FINANCING OF HOUSING SCHEME

Press, Volume LXXII, Issue 21886, 12 September 1936, Page 8

FINANCING OF HOUSING SCHEME

j TO THE EDITO3 OT THE PBESS. | Sir, —With reference to the £3,500,000 | with which the Government will finance the building of 5000 houses, the Prime Minister’s explanation, published in “The Press” this morning as to where this particular money is "going to come from” should rais'e' the hopes of every monetary reformer and social crediter throughout the Dominion. Here we have the straightout creation of a very tidy sum of money not, as in the past, by a private trading bank but by a national credit authority whose policy is definitely i controlled by the Government. Also, the iniquitous charge called “in--1 terest,” with which the private trading banks would have saddled an already overburdened community, is to be lelii minated altogether, and replaced by a | small charge which, though referred j to as interest, will actually be a bookkeeping or brokerage charge. The important point is that while a brokerage charge is returned to the community in the shape of bank officers’ salaries and bank overhead costs such as rent, much of the charge called “interest on i overdrafts” never reappears as purchasing power in the hands of the community but is incarcerated in the secret reserve funds of the ban v s. To those social crediters who are dissatisfied because this £3,500,000 is to be issued as a loan and therefore repayable, I will point out that no social creditor can possibly advocate the making of a gift of 5000 houses to 5000 individuals who form but a small section of the community. And so this particular issue of costless credit must be repaid to and be destroyed by the Reserve Bank. ~ At the same time, however, it should be remembered that this £3,500,000 is very different from all the money which this Government proposes raising by taxation and loans, for it is brand new money; ‘and because it is to be expended on the production of capital goods, i.e., houses, it will, whilst in circulation, stimulate the production, sale, and consumption of consumable goods. In other words, it will help to solve the paradox of “poverty midst plenty.” And possibly when the 25 members of the Government party who still cling to “orthodox finance, see the increase in unemployment ana Decrease in production of consumable goods which will take place when the last house is built, they will perhap at last realise that the only permanent solution of the paradox of poverty midst plenty is the regular distribution of a national dividend. And because a national dividend is an equal gift to every member and not to one small section of the community, it may dawn on them that there is no need or justification to call it a loan and demand ■'epayment-ygirs^ete.^ September 11, 1936.

TO THI EDITOR Of THR PRESS. Sir,—The Prime Minister’s repeated references to the use of the public credit in connexion with the housing scheme is probably intended to pacify the social credit voter. - The use of the public credit for building houses and retiring , the money in satisfaction of a particular account is a thoroughly orthodox procedure. The question of interest rates does not affect the important issue but, as a matter of policy, i should prefer the Government to pay the ruling rates in order not to disturp private investors. The fact of the matter is that a housing scheme is a very unsuitable medium through which to use the public credit, as the social credit supporter understands the term. If the Government really intended to use the public credit for the purpose of increasing purchasing power it would decrease taxation and not increase it. Mr Savage apparently thinks it is necessary to create assets with any money issued. The position really is that the people of New Zealand have already produced the assets and Mr Savage is now insisting that more assets must be produced before we may get possession of the ones already produced. The most outstanding example of this absurd attitude is to be seen in the New Zealand asset of £40,000.000 surplus credit held in London. , , , The public credit to be issued by Mr Savage must build houses and then go back to the Reserve Bank through rents or taxation. Quite obviously this money cannot go back to the Reserve Bank in satisfaction of an overdraft account and be available to buy drafts on London. The Government has taken over the Reserve Bank and is in complete control, but, partly, I fear, in order that the Prime Minister and Mr Nash may be well received in London, they refuse to allow the people access to their own wealth because to do so would involve an unorthodox procedure. Instead, Mr Savage is telling the old, bid story of “pie in the sky some day” if the people will only be patient and produce more assets. —Yours, etc., D. C. DAVIE. September 11, 1936.