THE MONETARY SYSTEM

Evening Post, Volume CXVII, Issue 125, 29 May 1934, Page 13

THE MONETARY SYSTEM

(To the Editor.)

Sir,—The letter by "Ex-Bank Officer" on the Central Bank, which appeared in your correspondence column on Jtfay 24, expresses some- doubt as to whether the Central Bank will be able to operate to the economic advantage of the people of this Dominion. It is therefore instructive to view the report of the Economic Crisis Committee set up by the Southampton Chamber of Commerce; in regard to this particular phase of the root causes of the calamitous depression. In section 12. of the reportj the committee states as follows: —"Returning to the fundamental defect of the financial system, it'is necessary to restate that under the existing system, the community,.in any industrial country finds itself-.with an ■ deficiency of purchasing vpower to meet costs carried forward' into the prices of_ its production.! We;:submit that this defect in the financial system, in regard to the methods, ;ftof. costing adopted, in conjunction with the methods employed in''issuing and recalling money, supply, the arbitrary limitation of the quantity of money arid progress in technical development furnish- a complete explanation of the world-wide economic depression in all its, phases. Here we have a logical ■explanation of the international situa'tion':.which has arisen. In the same 'way ;these root causes account for tho existence of the problem now represented ;lby unemployment, for the cal-amitous-fall in prices, particularly of primary" commodities, for the wholesale bankruptcies, for the increased poverty as nations become wealthier |-iii-.their ability to produce, and many other symptoms of a diseased body economic.

the control of financial policy must carry with it the control of >all economic activity, it would seem that.;the. powers of Government must pass into the hands of the most powerful, financial group as financial power becomes centralised internationally.^ That this is by no means an unlikely result is plain from the proposals being>put forward for the centralisation^ of national central banks undeT an international financial institution. It is further suggested that national banks should be made, completely independent of control by national governments so that any such ,centralised world hierarchy of finance would- form a world Government with complete' power over communities. We view. the progress towards such a state of affairs with alarm.

"Meanwhile we are witnessing the bitter economic struggle for markets between nations of varying standards of living. Nations with the higher standards' find themselves fighting a losing battle, and they are. obliged to counter the effects in the political field. Thus we see countries arming in the face of a world desire for peace, and scheming,.for securing a balance of power with other nations. So the situation develops towards the culmination of the economic struggle among nations, namely, war. There is no need to stress the grave consequences which would result from such a conflict.

"Another result from continuing to operate a fundamentally faulty monetary system must eventually be its complete breakdown. Such a breakdown might bring about the collapse of the^ entire economic structure upon which our civilisation rests."

In section 3, par. 4 of the report we read: "Money being merely a vehicle for the credit'of the community, and the power which. the control of money carries with it being nothing less than the control of the entire economic life of the nation, it is desirable that the administration of financial policy should be. vested in a national authority directly, responsible to the Sovereign and his people."—We are, etc., ...

THE DOUGLAS SOCIAL CREDIT MOVEMENT OF N.Z.