LABOUR PARTY'S PLAN ROTORUA SEAT

Evening Post, Volume CXX, Issue 116, 12 November 1935, Page 6

LABOUR PARTY'S PLAN

ROTORUA SEAT

CRITICISM BY MR. DOWNIE STEWART

'"BENT ON INFLATION"

(By Telegraph—Press Association.) j DUNEDIN, November 11. j The Hon. W. Downie Stewart open-! Ed his campaign for the Dunedin West ] seat in the Knox Church Hall tonight I before a large attendance. In the course of his address he trenchantly criticised the Labour Party's financial policy, and said he wished to say something about the financial proposals put forward by Mr. M. J. Savage. "Mr. Savage says his party will create a national credit authority to provide all the money required," said Mr. Stewart. "Now, it is very important to note that in the first place he says this money will not be raised by taxation, which iii his opinion is already too high, and that further taxation is out of the question. In the next place he says a Labour Government will not borrow because our debt is already too big and has reached unmanageable proportions. What other means are left to him to raise money? Mr. Savage says this national credit authority will provide a money service for all the currency and credit required. Now, what does this mean if.there is to be neither taxation nor borrowing? Mr. Savage has repeatedly said that he wants State control of currency and credit, which means, in other words, a politically-controlled note issue, but the creation of money and Reserve Bank credit at the call of the Government of the day is by far the most arbitrary and unjust mode of taxation Chat can be conceived. The more money created under this scheme the higher will unemployment become, but in order to try to reassure those electors who have some knowledge of where this road leads to, Mr. Savage then makes "the astonishing statement "that the money system would be operated the same as it is' operated'now—by people who know something of the business of banking. These are his actual words, but obviously he is speaking with two voices. He says things will carry on as they are, and yet they will not carry on as they are. Apparently we are to have political control and yet it will not be political control, but he must make his choice. He must have one or the other. If he has political control he knows the electors will be rightly alarmed; if he has non-political control things will go on as they are and his vision of unlimited money without taxation and without borrowing fades out of existence. "This very question was fought out to the death in Australia during the depression when Messrs. Theodore and Lang were clamouring for political control of currency and credit, and the people of Australia turned them down," said Mr. Stewart. "The Federal Labour caucus was demanding that the Commonwealth Bank should be required to create sufficient credit to finance requirements of the Government for all services covered by Parliamentary appropriations and a loan programme and other items in the same way as the Labour Party proposes here._ The Prime Minister, Mr. J. H. Scullin, whowas in London, cabled to say that A 6 create credit for the amount required for loan work was unsound—that the Government could not deliberately coerce the banks—and that all the talk about creating credit and inflation was most damaging. "DISTRESS AND MISERY." "If Mr. Savage will neither tax nor borrow he can only expand the cvr T rency. > In other words, however, he may wrap up his ideas in polite phrases, he is bent on inflation, but an increase by the Government in currency and credit cannot increase spending power as measured in goods. It cannot increase the real income of the country unless profitable production is developed. Every country that has adopted these alluring schemes has sooner or later had to extricate itself alter great distress and misery. In fact, history is strewn with the wrecks of. just this type of political control of money. We have a Reserve Bank whose duty it is to control credit and currency apart from politics and apart I from profits, for its profits go to the people of New Zealand with the exception of a small dividend. Its duty is to consult with the Government on major questions of financial policy, just as the Bank of England keeps in touch with, but is controlled by, the British Treasury; but if the Labour Party wishes to put our Reserve Bank under political control for its own purposes, then I am opposed it it." Referring to Dr. McMillan's remarks that it would not be possible for a Labour Government to ruin the Savings Bank, as happened in New South Wales, because the Government "had already spent the savings that people have in the Government Savings Bank," Mr. Stewart stated that from the fact that savings bank deposits were being turned over at the rate of over £20,000,000 per annum, it was easy to imagine what would happen if depositors lost confidence in the financial administration. Obviously no fresh deposits would be made, and there would be such a run on withdrawals that a bank like that of New South Wales would have to close its doors. If a Labour Government taking office attempted to find all the millions required to finance guaranteed prices and other fanciful schemes put forward on bank credit, there was not the slighest doubt but that confidence would be destroyed. "I am also curious to know whether the scheme of the Labour Party for issuing credit and currency without interest means that they will no longer pay interest on deposits in the Savings Bank. If they have a new way of finance, why pay interest unnecessarily on savings bank deposits" concluded Mr. Stewart.

The candidate was accorded a vote of thanks.

CANDIDATE WITHDRAWS

(By Telegraph—Press Association.)

AUCKLAND, November 11. At the conclusion of an address delivered on the eve of nomination day Mr. D. R. S. Campbell, who has been, announced as the Country Party candidate for Rotorua, announced his withdrawal from the contest. Mr Campbell said he wished to avoid splitting votes with other candidates who espoused a similar policy to that of the Country Party.