HIGHER PRICE LEVEL.

Auckland Star, Volume LXIII, Issue 139, 14 June 1932, Page 5

HIGHER PRICE LEVEL.

CONTROL OF CURRENCY. ABBRESS TO BUSINESS MEN. BAD EFFECTS OF DEFLATION. " How can business men expect business to be anything but bad? " asked Mr. A. C. A. Sexton, LL.M., in an address on " Currency and Exchange" which he gave at to-day's luncheon meeting of the Karangaliape Road Business Promotion Society. " The present position of New Zealand is going from bad to worse, as is evidenced by the number of unemployed rising by several hundred each. week. This means that the purchasing power ot' the public is being steadily reduced." Mr. Sexton said that the effect of finance on our national life was enormous, as Sir Robert Home had pointed out recently in liis address on the British Budget. In the opinion of many people the City of London bankers had committed four major blunders in advising the British Government of the day to (1 ) adopt- a policy of deflation after the war, as recommended by the Cunliffe Committee; (2) effect the debt settlement of U.S.A. on a gold basis; (;>) restore the gold standard in 1925; (4i link the Indian rupee with gold in 1927. "All these acts enormously increased the burden on the public, and in a large measure ruined British trade with India and added to the cost and difficulties of the British exporter," said Mr. Sexton. "Self-Government in Money." The remedy, said Mr. Sexton, was for us to have self-government in money. It was necessary for people to understand that, although the New Zealand pound was commonly called by the same name as the British pound sterling, there was not now any necessary connection between the two. He suggested that the control of our monetary policy should be taken out of the hands of private individuals and placed in the hands of a board, which would be independent alike of the Government of the day, the local trading banks and the overseas banks. That board would be required to carry out a policy laid down by Parliament, and the policy should aim at restoration of the price level in New Zealand to that which obtained a few years ago. That level should be stabilised in such a way that it would enable the unemployed to be absorbed, business to be carried on profitably, and justice to exist between debtor and creditor. Basis of Export Products. "Our money in New Zealand should be based on primary export commodities, rather than on general commodity values," said Mr. Sexton. "The effect of these proceedings would be to stabilise our price level for all things manufactured in New Zealand, in preference to the stabilising of exchange." If ' the exchange moved against us, tho amount of money available in London with which to purchase imports would not be affected by any alteration. Even if the price of imports had to rise in New Zealand, people would have more money with which to buy them.