaps the marksmanship will improve a little later. Perhaps it will even qualify on a target more ambitious. Otherwise …!!!

Light Weights in Ring.

During the last year during which the dollar stood on gold, the pound sterling behaved in a way not unsatisfactory to Britain, helped by an exchange stabilisation fund of many millions. Since the dollar was taken off gold, pound and dollar, brought down to a lower fighting weight, have moved backwards and forwards across the stage watching each other. Those who fear a contest in competitive depreciation of currencies have been hoping for a mutual agreement on the relative values of pound and dollar, as a kick-off for the London Conference. But President Roosevelt has to think of the internal dollar as well as the external dollar. He has two internal factors that the British Government has not yet had to deal with—(1) a big banking crisis, and (2) a whole bundle of emergency powers put into his executive hand by Congress, such powers as, except in wartime, British Parliaments have not been inclined to vote. The very plenitude of his permissive remedies is embarrassing.

Too Many Weapons.

In its earlier legislation Congress gave the President power to reduce the gold content of the dollar by 50 per cent., and to inject into banking three bullion dollars of reserves (with enormous multiple expansion of credit). Either of these powers, if fully enforced, would cause an inflation which, in banking opinion, would lead to a complete flight from the dollar. But these powers, and others, are permissive. Congress trusts the President's discretion. In real truth, Congress threw all kinds of weapons to the President because Congress did not know what to do. Does the President himself know what to do? And if he does not know exactly how the dollar will behave within the United States, is he able to frame an international policy? To that question, some people reply: “Yes, but he will proceed by tariff reduction, rather than by monetary action.” But already the American delegation in London is reported to be split on a Washington suggestion for a mere 10 per cent. duty reduction.

Home Experimenting.

Even as the London World Conference sits. Congress completes further legislation which, according to the cablegrams, gives the President, through a board, powers to fix wages, hours, production, and prices in five major industries. Here, then, is a President possessing complete authority to fix the value of money, credit, prices, work—a great experimenter in a little world of his own, a world of some 130 million people. Not having properly begun in his own world, can he make close commitments in monetary and tariff matters with the outer world? That seems to be the main problem at the moment before the London Conference. As things are liable to change from hour to hour, it is to be hoped something more definite will shape itself as the sands in the hour glass run down. But to under-estimate the difficulties would be of no avail. There can be no quick cure.