Ottawa and Currency

Dominion, Volume 25, Issue 276, 17 August 1932, Page 11

Ottawa and Currency

Sir The report on the subject of currency’ submitted to the Ottawa Conference is all to the good. Being a bankers’ and economists’ report, it is usetul and encouraging inasmuch as it discloses a complete change of front. It amounts to an all-too-tardy recognition of the tact that “deflation” is an abysimal folly. But better late than never. Money is a circulatory system, wnicn, in modern life, is a matter of vital importance. To interfere with the circulatory svstem by constricting the volume of circulation is equivalent to reducing the vitality of trade and industry by a like proportion. The decision that price levels must be raised is a right-about-face, but it is a decision of prime importance. It brings the financial world face to face with the facts. And one fact of prime importance is a fact admirably expressed by a studious business man in w ellmgton when he said, recently: “What we need is to get the spending power into the hands of the masses.” That is a vital point, for, until we get the spending power into the hands of the masses, price levels cannot be raised. Moreover, they cannot be raised even then, until people learn that money is meant for spending and not for saving. Money is part of the machinery of trade aud is not an independent business. Thus we are compelled to the conclusions that, if we are to get' the spending power into the hands of the masses and if they are to be induced to spend it when they have got it, then there must be guaranteed protection against the spectre of poverty and there must be a considerable liberalisation of the distribution of the rewards for service. For as each man makes more things he must consume more things, and to consume more things he must be invested with the power to spend. In the broad generality, selling and buying are the two phases of multilatcial barter. Consequently, if many refuse to buv, thev deny themselves the power to sell. Strange to say, although we are beginning to recognise this fact in its relation to international trade, we have been inclined to overlook its application to the necessities of internal distribution. After all, capilliaries are as important as arteries, for the one cannot serve without the other. Let us get on with the good work.—l am. etc.. P. B. FITZHERBERT. Wellington, August 12.