POLITICAL PARTIES AND INFLATION.

Evening Star, Issue 22195, 25 November 1935, Page 13

POLITICAL PARTIES AND INFLATION.

TO THE EDITOR. Sir—Mr D. Copland, Jun., states that Mr Downie Stewart admitted to him that thousands have been cheated out of a large percentage of the “ value ” of their insurance policies by the monetary policy inflicted on us by our financial controllers., You have a footnote to Mr Copland’s letter saying that Mr Stewart does not recognise the above as an answer given by him to Mr Copland, and you then proceed to give a brief result of the effect of the German inflation policy. What object do you have in putting such a footnote to Mr Copland’s letter? Is it to frighten the electors, or to educate them to the dangers of inflation? Seeing that the election is being fought between three parties, two of which stand for inflation and one against it, perhaps it will be as well if we just clear the atmosphere a little in connection with inflation. In doing so it will be as well to point out that our currency is inflated to the extent of apuioximately 50 per cent, against real

jnoney—gold—and to approximately 25 per cent, against sterling. This has not been done by the Labour Party, but by Reform and the Government party, a party which both you and the Hon. Downie Stewart still support. Now what have been the effects of the inflation policy carried out to this point? The answer is well known-sui-cides, murders, bankruptcies, unemployment, and starvation for many thou sands of our people. So far as Mr Stewart not recognising Mr Copland s statement, it does not prove it wrong. The statement is a positive fact, and no one knows more about the truth of it than Mr Stewart. Seeing that the Government which Mr Stewart and yourself are supporting has adopted the principle of a managed currency and inflation, it will be intereting to know why you object to a further extension of the principle being applied by the Labour Party in its “ guaranteed price policy.” To the person who does not understand finance and politics it will appear very peculiar. As you have not given any assistance to your readers on the matter, I will explain your footnote to the result of the German policy. To do so it will be as well to point out that there were wage workers, interest drawers, and rent drawers in Germany just as there are in New Zealand. r |'he result of the war increased workers “ money ” wages, interest, and rents just as in New Zealand. At the end of the war the German people found themselves with inflated land values, property values, and increased 1 burdens due to high interest rates and rents, etc. Also, with thousands of their workers disabled, etc., as the result of the war, the policy adopted to deal with the problem was similar to that adopted in New Zealand—i.e., a policy to buy property and land values, etc., to their proper value relative to world money values’. The difference between the German and Now Zealand policies at this juncture is: New Zealand has inflated her currency to a point where it has punished the workers and strengthened the rent-drawing class note rent, not interest —while Germany has wiped out the rent-drawing class to a large extent,» and is, as stated by Mr Copland, one of the best equipped nations in the world for the production of goods. Let us assume that Labour is returned and it inflates the currency by an increase in the “ legal tender issue, of notes,” as suggested by Mr J. Munro, M.P., to the extent of £IOO,000,000. It becomes obvious that we should have approximately 11 times as much legal tender money to do the internal exchanges as at present. On the assumption that goods to be exchanged in New Zealand were mat increased in volume, it will immediately be seen that prices would rise as currency was increased, and would proximately rise 11 times to what they are at present when the currency had reached the point of an extra £IOO,000,000. The relief workers, wage workers, and the manufacturers and working farmers would al require increased money due to rising prices. The mortgagee, the debenture-holder, and persons living on contracts fixed for a specified time would suffer as in Germany. An example will show this clearly. Take a person carrying a mortgage of, say, £2,000, with interest to pay, say, of £IOO a year, and an income of, say, £SOO, and with a mortgage that he had the option to pay off at any time. With currency inflated, as suggested by Mr Munro, M.P., A’s income would rise from £SOO to £5,500. It will immediately be seen that with such an income he would have little difficulty in paying off his mortgage and clearing off the debt on his land or property. The mortgagee receiving his £2.000 would find it reduced f in value to approximately £2OO. The above example will apply in general to explain Labour’s policy if carried out as suggested by Mr Munro. The example also explains your footnote. The rent drawing class were the greatest sufferers financially, and the working class and the women and children during the period of inflation. If the people believe in the inhuman principle of an eye for an eye and a tooth for a tooth they will be quite justified m supporting the Labour Party. Its policy, as before stated, is in principle the same as that which has been earned out by the Government. It is left to the people to decide on Wednesday whether they are prepared to extend the principle, or whether they will return men and women who will endeavour to place the currency on such a foundation that contracts, and agreements can be fulfilled ami honourably met. The writer sincerely trusts that the electors will seriously consider the

above. If they consider a wrong can be rectified by committing a greater wrong then they will be justified in supporting a further inflation of the currency. So far as the writer is concerned he is convinced, "thtifc whatever is morally wrong is economically _ unsound. _He knows from life’s experience that it is not the successful robber, whether he be termed a capitalist or a worker, that is the wealthy man. He knows that the only-men who count in the world and will live to be remembered are Men with strong minds, great hearts, Pure faith, and ready hands, Men whom the lust or office does not kill, Men whom the spoil of office cannot Men wfio possess opinions and a will. Men who have honour, men who will not lie. In conclusion, sir, allow me to say that if Labour should be returned with a majority to carry out its guaranteed price' policy, and should do so, you must take a great amount of the responsibility for the disaster that must follow. You have consistently followed the line that caused J. B. Lowell to write of newspaper editors the following - lines: — I du believe in bein’ this Or that, ez it may happen, One way or t’other, handiest is To ketch the people nappin’. It ain’t by princerplea nor men My preudent course is steadied— I scent which pays the best, an’ then Go into it bald-headed. . You, sir, have consistently emphasised that there are only two parties. As stated, there are three. The Democrats have a policy, and if returned, in sufficient strength to carry it out it will be in the best interest of the country. Whether they would carry it out the writer must say only time would tell. At any rate, we can only take a party s policy and trust to the honesty of men to cany out what they say. It behoves the electors to seriously think before they register their vote on Wednesday next. —I am, etc., C. M. Moss. November 25. , [We are unable to see merits in a policy of more borrowing.—Ed. E.S.J MR MUNRO’S SPEECH—REPORT PROTESTED AGAINST. TO THE EDITOR. Sir, —As one of those present at Mr Munro’s meeting at Woodhaugh I wish, to protest against the way his speech has been misrepresented in the Press. No exception was taken to what Mr Munro did say by the large number of electors present, and the way his. remarks have , been misconstrued by the reporter has only caused resentment amongst those who were present at the meeting, and made them more determined than ever to support Mr Munro on polling day. The reporter forgot to mention that Mr Munro’s meeting was a large and enthusiastic one, there being over 50 electors present, a record for Woodhaugh.—l am, etc., Fair Flay. November 25.