Evils of Inflation

Dominion, Volume 28, Issue 247, 16 July 1935, Page 11

Evils of Inflation

Sir, —Your interested readers can pass judgment on the rambling statements of Mr. Hans C. Thomsen on British, American and French finance without comment by me; but in passing I would like to point out to him that it is not the American and French Governments that control the gold, but financiers in those countries! The American and French Governments could only gain control by confiscation provided the gold was domiciled in their respective countries, and, as Mr. Thomsen says, financiers are no fools 1

Though Britain put an embargo on the export of gold she did not confiscate it, and it should be easily understood how both America and France, on behalf of financial interests, had to approach the British Government to partially lift the embargo when gold was needed in their own countries. The fact remains that the world’s currency gold supply has been well and truly cornered, so countries must, if necessary, use a substitute! The remaining gold countries are feeling the depression worse than any other! The burning question with our farmers is not, as your correspondent states, what will become of them when interest payments on the public debt absorbs all their production at some future date, but rather the needs of the moment of procuring sufficient credit for their productive work, to enable them to meet their contract obligations and maintain a decent standard of living I The present system foolishly allows overseas markets to decide whether there will be prosperity or poverty in New Zealand. The introduction of State or costless credit (as some prefer to call it) into our financial system is bound to come, so why not face up to the situation forthwith 1 If our wool, butter and meat are to be sold below cost of production, let it be to our own people, and the balance to overseas markets or Davy Jones’s locker! Our Minister of Finance is at present In England protesting against the. ruling low prices. I maintain that it is the bounden duty of the Government to supply the primary industries with State credit when overseas prices fall to such a low level that only poverty can stalk through New Zealand! In my opinion, the onlv sane way of applying this costless credit would be by the Government purchasing the total output at overseas price©, with <i well-defined bottom limit which State credit would maintain when necessary! . , • . , I favour the primary industries, not from anv particular love-for farmers, but for the'fact that the whole commercial life of this Dominion is directly or indirectly built round those industries! If the farmers have a payable return or credit all other businesses prosper! I appreciate Mr. Thom©en*<9 concern over the size of the national debt; already the interest payments have reached about one-quarter of the total exportable output of New Zealand. In stressing tins point, your correspondent quotes from the Year Book, giving the increases in recent rears with a final of £S.ol)0.000 for the year ending March 31, 1934. Had Mr. Thomsen scanned the news columns of the Press he would have seen the figures for March 31, 1935, given out about two weeks ago by the Acting-Minister of Finance. What a different tale! The national debt has been reduced over £22.000.000 by the use of State credit from our Reserve Bank ! By so doing, the taxpayers have been relieved to the tune of £1.200,000 per annum, being the interest on”’Treaeury bills at 5J per cent, per annum. The printing press was not used in paying off Treasury bill loans—just the signature of the governor of the Reserve Bank gave the Treasury the required credit. I have never advocated the use of the printing press to finance this country! Had I done sb, I Would have deserved being branded as a consummate fool who does not know what he is talking about! If the paying off of the most expensive item of the national debt will not convince Mr. Thomsen that the sane use of State credit, is beneficial to New Zealand—well, we can beg to differ. I Bm ’ etC ” ■ G. H. WILKIN. Wellington, July 14.