Politicians and Banking

Dominion, Volume 29, Issue 182, 30 April 1936, Page 7

Politicians and Banking

Sir, —It is an elementary truth that if a man earns £lOO a year and saves £5 that £5 is his saved labour and constitutes his capital. He can command the world to the extent of his £5. But there are people who imagine there is an easier way to get some capital than saving some of their earnings, and so they would pursue some ignis fatuus, like “costless credit,” iu the belief that they will get something for nothing and live happy on it ever after. The wise and prudent do not join in such a pursuit; they rather stand aside and smile at the ignorance and fatuity of the chasers of will-o’-the-wisps in finance. It is different when responsible persons, like the Prime Minister and the Minister of Finance of the country, would join in the chase. Our new financiers are not dealing with their own interests. They are dealing with the interests of the country and the welfare of its people. The Minister of Finance says the Reserve Bank shall give effect to the monetary policy of the Government as communicated to it by the Government. And the Prime Minister says the time has come for the establishment of a monetary system that will provide purchasing power that would equate the value of the people’s power to produce. “If they (the people) produced one hundred millions worth of goods they ought to have one hundred million pounds’ worth of power to buy.” That is what the Prime Minister said, and such an idea of production and consumption is utterly fallacious, as was shown in my previous letter. Remembering that all capital is saved labour and its whole-time employment (not 40 hours a week) is essential to the life of all industry and commerce —to use the Finance Minister's own phrase—its free circulation in the veins of the body politic is the very life-blood of all industry, trade and commerce. What has already been the effect of our new financial wizards’ threatened and actual tinkering with the life-blood of the body politic? Prior to the advent of the Labour Government tp the Treasury benches five million of fresh capital had been poured into "the life-blood of the body politic” in eight months by the people who had their surplus capital in the trading banks. Immediately after the Labour Ministry was created and within one month (December, 1935) two and a half millions of capital—saved labour —became unemployed. Labour Ministers went up and down the country in January. 1936, talking of "running shoes” and that "the people of the country had nothing to fear,” and that everything was all right; yet in that month nearly three millions of capital —saved labour —were withdrawn from the life-blood of the body politic—industry, trade and commerce. By the end of March, when the country had only been four months under a Labour Government, seven and a half millions of capital bad become actually unemployed. ' The people did fear; 'they did not believe that everything was all right, and what they did with their money—even the 81,000 depositors in the Post Office Savings Bank- —showed that they had no confidence in the Socialistic policy of a Labour Government.

During eight months last year £5,000,000 of unemployed capital came into active circulation and u_se. In one month (December) of last year ami three of this year £7,500,000 have ceased to find useful employment, and that is the strongest vote o_f no-confidence the Labour Government can get at present. The first duty of any Government is to establish confidence by its own conduct so that all available capital—saved labour —will flow freely into the veins of the body politic for the revival of trade, industry and commerce, and the Labour Government has so far failed to establish that confidence —its first duty. Reviewing the banking position in March, a Government official declares that such a position as I have set out has no parallel in the history of banking in New Zealand. —I am, etc., .1. I). SIEVWIUGIIT. Wellington, April 27.