WELLINGTON CENTRAL

Evening Post, Volume CXII, Issue 122, 19 November 1931, Page 9

WELLINGTON CENTRAL

31E. DAEKOCH OPENS

MEETING AT CLYDE QUAY

Mr. I\. Darrucli, Coalition candidate for ■Wellington Central, opened his campaign last evening, his initial adrlress at Clyde Quay being listened to by. a very large audience. In fact, accommodation in the hull was overtaxed, and many were unable to gain admission. At the outset, there were many interjections, but. after about a quarter of an hour they stopped, and the candidate spoke for the- rest of the limn without much interruption. Air. \V. Perry presided, and in introducing Mr. Darroch referred' (o his career ;is a headmaster, and the many oflires of a public nature ho had held. Mr. Darroch said that the Coalition platform, recognised that taxation was so heavy that the burden was almost unbearable. But the electors were told that there was no alternative at present other than national bankruptcy, but that when conditions improved and a reduction of taxation became possible the Government would first afford relief to the working man and to struggling industry. - Criticising the Socialist financial policy, ho said that the policy included raising £25,000,000 spread over three years; establishing a Central Bank under controlof the State; and reinstatement of wages. Mr. Holland, when claiming that the sum could be raised, misquoted the evidence of the bankers to the special Economic Committee. The Prime Minister, who was chairman of the committee, had denied that such evidence was given. If the expression "raising the sum of £25,000,000" was taken to mean making available to that extent money which was already in existence, it, was certainly impossible to raise that sum in New Zealand under existing world conditions. If "raising the aioney" was taken to mean creation of new money, that was,- printing paper money, it was certainly possible to "raise" £25,000,000, or even many thousands of millions. MONEY COULD NOT BE BORROWED. The question, then, was not whether the money could bo raised, created, or issued, but whether the results of raising it would be beneficial or disastrous. If a Socialist Government came into power and determined to avail itself of the £25,000,000, firstly, it could not borrow this sum abroad, for no one would lend it, and, secondly, it could not obtain it from, the people o f the Dominion, because the people of the Dominion had not got it to lend. The only alternative would be for the Government to attempt to compel the banks to create and issue to the State new money (but it would fail, as it did in Australia), or for the Government to take the matter into their own hands and issue State currency. Speaking of the results that would, follow the issue of the enormous sum contemplated by the Socialist Party, he said that if the money were issued by the banks under State coercion there would be a weakening of banking resources. The power of the banks to make advances to their customers to finance -jMtniry productions and trade and commeiroe would be tremendously diminished, and the country as a whole would suffer to that extent. The inevitable consequences of that would bo a loss of public confidence in the banks, •which was one of the most serious calamities that could ever befall a country. "Remember," he said, "what happened to the New South Wales Savings Bank under a Socinlist GovernA voice: "Who killed Cock Kobin?" The chairman: "The kookaburra." Loss of public confidence in the banks, said Mr. Darroch-, would, most certainly be followed by loss of international confidence in the country.FURTHER ISSUES NECESSARY. If the money were raised by the issue of a State currency by a Socialist Government, the results, as-the verdict of history decisively showed, would be a fall in the purchasing power of each unit of that currency, necessitating further and yet further issues of the State currency to enable the State to pay its way, accompanied by a progressive fall of public confidence, with the almost invariable conclusion of utter collapse of the currency and ultimate repudiation by the State. Dealing with the general results that would follow a large increase in the currency of the country, whether issued by the State, or by the banks under State coercion, he said that unless the money were employed for productive purposes in such a way as to ensure prompt payment of interest and repayment of! the principal amount within a reasonable time, and the Socialist Party could not. so employ it, the issue of such money would cause inflation; that was, •the purchasing power of the money would fall. Price levels would rise. The cost of producing the commodities that this country use.d and exported would be increased, leaving the producers, etc., a smaller margin of profit or a greater margin of loss -in return for their efforts. Wage earners would be worse off on account of the rise in the price level (that was, of the cost of living) unless wages were sufficiently increased. If wages were increased the coat of production and commerce were thereby further increased. Thus the evil was seen to keep on growing by feeding upon itself. A rise in Ihe price level, which was ;.,';« f-anic thing as a fall'in the value of money, also resulted in an adverse foreign exchange rate. That in itself was an immediate benefit to exporters, but on Ihe other hand increased the cost of imports, which further accentuated the increase in the. cost of Irving. The benefit received by exporters was thus largely eaten up by the .higher prices they had to pay for everything they purchased. The adverse exchange rate would diminish foreign confidence in this country, and also increase the burden of State indebtedness and interest' payments overseas. It. was important to bear in mind that wages could not effectively continue to ri.=e in proportion to the cost of living under conditions of inflation,1 because the continuing ii.se in costs of production, apart from the wage bill,,

would make it impossible for employers to pay the progressively increasing wages necessary. Inflation was a losing game. Inability to pay wages led to increased Unemployment. For that, and other reasons, a policy of Government inflation must inevitably bear most heavily on, and cause more suffering among, the poorer people. When all that was considered, of what use were promises to reinstate the level of wages, in the Civil Service or anywhere else? NEED FOR THRIFT. "We need a level-headed Government which understands the meaning of, and need for, thrift," he said; "good old fashioned Scotch thrift." An interjectpr: "Whisky." "A Government," continued Mr. Darroch, "which understands that our only way to avert disaster, to better our position, and to win our way once more to prosperity, is to reduce our costs, increase our efficiency in every avenue of production, and to do our utmost to pay our way by the only sane and honest method, that is, by' what we can earn, and not by the dangerous means of resorting to the printing press for inflation-begetting money. In fact, we must live within our income; we have overborrowed already." At the conclusion of the meeting the chairman declared a vote of confidence in the candidate carried, though his decision met with some disapproval.