MONETARY PROBLEMS

Press, Volume LXX, Issue 21085, 9 February 1934, Page 14

MONETARY PROBLEMS

TO Tns EDITOB or THIS MESS. Sir, —It should be some satisfaction to the general public to see that the Government has appointed a committee to enquire into monetary problems, as it shows a definite acceptance of the fact that the existing system is unsatisfactory. That bankers are not included in the committee may be a good thing. Some of them are so closely associated with the problem and arc so full of banking technique that they seem to bo unable to see the woods for trees. A nation is like a farm or a business: it cannot lie run to the best advantage without sufficient capital. V\ r e must lay it to the credit of the present Government that, although it' has made many bad moves and acted, as some of us think, on false prejudices, it has placed that wonderful Central Reserve Bank Bill on the Statute Book. That act is there for it 1o work to the full advantage, and if it does not it is there for a succeeding government. Properly used, a reserve bank gives the Government the key to the source of the money supply for home finance. It places the real power to govern in the hands of the government. In the past we have seen government thwarted and handicapped by powerful influences used behind the scenes. To develop the country in the past they have had to pledge the public credit to overscan financiers. To-day the Government acauires the money (free of interest if it chooses) from the Reserve Bank, and carry out works that will be national assets. It can venture on works that no private company dare undertake, because it need not be pressed for an immediate financial return. This will not impair the nation's ability for meeting overseas liabilities, but will strengthen it, because development will increase the nation's wealth-producing caoaeity mid there will not be any additional debt oversea'-.

The United Stales is devaluing the dollar around T>o per cent, and it look:; as if she is basing it to a certain dcrzxoc on sterling. Conditions in New Zealand. Australia, and Canada wcr/2 more or less on a level with conditions in Ihe United States. If New Zealand devalues the Dominion pound note 50 per cent, on the sterling basis, it will go a lon<? way to restoring former conditions. When we take into consideration that many people had balances at the banks ;.iid now have overdrafts, we can sec there is room for a big issue of new moncv. The Government's present methods of gauging individual wealth will give it ample warning of suflicient money in circulation. When there is sufficient money in circulation and the people's financial position is sound, the Government will be able to return to Die old system of financing by taxation. New Zealand has been a country nhere a man who worked at any job could, with reasonable thrift, work himself into a good position. The Government has now the chance to bring back those conditions with the advantage of not adding to overseas indebtedness. —Yours, etc., KAYE HOE. February 7. 103-t.