TRACTS FOR THE TIMES.

Auckland Star, Volume LXV, Issue 170, 20 July 1934, Page 6

TRACTS FOR THE TIMES.

PLENTY OF MONEY, NOT A PROSPERITY SIGN. (By PRO BONO PUBLICO.) Looking through an old paper, the "Morning Herald" of November 17, 1791, at a friend's house, I came, across this paragraph: "A certain marquis has at length settled his long meditated loan. The house of Drummond have advanced him 200,000b on mortgage for six years at 3.J per cent, by which hi.s Lordship saves 23001. in annual interest, having hitherto paid 5 per'cent for the same sum. Nothing can more clearly demonstrate tho opulence of this country, so ruined in the eyes of the party, as the fact above mentioned; for if tho state of Britain was not at every point prosperous and pacific, what bankers with tho information and discernment of tho Drummonds would have tied up an enormous sum at so moderate an interest; knowing from a profitable experience that in times of war and tumult its produce must bo more than double!" I copied it out because of tho implication that cheap money is synonymous with prosperity. Actually it is characteristic of depressed times, since in times of prosperity no one wants to tie money up for a period unless the return is high and the security unexceptionable. The position is unfortunately familiar to us in New Zealand just now. Prosperity depends not on the accumulation of money, but in the utilisation of it.

This principle is often lost sight of, especially by Governments. Our own Government is naturally anxious to see New Zealand prosperous again, but it seem* to me to overlook the essentials. Capital that is not constantly being turned over is dead, or as good as dead. It must bo invested not in static investments •but in the means of reproducing wealth. Used to finance.construction, to finance trade or to expand industries, it gives employment and is paid out in wages or in payment for goods. Part of the new wrjilth produced goes to ~\it\y interest, and fresh capital is thus constantly being created. These are the conditions that make for prosperity. Consequently any measure that retards trade or discourages industrial expansion is bad for a country. We knpw to our cost that it is not a good thing to have an accumulation of idle money. If the ordinary activities of private enterprise cannot absorb the money Offerings the Government itself ought to provide, proper channels for investment. The failure of the Government to move could be excused only on the supposition that there are no more reproductive enterprises to be undertaken in New Zealand. This is absurd, and the explanation of our inactivity must, be cither that the Government dors not understand the position or else that it lacks imagination, ,