THE FINANCIAL DRIFT.

Press, Volume LXIX, Issue 20828, 11 April 1933, Page 15

THE FINANCIAL DRIFT.

TO THE EDITOB OF THE PBESS. Sir,—ln the full glare of the masterly analysis given by the Canterbury College Economic Bulletin published in "The Press" on April 7, stands out the present economic position of New Zealand, rightly described in the headline as alarming. In view of the fact that the last three years have been spent by the Government in searching for and devising ways and means to prevent this disclosed drift to disaster, the inescapable truth forces itself on us that the methods adopted have been fundamentally wrong to produce such diametrically opposite results. Perhaps the one outstanding feature in the present position in New Zealand, and common, of course, throughout the world, is the scarcity of purchasing power in the hands of the consumer. Whatever the cause or causes, this is the epicentre of the whole position, and from this radiates the bulk of the trouble with which New Zealand is at present afflicted. If a permanent and workable antidote to this were devised, every other ill would disappear. In the light of Bulletin 99 and previous bulletins, it may fairly be stated that every step taken by our Government so far has tended to a cumulative lessening of purchasing power

instead of increasing it —or, in other words, a decreasing power of _ consumption in roughly inverse ratio to an increasing power of production has token place. Now the danger, more than any other, which at present threatens New Zealand, is the steady resistance by orthodox economists, financiers, and politicians to the recognition of this truth and the further disregard of its importance when devising fresh ways and means to meet the present drift. As an illustration of this and a forcible illumination on the working of the average economist's mind, I would point to the concluding paragraphs of this bulletin suggesting steps ostensibly for the salvation of New Zealand, but actually for its further damnation by increasing restrictions and economies and more ploughing in the sterile fields of reduction of purchasing power. That is the best that can be done by the orthodox economist, with his asons of ages of scarcity complex, or the financier maintaining money as the supreme commodity ruling all, or the | politician who does not understand either, but follows on bravely repeating the old shibboleths about the only safe paths being the old ones and the tried methods, and so on. Alreadv leagues, legions, and associations " are being freely formed throughout New Zealand, with their general objective the re-establishment of sanity in our Government and a recognition that any monetary system that docs not reflect the productive capacity of the country on the one hand and the consumptive demand on the other is merely a useless and increasingly dangerous clog in the industrial iifc of the country. T have no intention of taking up your space by going into details of the numerous plans and suggestions that have been made over the last few years but out of the welter of them all some radical, though not necessarily revolutionary plan, involving substantial alterations to our present financial system, can, and must be, made. In the meantime we must overcome the terror of the economist and financier at the suggestion that plans for an increase of purchasing power in the hands of the mass of consumers must be considered first, and further that along this line—basic to all others—will be found the only possible road back to prosperity. The coming world economic conference from the very nature of things as they are, and not as we wish them to be, is likely to be about as barren of results as Ottawa. Therefore we must be prepared to put our shoulders to the wheels of our own economic cart, and place it back fairly and squarely on thn road wide open towards prosperity—independent of Lnt-. ish and foreign markets, exchanges, pegged or otherwise, exports and imports quotas, embargoes, mass production, and mechanisation of industry, tariffs, war debts, external debts, internal debts, and growing debts. Our internal debts-public and pnvateare the keystone in the arch of oui present benighted and obsolete economic system—if it is a system. If we fail, Bulletin 99 is a sufficient confirmation of what we are in for. Against the rather dismal pictuie and disregarding the daily ebullitions of the round-the-corner fanatic, stands out as evidence of the dawn to be this very patent disinclination of so many of the rational and thinking portion of the community to suffer much longer the anachronism pf unparelloled economic wealth side by side with the greatest financial poverty. With this aspect of the position Bulletin 9<) does not deal.—Yours, etc., tin JJ ctoes n^ RRENCY REF ORM. Culverdcn, April 8, 1933.