THE MONEY CIRCLE.

Evening Star, Issue 22261, 12 February 1936, Page 6

THE MONEY CIRCLE.

TO TUB EDITOR. Sir, —Most people agree that the money question is at the bottom of our troubles. Many consider it is too complicated ana too deep tor them ever to understand Maybe there is a nigger m the woodpne that requires filming, but L can assure your readers that once they have found him they will understand why we have big armies •and navies and why tiro nations ot the world are arming at cue present time, t'erhaps if we Uirow a jutle light on the money question we shall find tuo little man. To meet the request of “A ” and Mr Harrison that we deal with fundamentals it will be necessary to state what money really is. “Money is a class of property or commodity that is universally accented as a medium ot exciuuigo, a score of value, a standard of value, and « measure ot value.'’ 4ue commodity recognised and used lor the above purpose uy civilised nations is gold. rill other forms ol money, such us bank notes, drafts, cheques, debentures, bills ot exchange, treasury notes, silver, copper, nickel, etc., are forms ot “ credit money.’’ They can and have at times been declared, “legal tender money” in many countries, and they function as a means of exchange, but their value will always be relative to “gold,” which is the only recognised universal and intrinsic money. The value of gold for international purposes is relative to the “ labour power goods-—that loz of 11-12 fine gold will exchange for in the London market. (A point of importance’ is that the value of gold will vary according to the price paid for labour, and also according to the productiveness of labour, also whether gold is under control and restraint.) To illustrate this point, in England the paper pound is worth approximately 74 grains of gold at present; it will purchase approximately the same amount of labour power that 123 grains or one sovereign would purchase in 1914. In New Zealand the Reserve Rank note is worth approximately CO grains of gold, and wilt purchase the same amount of labour power it took a sovereign in 1914 to purchase. It will be seen tnat gold has increased in value in terms of labour power in New Zealand by approximately 100 per cent, since (1914, the reason for this being that “ new credit money ” was forced into -circulation and declared “legal tender money.” It is only through the Government restricting the right of the individual to. put into circulation money and to buy and sell gold that money has been raised in value relative to labour power. If our note issue had been convertible on demand to gold the sellers or issuers of notes could not have raised the value of money. In other words, they could not tax industry and labour. The question that arises is, what are we to do to remedy the evils that have arisen and to case the burden that has been placed on the working class? “A ” supports Major Douglas’s suggestion of the issue of “ new money.” An issue of new money, as will be seen from the statements made earlier, would result in a further fall in the value of our currency relative to sterling and to gold. In other words,! the internal price level of goods must rise, meaning an extra tax on New Zealand labour to the benefit of the holders of sterling assets and to the holders of gold. The Douglas policy, put in operation in New Zealand, would be a good thing for the British financier, but a very bad thing for the’New Zealand worker. The policy will be condemned by all who understand the money system, and who have the interests of the people of New Zealand at heart. Those who wish to enslave the workers to British finance will naturally support ft. During the last few weeks the Prime Minister (Mr Savage) has stated we have increased the volume of production during the last 10 years by 100 per cent. At the present time we have approximately 100 per cent, more notes in circulation than we had a few years ago. While we have doubled the volume of production and have also doubled the legal tender money, the value of our money has fallen in terms of sterling and in terms of real money, gold. AVhy? The reason is that our legislators decided < to reduce the standard of the value of our money against sterling. The result was that oil all the outstanding debts we had to pay an additional 25 per cent. The £160,000,000 of national debt held in London was raised in effect to £200,000,000, on which we now pay interest. The Harbour Board’s interest since the raising of the exchange has been increased by approximately £41,000. All interest is paid in goods, thus the increase in the volume of production of goods went to pay the interest in Britain and was enjoyed there at the expense of our New Zealand workers. Tne quickest remedy for our troubles does not lie in increasing the volume of production and finding further markets, nr in increasing the volume of new legal tender credit money, but iu increasing the value of our currency by taking off the exchange, and thus keeping more goods in our own country for our own people —in other words, increasing the value of our currency against sterling and gold. in conclusion, a brief summary of money is;—All money, whatever it is composed of, is the product of labour, •therefore it is property and has value in itself. Its value in labour power may be small, as in paper, or it may be high, as in gold. Its value as money both in New Zealand and in other countries will depend entirely on whether it can be bought and sold by anyone, and whether the commodity used as money can be put in circulation as money by anyone, or whether it is under monopoly control. To illustrate, owing to the note issue being in the hands of the Reserve Bank the pound note will exchange for 160 copies of the ‘ Evening Star.’ Both consist of paper. If anyone was allowed to put into circulation paper pound notes, the value of the pound note as money would soon fall to the cost of the labour to produce the paper and to print it, and many notes would have to be given for a copy of the ‘ Evening Star.’ If, on the other hand, the pound note was convertible to gold on demand, and the people bad the right to free coinage of gold, then the pound note as money could not be manipulated and used as a means of taxation on labour, uhen a pound note was exchanged for boots it would be a true exchange of labour power for labour power. In other words, it would have cost the same amount for labour to produce the gold that the' note could be converted to, as it had cost to produce the boots. Thus the issues of currency could not rob the producer of goods through the manipulation of the currency. One of the first things that should he done by our Government is to return to parity with sterling and make the currency convertible. Until this is done we are in the hands of the British financier, who will, ami can, tax the shirt off the back of tlie New Zealand worker without his knowing how it is done. The sooner the people realise what is behind the British Imperial

* policy the better. It is to be hoped that the Government will get a different . class of “expert opinion” on the money question than the last Government, otherwise New Zealand will soon be a land of slaves to British capital. One wonders will our Government be able to deal with the problem. Time alone will tell.—l am, etc., C. M. Moss. February 10.