OUR ECONOMIC ILLS.

Auckland Star, Volume LXI, Issue 229, 27 September 1930, Page 8

OUR ECONOMIC ILLS.

NEED OF A CENTRAL BANK. . • (To the Editor.) Tie people of New Zealand will read witt great satisfaction the address given bv R Otto Niemeyer at the New Zealand CkU luncheon on Wednesday. He points to % silver lining behind the dark,cloud of denf 1 sion which has hung over New Zealand durW the past few years, and, as be assures there is no justification for the pessimism j, ! with 111 this country. .We know that 2 production, of real wealth is the highest iT head of population of any country in uf ' world, and we have it from the best financial authorities that the. national credit of Nmt - Zealand in London is of the. highest.order " There is, however, no satisfaction to be derived from these facts while we are prevented fro» : ■ making full use of them. The man in street wants to know what is it that acts « a brake on our development and prevents our making use of our credit. The answer W ' •this question is the menace of money'power - ; We have been advised by local financial authorities that things cannot improve until ' there is a reduction in wages and prices decline and we must get back to a'pre-war leveL Against this, however, another great financial authority, Reginald McKenna, chairman of the Midland Bank, tells us that if prices;,w'ere to go back to the pre-war basis it would be impossible for any Government to balance its Budget, as lower prices increase the real burden of fixed charges on national; revenue •Instead, therefore, of finding the remedy for our trouble in reduced wages and prices, the •past few years have taught us that this really is the cause of our present depression and not the remedy for it. Falling wages mean a decline in purchasing power with less orders and diminishing trade, and as a..consequence unemployment. Sir Otto Niemeyer,. however points the way to New Zealand to make more use of her wonderful resources and magnificent credit, and, if we read between the lines correctly, through the establishment, of a national central reserve bank. "A central bank," eayj Mr. McKenna, "is the spring from which the water of life wells up; the commercial banks are the pipes and channels by which it is conducted to a thirsty economic system; 5 ' The establishment of a central .bank in this country, however, cannot be entertained until the State's partnership with the Bank of New Zealand is brought to an end, and in the long run this will, I think, be to the mutual benefit of both. J. HISLOP.