HIGH FINANCE

Press, Volume LXXI, Issue 21404, 21 February 1935, Page 9

HIGH FINANCE

TO THB EDITOB CIP THE PBESS. Sir,—A recent correspondent, writing on another subject, contended that it was useless to put more money into circulation when the country already has enough money in it to provide its population with all they need. This statement makes me think how ridiculous it would sound to hear someone say that it is foolish to talk of desert in Africa when that continent possesses sufficient rainfall to make every part of it a veritable Garden of Eden. The uepression, to my knowledge, is more or less world-wide, yet I am prepared to say that there is enough money in the world to meet everyone's needs, providing every one had sufficient of it, and no one had more than they needed. But unfortunately this state of affairs does not exist. For while many millions are living in abject poverty, numbers even starving, others possess so many millions of pounds, that if they lived twice as long as Methuselah, and never received any interest on their horded wealth, but merely lived on the capital at the rate of £lO a week (which would be like a king's income to me), they would not have used up a quarter of their money. So while looking at the situation from one angle, it cannot be said that the depression'is the result of a money shortage; looking at it from another angle it can equally truthfully be stated that the depression is the result of a shortage of money in the hands of those who would purch. -,e the surplus world production if they could. Take another illustration. Let us suppose that someone went into the shipping office of any seaport town and bought up all the steamer tickets available, then commenced reselling them or trying to at a price that few, if any, could afford. The ships from that port would have to go almost, if not entirely, without passengers because no one could afford to pay the extortionate pjice charged for the tickets, unless the companies did, as probably they would in the circumstances, issue a fresh supply. Thus. I think, anybody with average intelligence can see that even the scheme of "Kaye Hoe's" (whose' correspondence on finance is well known to your readers), that of feeding the country with new money at the labour end of the ladder, whatever its failings, would certainly be better than present conditions, while the scheme of Major Douglas to put into the hands of all those who will purchase a pound for every pound's worth of goods and services available; to abolish interest on money and in its place grant a national dividend, is infinitely better.—Yours, etc., IN EARNEST. February 20, 1935.

to th* editor op thb pbess. Sir,—"Kaye Hoe" writes, "If the scheme undertaken is profitable then the value of the debt is enhanced." Naturally, Q.E.D., but the question is, profitable to whom? Any single scheme may be profitable at the expense of others, so we want to view things as a whole, the whole is greater than the part. In answering his own question, why money goes out of circulation, he does not go far enough and explain why the public have lost so much of their purchasing power. The reason is obvious. When people are struggling to pay rates, taxes, and interest, there isvery little left to buy goods. With regard to the £lO paid to worker, not getting back to the Reserve Bank in a fortnight, I do not see why ho singled out the Reserve Bank, but in any case it would not be the property of the Reserve Bank but of the depositor. He next explains quite well what would happen 1o the £5 a week paid to a worker. Of that £2 would immediately be paid in to bank. He omitted to say that it becomes a debt; it may or may not be interest-bearing. The balance, £3, filters through business houses until some of it even reaches the mortgagee, there to await reinvestment. Now as most tradesmen, i believe, bank their money every week, only keeping back sufficient for immediate requirements, it is reasonable lo supnose that this extra amount will be banked in the ordinary way and then becomes a debt on the bank. So every issue of fresh money becomes a debt in a very short time. It is this very debt on the money we have saved which is giving us all the trouble. When we see that money is not wealth: when we can distinguish between money and property; when we can see that by saving money we destroy the value of our property, then the Reserve Bank will come in handy, not to issue more credit but to receive on its books a record of all moneys as th-.j debts are paid off, which will be there to remind us of the time whoa we wasted our energies making more money than we could use. By saving money we stop consumption; by stopping consumption, we stop production; and stopping production means a reduction in wealth, a wealth of goods and services.—Yours, etc.; \V. WELD. February 20, 1035.