MINORITY REPORT

Evening Post, Volume CXVIII, Issue 65, 14 September 1934, Page 10

MINORITY REPORT

MONEY AND PRODUCTION

PROBLEM OF ABUNDANCE

A memorandum,of dissent is signed by the Labour members on the Committee and by Captain Rushworth. They state that the non-monetary factors in the depression are a result of the monetary system. They cite the Southampton and London Chambers of Commerce and the World Economic Conference as stating definitely that the cause of tho depression was monetary. They say that since the Eoyal Mint ceased manufacturing the money required, a fundamental change has come over the monetary system in that money can now be withdrawn from circulation.

Because New Zealand operates on a sterling base the Dominion is subject to the policy of tho Bank of England and under the control of the Bank of International Settlements. They allege that tho asociated banks and now the Reservo Bank are tho instruments of the Bank of England. In stating that banks create money and also, vast debts, tho four signatories contend that when advances bring money into circulation it- should not create a debt. The amount of money should represent the amount of real wealth.

"Progress towards greater total production is retarded because consumer buying does not keep pace with production," states the dissentients. "Complote reconstruction of the monetary system of the Dominion is essential. "1. Unity of control of the volume of currency and credit is necessary, and is too important an element of sovereignty to farm out to private enterprise. The State must be the solo creator of currency and financial credit. All element of private control in the Reserve- Bank, and all statutory 'subjection of it to the London sterling policy, should be eliminated. No change is recommended in respect of savings banks arid other institutions not having power to create credit.

"2. Creditishould be created by the Stato to close tho gap between production and consumption arising from shortage of purchasing power in tho hands of consumers under the present system. Pensioners of every . description, unemployed and incapacitated citizens, producers in so far as their prices do not realise pro-depression values, aro types of consumers whoso claims might be considered under this head.

"3. Financial policy should aim at stabilising the general wholesale pricelevel of Now Zealand-produced com-

modilies. Tho amount of money in circulation need then bo limited only by tho volume of consumable goods. "4. The amount of credit created for capital, works, the amount created for trading purposes, tho amount created for consumers, tho total weekly debits to customers' accounts in trading banks, tho total taxation levied, aro elements determining the circulation of money, anil with unity of control vested in tho State, can bo so observed and govorned as to avoid deflation or inflation, boom or slump, and sccuro steady business activity.

"!3. It may not lie cany in certain cxtiemo onsen to maintain stability of internal prico level, and at the samo timo maintain parity of exchange with countries whoso price level is fluctuating. In such eases stability of our internal price level should be preferred, and, if exceptional difficulty is experienced tho exchange should bo rationed, giving preference to essentials."