CORRESPONDENCE

Evening Star, Issue 22275, 28 February 1936, Page 14

CORRESPONDENCE

THE MONEY CIRCLE. ro THE EDITOR. Sir, —It is rather unfortunate for the supporters of Douglas that they have not a more able advocate than your correspondent “ A.” He is so impetuous and infatuated with one idea that he does not give himself time to try and understand his opponent’s views. In none of my letters have I disputed that the banks do not supply money. In my first letter 1 began by saying, “ 1 A ’ takes up the attitude of most of the Douglasites—i.e., he is prepared to discuss anything relating to money with the exception of whether it has value in itself. It is on this point that money has value—exchange value—that Douglas crashes.” If “ A ” had given himself time to examine the above statement he would have seen it was on this point that I differed from him. Such being the case, I outlined what money was and how it varied in value. “A ” has not refuted my statements, but has continually repeated that financial .“ experts ” have passed certain opinions on money that differed from my views. Now, what are the views of- one of these experts, quoted so often by our Douglas friends P Mr MTCenna, the one used most, said to the shareholders of the Midland Bank in January, 1925, “ I understand by money all currency in circulation, together with bank deposits drawablo by cheque, which in the aggregate represent the purchasing power of the people. By far the larger part of money consists" of bank deposits.” Speaking of value he said: “Price level is dependent upon the quantity of money, tne rata at which it is "expended, and the amount of goods and services available for purchase. The quantity of money is thus one of the three principal factors determining the price level. And it follows that whatever contracts the quantity of money is to that extent determining its value.” Now, what is the substance of these quotations? (1) Mr M'Kenna obviously recognises that there are various types of money in circulation, legal tender money, token moneysilver and copper coins—credit money —drafts, cheques, notes, etc. He also, recognises that money has value. Furthermore, that its value varies according to whatever controls the quan- , tity of “ money.” “ A.” will now see why I outlined money and value. 1 had not overlooked Mr M'Kenna’s statements. Seeing that we have Mr M'Kenna’s views on money, it will be as well to have Major Douglas’s view. He says; “ Money is nothing whatever but a ticket system, which has nothing whatever to do with all those abstract descriptions of it, such as a medium of exchange or a storehouse of value, or any of the other things. It is' a ticket system, and nothing else.” Seeing that there is a big difference of opinion as to what money really is and as to whether it has value, between Mr M'Kenna and Major Douglas, it will be as well if we take a few figures connected with the banking returns of the New Zealand hanks and see if they will prove anything. la the year 1913 the note issue was £l,674,333; 1914, £1,998,386; 1915, £2.846,277; 1916, £4,049,527; 1917, £4.410,959: 1918, £6,761,705; and 1936, £9,851,037. Taking these figures, we , find that in 1913 the £1 note was worth one sovereign, or 123 grains of • > gold. As the notes —“ tickets ” —were “ created ” and forced into circulation by the banks, the price level of goods rose, and the value of the note—“tickets” decreased. This policy of “ creating money ” has been carried on till the pound note is now worth approximately 9s 7d, or 60 grains of gold. In other words, the workers’ wages have been reduced from 100 per cent, to approximately 60 per cent, in real money. If we further “ create tickets,” is there any reason to expect that they will not continue to fall in value? I will leave your readers to judge for themselves. 'i I am not quite sure whether “ Blue- ' gum ” is serious or sarcastic. In . case ho is serious, may I inform him that Major Douglas informed the Government Monetary Committee in February, 1934, that if it wished to increase the purchasing power of New Zealand money_ it should first put up its pound to parity with sterling. I just mention this, seeing that “ Bluegum ” is evidently a Douglas supporter. I might also mention in pr.'-imr that I believe, the major would be a most disappointed man if the exchange were taken off and the pound brought to parity with sterling. If it was done it would have just the opposite effect to “ creating ” more new “tickets.” Perhaps “A.”, and “Bluegum” will think over, this, —I am, etc., . C. M. Moss. February 26. R.S.A., POLITICS, AND APPOINTMENTS, TO THE EDITOR. Sir,—lt seems to me that the fairest way to settle the allegations made by the Plumbers’ Union and incidentally mentioned by “Sniper” would be by the exhaustive inquiry which that writer suggests. Cross talk by the contending parties consists perhaps mostly of hearsay, and does not produce the finality which a searching inquiry is sure to do. Mr MacManus and the party which he sponsors must realise that a grave doubt still exists, and is now assuming a deal of credence, / and this may assist in degrading the dignity of the council as referred to and feared by these gentlemen. The inquiry suggestion was the star item in “ Sniper’s ” letter, but perhaps he is over-optimistic if . he expects a burst of enthusiasm in that regard from Mr MacManus or the Labour Party. The addition of the ex-soldier consideration to the agenda is an excellent and timely one. If Mr MacManus has any doubts about this, I can only ■ advise him to try one section on any tramcar platform, where be will probably hear the latest evidence of the antisoldier trend. It is becoming ■ more evident day by day that the ex-soldiers’ greatest need is direct representation in politics. The old slogan, “Be prepared.” though it may not make much appeal to Cr Batchelor, the no mor* war troupe, or their comrades in disarmament, must eventually become th* guiding influence with returned soldiers, —I am, etc., ■ . Digger. ■ February 26