LABOUR POLICY

Ashburton Guardian, Volume 56, Issue 26, 12 November 1935, Page 3

LABOUR POLICY

MR W. D. STEWART’S CRITICISM.

THE FINANCIAL PROPOSALS. (Per Press Association). DUNEDIN, November 11. The Hon. W. Downie >Stewart opened his campaign in the Dunedin West election in Knox Church Hall, beforq a large attendance. He trenchantly criticised the Labour Party’s financial policy. “Mr Savage says his party will create a national credit authority to provide all the money required,” said Mr Downie Stewart. “Now it is very important to note that in the fiist place this money will not be raised by taxation, which, in his opinion, is already too high, and that further taxation is out of the question. In the next place, he says, a Labour Government will not borrow, because our debt is already too big, and has reache unmanageable proportions. '* hA other means are left to him to raise money? . . ... “Mr Savage says this national credit authority will provide money service for all the currency and credit required. Now what does this mean, if there is to be neither taxation nor borrowing? Mr Savage has repeatedly said that he wants State control of currency and credit, which means, in other, words, a politically controlled note issue; but- the creation of money and the Reserve Bank's credit at the call of the Government of the day are by far the most arbitrary and unjust modes of taxation that can be conceived. The more money created under this scheme, the higher will unemployment become; but in order to try to reassure those electors who have some knowledge of where this road leads to, Mr Savage then -makes the astonishing statement that the money system would be operated m the same way as it is operated now, by people who knew something of the business of banking. These are his actual words, but obviously he is speaking with two voices. He says things will carry on as they are, and yet they will not carry on as they are. Apparently we are to have political control, and yet it will not be political control. But he must make his choice. He must have one or the other. If he has political control he knows the electors will lie rightly alarmed. If he has non-politica control, things will go on as they are, and his vision of unlimited money, without taxation and without borrowing, fades out of existence.

Australia’s Experience. “This very question was fought out to the death in Australia during the depression, when Mr Theodore and Mi Lang were clamouring for political control of. currency and credit, and the people of Australia turned them down. The Federal Labour caucus was demanding that the Commonwealth Bank should be required to create sufficient credit to finance the requirements of the Government for all services covered by Parliamentary appropriations, and the loan programme and other items, in the same way as the Labour Party proposes here. The Prime Minister, Mr Scullin, who was in London, cabled to say that to create credit for the amount required foilcan work was unsound, that the Government could not deliberately coerce the banks and that all the talk about creation of credit and inflation was most damaging.- If Mr Savage will neither tax nor borrow, he can only expand currency. In other words, how- . ever, he may wrap up his ideas . m polite phrases, he is bent on inflation; hut an increase by the Government m currency and credit cannot increase spending power, as measured in goo s. It cannot increase the real income of the country unless profitable production is developed. Every country that has. adopted these alluring schemes has sooner or later had to extricate itself after great distress and misery. In tact history is strewn with the wrecks of just this type of political control of m( “We have a Reserve Bank, whose luty it is to control credit and currency apart from politics and apart from profits, for its profits go to the people of New Zealand, with the exception of a small- dividend. Its duty is to consult with the Government on major questions of financial policy, just as the Bank of England keeps m touch with, but is not controlled by, the British Treasury- But if the L. hour Party wishes to put our Swerve Bank under political control for its. own purposes, then I am opposed to it.”

Savings Bank Deposits. Referring to Dr. D. G. McMillan’s remarks that it would not be possible for a Labour Government to *ann the ■savings bank, as happened m New South Wales because the Government -had already spent the savings that the people have in the Government Savings Bank,” Mr Dowme Stewart said that, from the fact that the savings bank deposits were being turned over at the rate of more than £20,000,000 per annum iV was easy to imagine .what would happen depositors lost confidence m the fmaniial. administration. Obviously no fresh deposits would be made, an there would be such a run on withdrawals that the bank, like that ot New South Wales, would have to close it s doors. If a Labour Government taking office attempted to find all the millions required to finance guaranteed prices and the other fanciful schemes put forward on bank credit, there was not the slightest doubt but that confidence would be destroyed. “I am also curious to know whether the scheme of the Labour party for issuing credit and currency without •interest means that they will no longer pay interest on deposits in the savings bank. If they have a new way of finance, why pay interest unnecessarily on savings banks deposits?” The candidate was accorded a vote of thanks.