A prominent Swiss banker,in an address to the National Press Club luncheon in Washington on Wednesday (5 November), called for a new approach to the world's inflation problems.
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GV Mr. Schulthess speaks
SCHULTHESS:"The inflation presently plaguing our world is not so much an economic, but rather a social and political phenomenon. Inflation is not in the first place the natural companion of an upward trend in business, and will therefore not necessarily decline when the trend should go into reverse. In my opinion, the assumption that a conventional economic instrumentation, such as a restrictive credit policy, would suffice to bring down inflation to a bearable level, is hardly realistic. More likely, such measures would create problematic economic, political and social tensions, and, if at all, they worked at all, would result in hardly more than a temporary slowdown of inflation. Of course, I know that in one place and another the first intention is being preached to step hard and relentlessly on the economic brakes until the nasty monster of inflation is dead as a doornail. Alas, past experience hardly enhances the credibility of statements of this sort, for as a rule at the first or second sign of recessive tendencies, authorities operate the switch to expansive measures, and one again inflation gains momentum. There remains therefore, an anxious question. Will it be possible in future - considering such ups and downs - at all be possible, to create lasting impulses for an economic equilibrium, or will the whole world exercise simply end up in even more inflation, a result which would not be surprising considering the philosophy of some industrial leaders and union bosses?"
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This film includes an extract from Mr. Schulthess's address. The following is a transcription:
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Background: A prominent Swiss banker,in an address to the National Press Club luncheon in Washington on Wednesday (5 November), called for a new approach to the world's inflation problems.
Mr. F. W. Schulthess, the Chairman of Switzerland's largest bank, the Swiss Credit Bank, questioned the validity of traditional methods of fighting inflation. He said that a situation in which there was both inflation and unemployment, could destroy the democratic institutions of the Western world.
Mr. Schulthess, who served as President of the International Monetary Conference in 1972, pointed out that "slumpflation" - unemployment and inflation occurring at the same time - had already hit the United Kingdom and Italy. He said there was a real danger that it could effect other nations too.