WAR LOANS

Press, Volume LXXIX, Issue 23946, 13 May 1943, Page 3

WAR LOANS

; “MONEY MUST BE 1 SUBSCRIBED ” ! DANGER SEEN IN CREDIT [ EXPANSION (P.A.) WELLINGTON. May 12. A national war loan committee has t been formed to deal with the next New ■ Zealand Government war loan. The r committee consists of the Acting-Gov- : ernor of the Reserve Bank, Mr W. F. ; L. Ward (chairman), the Secretary to ■ the Treasury, Mr B. C. Ashwin; the r chairman of the National Savings Comi mittee, Mr T. N. Smallwood; the ore- • sident of the Federation of Labour, the Hon. A. McLagan; the Under-Secretary to the Prime Minister, Mr J. Thorn, M.P.; the general manager of the Bank , of New Zealand, Mr H. R. H. : Chalmers; the chairman of the associated Banks, Mr P. R. M. Hanna; the Director-General of the Post Office Mr J. G. Young: the president of the Associated Chambers of Commerce (Auckland), Mr N. B. Spencer; the Mayor of Mastertori and chairman of the Municipal Association, Mr T. Jordan; the chairman of the Counties Association, Mr W. Morrison; the chairman of the Life Offices Association. Mr W. T. Ikin; the chairman of the Fire and Accident Underwriters’ Association, Mr H. G. Wiley; the chairman of the Newspaper Proprietors’ Association of New Zealand, Mr C. W. Earle; the chairman of the Stock Exchange Association of New Zealand, Mr A. Hamilton; the vice-president of the Associated Chambers of Commerce. Mr S. Paterson; and the president of the New Zealand Farmers’ Union, Mr W. W. Mulholland, The Deputy-Governor of the Reserve Bank (Mr E. C. Fussell) at the first. meeting of the committee, emphasised the need for raising money from the | public and not from credit expansion. The success or failure of the loan would depend on the decision of ihe people and the public was entitled to a plain, frank explanation of the reasons for their decision and to be guided by their knowing the real truth about their country’s need of their help. More Than Enough Money “There is now much more than enough spendable money in circulation to enable the people of this country to purchase the goods and services becoming available from day to day. According to the bank’s calculations, the supply of spendable money (not counting deposits in the Post Office Savings Bank) has increased from £54,000,000 at the outbreak of war to over £120.000.000 now.’’ Mr Fussell said this was a more than 100 per cent, increase and it would be idle to suggest that the volume of civil goods and services in the country had ,T also more than doubled. On the contrary, civil goods and services had been very heavily reduced. “That is just what we all exoect to happen in war time because so much of the country’s productive capacity and our imports, too, have to a very great extent been switched over to another kind of goods services—not for civil consumption but for enemy consumption,” said Mr Fussell. “This uses up a large share of our energies and thoughts, a large share of materials, and a large share of our spending power. “To raise all the money from taxation of income would be unjust, because incomes alone do not measure ability to help. Some people’s income is large in relation to their available cash. Some people’s cash holdings are large in relation to their incomes. Voluntary Source of Funds “Loans from the public provide means of tapping that voluntary source of available funds which are not reached by income taxation. The taking of deliberate steps to make large artificial additions to the already teeming money supply only harms the people of New Zealand. The money that is already in existence is competing strongly for the restricted supply of goods and to issue new credit for war purposes as a substitute for pub-licly-subscribed war loans would set the price stabilisation organisation an impossible task. “It would simply lead to a reduced purchasing power of wages and of all family incomes and would cut down the real value of hard-won savings,” the speaker continued. “And if, as has already happened in some countries, the pressure of prices becomes too great, the dam bursts and an uncontrollable deluge follows.” Mr Fussell added that if there were not enough money in circulation to do 1 the job required of it there was a case for issuing more—but not otherwise. . Inflation represented the result of trying to get something for nothing on 1 a large scale. 1 “As the dangers of overflow money are known, it is intended to do all that is humanly possible to protect the \ people of New Zealand from its con- ] sequences,” he said. “If all support ! the loan according to their ability to do so. their contributions will in the j aggregate carry the loan to victory and 1 at the same time help build a'rampart of stability against inflation.”