CHEAPS MONEY PROPOSALS

Evening Post, Volume CXVII, Issue 148, 25 June 1934, Page 8

CHEAPS MONEY PROPOSALS

(To the Editor.)

_ Sir, —There seems to be an impression gaining ground in Hew 2Wland that cheap money is going to be of some great assistance in bringing back prosperity. This might be all right if there was not a large surplus-of money lying idle waiting investment, but with the purchasing power at its present v low and very unsatisfactory level there are very few avenues open for profitable investment. It is evident that the greatest trouble at present is the low purchasing power, and it is essential that sbme means be found to increase it. Some channel must be opened to allow those without sufficient money, to live decently, .to -acquire spending power by increased)work at. standard rates of pay, better sustenance allowance, or a consumer, credit for a period to restart the wheels of industry. Consumer credit will riot perhaps be very popular with a section of the community, but the-Government1, could well- consider, the talcing of;a further debit to the- national debt for, say, £4,000,000, jeei'ng it can be no.w issued free of cost to the taxpayer^ through the- Reserve Bank. If there are objections to it they can be no worse than the suggestion of cheap money being a cure for'the depression.; -r. ','■-.■,' ..-V.-.' The British Chancellor, in a recent speech said, "In order to obtain' a recovery in world ■ -prices a' monetary action is one of .the':essential features. The fundamental monetary conditions for a recovery of prices are that cheap and plentiful credit should bo made available • and its circulation actively encouraged." ' . In one of the leading British journals the following appeared in reply: "This betrays an ignorance of eeonomie fact and recent history so vast, that its utterance should lender its "speaker incapable, of holding an : office of responsibility. ;Money is already iniexistence and.'plehtif ul, and' to1 suggest recovery wiU.coine from that, is a; cardinal error of fact: which admits, of no Argument" In a recent sub-leader on Friday night you pointed out somo of tho troubles real troubles, Jtoo —which will arise from cheap money, and no doubt there are others if analysed in detail, so it^eems there is quite a lot in the above comments/ / . I have given tho matter a lot of thought and can see no way of starting tho economic machine again but an issue of consumer credit free of interest, so ns some of the goods glutting the mauket can be put into consumption to restart production. Borrowing at interest and Increasing taxation is useless, production without consumption is useless. How can we get "goods to tho consumers, quickly and with.tho loast disturbance. That is tho problem for solution.—l am, etc., ' . . ' ' '. EQUITY.