MONEY INQUIRY

Evening Star, Issue 21655, 26 February 1934, Page 11

MONEY INQUIRY

SPECIAL MEETING OF COMMITTEE MAJOR DOUGLAS HEARD : MONETISING OF " CONGEALED RESERVES ” [Per United Press Association.] WELLINGTONj February 21. ... A special meeting of the Parliamentary Monetary Committee was held, today, to hear evidence ,Ifoni . Major Douglas, the founder.- of the! Douglas Credit Movement. When ho was first invited.to appear before the committee with a proposal or definite scheme ; which might be made applicable to New Zealand, Major Douglas pointed out that, owing to inescapable commitments, be was obliged to leave Wellington at an early date, but suggested that a judicial inquiry into the current, monetary system on behalf of the New Zealand Government might suitably he held in London. He asked whether the committee did not wish to comment on or investigate the current working of the financial system, and, in- reply,, it was, stated that - the committee was prepared to hold a special meeting in order that it might hear Major Douglas', and/it ; was also pointed out that it was -felt that any inquiry into the monetary system applicable Id New Zealand should be 'held m tiie .dominion. The committee- further stated that it could not approach ■ its work with other than an open mind, and obviously could not prejudge any issue, nor at this juncture make - any statement in respect to the existing financial monetary system orv any; proposed system while the matter, was -. .sub judice; Mr J'. A.. Nash,- who. presided,- -welcomed Major Douglas as,a distinguished visitor to the dominion and' one who 1 had taken a keen interest', in. monetary schemes. He said that if necessary the committee would probably he prepared to hear Major - Douglas at greater length in. any other part of the country than-might be possible at the present juncture. That,; however, - was entirely a matter for Major Douglas to decide.

Major Douglas’s proposals are contained in a letter which he wrote when he agreed to appear before'the committee. He set out what he considered were the defects in the present industrial, social, and economic System,: and attached proposals .for the consideration of the committee. The letter stated, however, that these proposal® did ; not deal comprehensively with defects .which, in his opinion, resulted primarily from a radically defective conception of the proper function and ownership of financial credit. His proposals included limiting the. banks to, paying a dividend of not more, than 6 per cent, on the subscribed capital; preventing a hank:from increasing its. capital in such a mariner as to affect the gross amount of the dividerid distributed in respect to business; carried on in New Zealand, except with the; consent and through the. agency, of a legal enactment of the Legislature; every, bank to make an exact return of its assets within three months of the enactment of the proposals; where the assets are the real estate, buildings, furniture. fittingSj appliances, etc., .of. the bank, and it is found that their value on the hooks for balance-sheet purposes islower than the market value, the difference shall he transferred to an account called the suspense account No. 1, and all profits earned from any source over and above the amount necessary to pay a. 6' per cent, dividend shall be; transferred to a suspense account No. ; 2. The first account, is to be applied to overdraft reductions, and the secorid to the reduction or reinhursement of interest paid on overdrafts. He proposed _ a scheme on a similar basis regarding insurance companies. The monetising of the concealed reserves within_ the existing financial system with a view to improving. the overdraft of the community on a pro rata basis, Major Douglas argued, would lead to increased, purchasing power apd unemployment would be eased. ■

The hearing was very lengthy, questions being asked for the purpose of obtaining in detail how members of the public would benefit from the proposals which Major Douglas made, after the groundwork had been prepared. [The Government recently set up a monetary committee to inquire along the lines as set mit in the following order of reference: —“ To inquire into the monetary systems or standards which have been advocated as preferable to our present system,-and. having regard to the nature of the trade and industry of the dominion, Our economic relationship with Great Britain, with other parts of the British Empire, and with, foreign countries, ; and generally all other relevant factors, to report upon such proposed systems or standards, with particular' reference to their examination or adoption by other countries, their practicability, and the probability of their adoption promoting the development of -industry, and the welfare of the people of New Zealand.” The committee invites those interested 'to place before it their proposals for changes in, improvement or alternatives

to the present monetary system of’the dominion.; Those desiring to put forward proposals are requested to make application to the secretary. Monetary Committee, Parliament Buildings, Wellington, and enclose a concise outline of their proposals for rihe.; pre'liniinary consideration of the'committee. _ Those who wish to appear , personally -in support of their' written statement should indicate accordingly, and they wilt be notified later as to when and where their evidence will be heard by the committee.]