ISSUE OF CREDITS.

Auckland Star, Volume LXIX, Issue 119, 23 May 1938, Page 11

ISSUE OF CREDITS.

INSULATION PLAN. STATEMENT CRITICISED. (From Our Correspondent.) MARTON, Saturday. Reference to a recent statement by Mr. Ormond Wilson, M.P. for Rangitikei, to the effect that in a depression credits would be issued by the Reserve Bank, which would keep prices at their present level, was made by Mr. H. C. Jenkins, in speaking at Kakatahi this afternoon. "To whom would credits be issued T" asked Mr. Jenkins. "Business firms not making profits would not want them, and farmers unable to make ends meet would only require enough to meet the outgoings. They would employ no more labour than they could possibly help. "Under those conditions the only user of the credit issued by the Reserve Bank would be the Public Works Department. Here, then, would be a country not paying its way engaging in a large-scale programme. This would be equivalent to a man going downhill financially and furnishing his home luxuriously. He would have assets for the money spent, but unless the income could support the home ho would soon be bankrupt; and the buying of furniture would hasten bankruptcy. "Mr. Wilson is also a realist enough to admit that in the event of a longcontinued depression, or permanent fall in the price of butter, the exchange might easily go to £150," continued Mr. Jenkins. "That means the value of all money would again depreciate, and every fixed debt or long-term contract, such as a mortgage or life insurance policy, or deposits in the Savings Bank, would be commensurately reduced in purchasing power. "Wages, too, could not be raised by the equivalent amount of the fall. Mr. Wilson admits also that in any attempt to insulate Xew Zealand the 40-hour week would probably go by the board in a depression, because its duration cannot be foreseen."