OUR FINANCIAL SYSTEM

Press, Volume LXX, Issue 21146, 23 April 1934, Page 9

OUR FINANCIAL SYSTEM

to tll*;_ t.DiTOH or Tiir rur.-is. Sir.—Fearing that abler persons will think Mr Atmore's questions in your Saturday's issue are not worth answering. I venture to reply: <1) Our "sound" money system unfortunately is not yet fool proof, but it produces enormous wealth. We are endeavouring to strengthen it against the actions ol the foolish without unduly reducing its wealth-producing power. Our task is not as easy nor as quick as Mr Atmore thinks. 12} To economists it is a known fact that in the long run commerce suffers more from the periods of over-abund-ant money than from a scarcity: the origin of each recurring period of light money can be traced to preceding periods of easy money. The slump has taken two decades to grow, and cannot be cured overnight. Even if it could, it should not be. Democracy, alas, can rnly be taught by experience and if thaf is too short the education is insufficient.

1.3) "Sound finance" has to do far more than Mr Atmore appears to think. Its most important purpose is production: its second distribution: and its third stability of values. Our capitalist system dates no further back than the invention of the savings banks --say 150 year; ago—yet we have nlleady triumphantly solved the most important problem, production, made remarkable progress in distribution, and achieved considerable, though notconstant, success in stability of values. 14) If our control < ( sf currency j.- i the interest.-, of shareholders, it is surely because we arc all shareholders. vVar debts and reparations upset the world distribution of the standard of currencies, iind comoelled us in Seotember. 19'? 1. to adopt a new standard 'sterling) with a success lhat is now provint; phenomenal. Our new standard, in conjunction with the new standards of oilier countries, will also automatically halve the world's debts —but we must give it time. •5) All new money does not come from the banks. Mr Atmore should really study authorities, instead of blindly accepting foolish theories. I <6) Japan, by virtue of her low living conditions and exchange manil pulations, is able at present to make a I quick entry into many markets, but so tar we have received more benefit than | harm from that circumstance. But for the Japanese competition at the wool tales there would have been little or no rise in wool prices; and there would have been no Japanese competition had there been no trade. Her rubber canvas shoes at Is lid, I noticed, rolved temporarily many a poor person's foot problem. They will soon be able to purchase something better. (7) Our money and credit are based on gold at a certain price. I have always contended that the price of gold should vary inversely with the price of goods, and in the future it probably will. Currency, like a fiddle string, should be screwed neither too tightly nor too loosely; it should be in tune.

(8) As Mr Atmore apparently suspects, it harms everybody to keep millions of workers short of necessities, hut he must remember that the reins of government are in the hands of democracy, and democracies are always asinine. Think of all the rot spoken by our parliamentary opposition during the slump—and weep. Hansard records that our every step towards reflating our currency standard and thus restoring our living conditions has been bitterly opposed by the ignorant representative.'; of Labour.

(9) I possess five cottages with rentals all less than 14s weekly. My tenants.' standards of living have been raised wonderfully during this century by scientists, inventors, and capitalists. All these tenants have experienced at some time the wealth of the average millionaire, although, of course, not so often, so regularly, nor so luxuriously. Not one, I think, has ever suffered from hunger or cold. One at least has mounted above the mistrin an aeroplane. Another has had radium treatment. Their sufferings have been purely mental and mine financial (through loss of rents), but we arc sticking together and now rapidly improving. The above answers withdraw the pertinence from the remaining questions, but if there is sufficient interest in the subject I could Pud time for I hem in a future issue.—Yours, etc.. PSHAW. April 22. 19:54.