COMING REVIVAL

Evening Post, Volume CXIV, Issue 38, 13 August 1932, Page 10

COMING REVIVAL

LOWER-INTEREST

BUT NOT FOR WASTES

{By Three P. 0.)

"The British Commonwealth's monetary policy (reports the Monetary Policy Committee at Ottawa) should be oa sound lines toward raising price level* by ioiv- interest rates and a plentiful supply of -short-term, money. This should -not take the form of financing public expenditure, but should be directed towards stimulating industry and reviving confidence in business." It is now clear that the British monetary policy is simply the age-old plan, of defeating high prices by means of low interest. In other words, money is a commodity. So are goods. The world has been suffering from, cheap goods and dear money. Now it is to have cheap money, and that -will mean dearer goods. Up to "a point, these rising goods prices should revive trade.

As the demand for money is dependent on the demand for goods, a cheapening of goods has always corrected itself by cheapening money; and this is not an Ottawa discovery. But the second sentence of the abovequoted paragraph contains a statement very_ pertineut to New Zealand. The aim is not to finance public expenditure. Public expenditure iii New Zealand includes several millions of money lying idle in. the Napier-Wairoa-Gisborne railway. Between Napier and Wairoa there is only a tiny gap between the rails, but the railway may never run. For even if ? the sum. of £.200,000 (or less) necessary to complete that gap were available, the Bailways Board could refuse—by statute —to operate a. losing line.

It was not to finance public expenditures like this that British financial authorities signed this low interest report of the Monetary Policy Committee.

Cau-New Zealand blame.them*