"THIS FALLACY"

Evening Post, Volume CXI, Issue 74, 28 March 1931, Page 11

"THIS FALLACY"

CHANGE IN CURRENCY,

"There is a mistakort idea, abroad that a change in our currency and credit policy will produce prosperity.'* said Mr. W. Appleton, F.1.A.N.Z., addressing the "Wellington branch of th« Now Zealand Society of Accountant* on. Thursday. "The best way to illustrate this fallacy is to assume that half a dozen] people are sitting round a table playing a game of poker. Bach man is handed a dozen matches by the man who acts as banker. Under normal conditions, at the end of the game those who have got more than a dozen matches are paid for the excess number,.whil© those who have not sufficient have to make up the dbflciencyi In this way the whole matter is satisfactorily adjusted. But, suppose that ona of the individuals, during the game, takes out his own box of matches and carries on with a couple, of dozen'that are not received from the banker? At the end of the game there would naturally be a surplus of twenty-four matches, and there woulct not be sufficient money to redeem the whole. That is exactly what happens in the process of inflation." Mr. Appleton said that he was not unduly pessimistic as to the future. During recent months business generally had derived no stimulus from low commodity prices because of the fear that they might fall yet further.. All traders even now were still reluctant to meet anything more than irnmediato demands. Even the average consumer was buying only his pressing needs, while we all knew that investors wera (vithholding their funds from investment, preferring to leave their money, on deposit at the banks. Until sufficient confidence had returned to stimulate buying, stocks1 of goods were not likely to dwindle nor production to increase. - Fortunately, within the last week or ten days there had been * marked revival of confidence, particularly in tlio wool market and in- tha investment field. "If this is not a 'Hash in the pau, J and I do not think it is." ho said, "we shall soon see the end 'of our troubles. Business ; losses will stop when, the downward trend of Vrices is arrested and reversed.''