CONFIDENCE

Press, Volume LXXI, Issue 21646, 3 December 1935, Page 17

CONFIDENCE

TO THE XDITOJt OJT TMM PKIB9, Sir, —Nearly every writer on political economics has submitted as the bedrock truth that credit is founded on confidence. It la credit that demands currency to perform the work of the world. Without confidence there cannot be that demand for the currency which some people think should be provided by issue of State banknotes, whether there is a legitimate demand for it or not. Paper money that cannot be usefully used in trade or founded on securities that everyone will have confidence in would soon go the way of the "German mark of 1922 or the American greenback of the 1860's. The clearest evide'nce of this has just been illustrated in New Zealand, because a dozen or two people lost confidence in the Reserve Bank, owing to their thinking - the new Government would interfere with it, the value in the eyes of the people of the bank shares dropped from, £6 7s to £5 12s 6d in three days. As confidence began to be felt that the Labour Government would not interfere overmuch with the bank their shares value has gone up and will go higher. The new Premier has expressed himself in such a way as tp inspire confidence; may I suggest that all do our best to co-operate with him. We shall criticise and actively oppose certain measures with a view that they may be evolved lightly to suit the progress of the country, but as they have asked for co-operation we should willingly do all we can to help.—Yours, etc., EXCALIBUR. December 2, 1935.