FINANCIAL POLICY

Press, Volume LXX, Issue 21119, 21 March 1934, Page 9

FINANCIAL POLICY

in 'IIIF. Kall"R of Tlu; i' K K - s ■ j So —Wo see Mr McKenna ackr.ow- j ■ lt-d"inu the Bank of England's definite j ' reversal of its deflation policy and the ; ' success of tho managed paper cur- ! rcncv it would bo very interesting ! to know what were tho real reasons for the Bank of England's adopting tho poliev of deflation in 1921. causing tho tumbling down of prices the \vuiki over, wrecking- homes, and rendering millions unemployed. One reason I heard advanced was that it would make pavment of the American war debt easier. But it did not work. Another reason suggested was that it was initiated to beat down the working man. Although this has been one of the results. I not think it was initiated for that purpose. Really the working mar. was tho last to gel hit, although 1 consider him the greatest sufferer. Before deflation, the most successful and progressive men wore producers and dealers in what we can broadlv describe as commodities. Men in England who lent out money wore at a disadvantage. The Government controlled interest rates. Ihen in 1921 government control m England was practically abandoned. Ino Bank of England was in a position to reverse the national policy and introduced donation. This had the result of making the traders in money top dogs. Prices of slock fell, causing losses to prudueirs and dealers, and bank balances disappeared. Money i doubled its purchasing value. • Mr MeKonna says tins policy lias , been reversed for two years. One can ' see that if New Zealand keeps step with tho Bank of England tho depresi sion will be 20 wars in disappearing. ! The question is: What is New Zealand going to do" Is she going to be conUnted to drift back wiih the rest ol the world or is sue going to take a lino of her own" ] i There is nothing encouraging in the l , suave talk of the new governor ol! the Reserve Bank. Everything he ! sa%s is stamped with the •'laiss.v faire j 1 fraud. But there i.- one tiling he pro- : , miso.-, and that is to carry nut the GovI ernment's pohey Will the ment adopt a detinue NVw Zealand ; ! runenev and use l!,o Koerw Bank as a .oaree of supply for New Zealand 1 home currency? l! the Gowrmnont doc- we can haw prosperity and a . ! return to the proper standard ol living 1 in a few month.-. But if the Govern- I ■ment does not use Ike Reserve Bank: , a- a financial ixsorvoir in supply the j lag,nee to raise price, (fV public . works land settlement, irrigation. ;« 1 ' general schemes of development, then I New Zealand ha- a long, dreary [ur- . . row to plough. < A central bank. Used ,u the ordinary , I u-;iv i- not tiiiich is-e The Argentine , has 'had a central hank h r /') years; \ but it has been kep' d<.v.-, : by work! | ! r " ,<TS - V ' U;! C " KAYK ..OK. ;