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definite undertaking that we could keep exchange constantly at one uniform level. Clearly the ultimate remedy for the fluctuations in exchange is the restoration of confidence in the world at large. In proportion as the various forces —- political, monetary and economic—which have undermined that confidence are overcome, there will be diminution of the extent and the rapidity of irrational and speculative movements of short-term capital. 10. Coming back now to the question of price levels I need hardly emphasize the fact that it is in wholesale much more than in retail prices that we desire to see a rise and I agree with those Delegates who have indicated the view that it is possible to contemplate a substantial rise in the one without a corresponding' movement in the other seeing that the fall in wholesale prices has been accompanied by no equivalent drop in the cost of the articles concerned to the consumer. On this point then there is no difference between us, but when we come to the question how this desired rise in price level is to be attained I .seemed to find in some of the speeches made yesterday a suggestion that it could be effected by some manipulation of the monetary factor alone. 11. If such a view be anywhere held I venture to submit that the matter is not so simple. I agree with Sir Henry Strakosch in his view that the causes of the depression in prices were political, economic, financial and monetary, and if the causes are manifold it is surely unwise to suggest that the remedy is unitary. In everyone of these four fields there are features which must be modified or removed if we are to achieve our purpose, and I cannot think that it will be out of place if I attempt to summarize briefly the views of the United Kingdom Delegation under each of the four heads. 12. On the political side there stands out as one of the most prominent of the causes which brought about falling prices the question of reparations and war debts. Happily I need say no more upon this matter since the first step at least has been taken at Lausanne towards the removal of this cause. 13. Financial causes are closely linked with the political. Lack of confidence owing to political insecurity prevents the free flow of investment capital between the nations of the world and dries up the sources from which industry may be maintained and replenished. Frozen credits constitute at once a barrier and a menace and they lead to that restriction of consumption which is the precursor of the lowering of price levels. 14. On the economic side there is disequilibrium between production and consumption and whilst it may be a matter of controversy whether too much is being produced or too little consumed the effect is the same in both cases. 15. Surely after consideration of these matters it cannot be contended that the world can be put right or even that prices can be restored merely by an alteration in the monetary factor. In his interesting review of the chain leading from cause to effect Sir Henry Strakosch concluded that the result of lowered prices was the curtailment of production. In practice that must of course be the case, but the vitally important question is how long a time must elapse before the effect follows the cause. 16. In speaking of price levels here the Delegates have been thinking in terms of primary commodities. If farmers were ruled by theoretical economics they would go out of business as soon as prices became unremunerative, but having to meet the pressing demands of their creditors they are apt instead of reducing production, to increase it, hoping thereby to make up in volume what they have lost in value. 17. I have been looking at some of the figures of production of primary commodities in Australia and New Zealand, during three years, 1929, 1930 and 1931, of falling prices, and the results are significant. Taking the imports into Great Britain of butter from Australia the quantity in 1929 was 768,000 cwt. and the average price was 1655. a cwt. In the following year, the import was increased to 950,000 cwt. and the price fell to 1265. Was the production of butter reduced as a result of this fall? On the contrary, in 1931 it went from under a million to over a million and a half cwt. and the price fell from 1265. to 107s. per cwt. 18. A similar story can be told of the imports of frozen mutton and lamb from the same country. In 1929 they were 593,000 cwt. and the price was 68s. per cwt. In 1930 the importation rose to 810,000 cwt. and the price fell to 61s. Insitead of the fall in price reducing production the imports in the following year rose to no less than 1,532,000 cwt. and the price dropped to the calamitous level of 475. The New Zealand figures tell the same tale although the fluctuations are somewhat less striking. My purpose in quoting these figures is not to 51041—Si