ECONOMY OF N.Z.

Press, Volume LXXXI, Issue 24610, 5 July 1945, Page 3

ECONOMY OF N.Z.

NEED SEEN FOR “ STABLE POUND” MR H. J. KELLIHER ON MONEY (P.A.) AUCKLAND. July 4. What businessmen as well as consumers wanted to-day more than anything else was that something called sound money, said Mr H. J. Kelliher, managing director of Dominion Breweries, Ltd., at the annual meeting today. By sound money he meant stable money, a pound that would buy tomorrow pretty well the same amount of goods and services as it bought today. ’ New Zealand wanted a financial system under which, the people were free to exchange money for goods, mid goods and labour for money as they pleased, an economic and financial system that would prevent the chaotic conditions of boom and depression of the last post-war period. “Although the problem of inflation is still with us, the peak of this danger is past,” be continued. “The greatest danger from now on Will be deflation. The fear is rife that as soon as war-time spending ends, deflation and depression must follow." ‘ The remarkable recuperative powers and potential resources possessed by New Zealand, the dammed-up demand for consumer goods, and the large reservoir of accumulated: savings should compensate for the cessation of Government spending. All that was wanted was a stable pound, The system of privately issued interestbearing debt money had been permitted to get almost completely out of hand. Those who had given thought to this system realised that a change was imperative. A fundamental defect in the present financial set-up was that the great bulk of our money was interest-bearing credit money, created and.issued into circulation by a private banking system at practically no cost to the issuers. . . „ _ , , Tlie general manager of the Bank of New Zealand admitted recentlythat during the war years the trading banks bad created just on £20,000,000 of new money, r Little imagination - was required to realise the effect of the injection of £4,000,000 of additional money yearly for five years on internal economy. ' ; •> - “With such a system we live financially on the verge of a volcano, for this money can readily be taken out of circulation when expediency decrees, the inevitable result being a depression And economic chaps, he said “If democracy is to become,: a. reality control of credit and currency must pass from private institutions into the, tends of a statutory authority representative of the people as a whole.