MONETARY SYSTEM

Evening Post, Volume CXVI, Issue 96, 20 October 1933, Page 10

MONETARY SYSTEM

CHANGE PROPOSED

"HIDEOUS PRESENT CONDITIONS"

A LABOUR BILL

A reorganisation of the credit and currency system is proposed by Mr. H. G. K. Mason (Labour, Auckland Suburbs) in his National Credits and Currency Bill, which was discussed in tho Houso of Representatives today. Tho Bill provides "for the creation of credit and currency and tho distribution thereof direct to such persons and in such amounts as may be best calculated to ensure that the peoplo will be enabled to buy and sell and therefore enjoy all the goods and services which the peoplo aro capable of supplying, and to abolish tho necessity for payment of interest as a condition of such buying, selling, and enjoyment."

Moving the second reading Mr. Mason said that to the ordinary man in want money was the essential thing which would increase his consumption. Under the present system money was not used towards the enjoyment of the wealth of the world, and his Bill was designed to remove this anomaly. Under the proposals of the Bill money would lie provided for those in need, and their purchasing power would create, a demand sufficient to regain prosperity. The assessment of the needs of the people was contrary to present banking practice, but it was a humanitarian principle. Basically the problem was a moral one.- It was desirable to get away trom the competitive scramble which- brought so much suffering. The spectacle of old men on the No. 5 Scheme and boys in want of a job condemned the hideous present system and those who said that things could not bo done. The amount of money in circulation could be governed by the Government, and if there was too much money in circulation it could be adjusted by taxation. The volume of money would, be adjusted on a commodity basis. Tho matter of governingl the amount of money in circulation was no more' difficult than governing the steam pressure of a boiler. IN OTHER COUNTRIES. Mr. F. Langstone (Labour, Waimarino) said that Sweden had fixed her own internal level, and it was competent for New Zealand to do the same. Both countries had a large export trade. Under, the proposals of the Bill money was to be used as a means of distribution and an index of prices. It was ridiculous to. allow London to fix New Zealand's price level. Price was the central factor in the economic system, because price governed the existence of assets and securities. A fall in the price level did not'put goods out of existence, but it froze assets. The world was abounding with wealth which could not be distributed because of the faulty monetary system. The Bill was a step towards a co-operative commonwealth which would dispense with greed. Interest was a mortgage on future production, and under the Bill it would be dispensed with. "DIFFICULTIES IN THE WAY." Mr. B. A. Wright (Government, Wellington Suburbs) said he agreed that prices should be stable, but there were difficulties in tho way. It was unfortunate that the distributi6n of the wealth of the world was faulty, but it was not clear that the Bill would alleviate the position. The proposals for increasing the volume of currency did not appear to be sound, and they were fraught with all the dangers of inflationary schemes. "I am not in favour of throwing out dirty water until I can get clean," said Mr. Wright in commenting on the dangers of embarking on currency schemes. The supporters of tho Bill had not shown how they would get over the difficulty of export prices which could not be controlled by the. Dominion. How much money would be needed to carry out the Labour Party's guaranteed price system? The-House desired details of the proposals. It was essential that tho details should be worked out, if the Labour Party wished to win converts. "SCARECROW FOR THE ELECTORS." Tho Leader of the Opposition (Mr. M. J. Savage) said that Mr. Wright appeared to 'be trying to create a scarecrow for the . electors. Money, was for the purpose of making possible' the exchange of goods and' services. No one would say that they should use the printing presses to give more credit, for it was known that there must-be. a day of reckoning. (Hear, hear.) Production must be tho basis of anything they did. The Government had takon no steps to formulate a currency policy. "If we did not have international trade we could still live in a fertile country, having our system of currency and credit and looking after our own people," he said. There was no better foundation'for a credit and currency system than the oue outlined in the Bill; the basis was goods and services. There was a duty on every member to consider the Bill calmly and even if they did not think that the machinery provided was tho last word, they should address themselves to the main principle embodied in the Bill, that was, whether the country could keep on shaping its course aiid building the monetary system on external conditions in the first place, and upon some metallic form of currency in the second. LABOUR'S VIEWPOINT. "We aro not hove for tho purpose of saying that tho . way out of our difficulty is to increase taxation alone," said Mr. Savage. "Labour's policy today is reform in tho currency system, which is long overdue, a rearrangement of our industrial relationships, and cf our financial relationships} a rearrangement of prices, guaranteeing prices for goods and services, and guaranteeing incomes at th- same time upon tho sources over which wo have absolute control. It would bo strengthening the source of taxation.'' Mr. W. E. Barnard (Labour, Napier) deplored tho lack of Government commont on the Bill.

Mr. W. A. Veitch (Government, Wanganui) said he' would give his siAvport to the. second reading of the Bill, not that he agreed with everything in it, but because it opened up the subject of monetary policy for discussion. He considered that Parliament would be doing more for the benefit of the people if it devoted the rest of the session to a solution, on nonparty lines, of tho monetary problem. He advocated the sending of the Bill to a Committee of the House.

(Proceeding.)