NEXT WAR LOAN

Gisborne Herald, Volume LXX, Issue 21093, 13 May 1943, Page 4

NEXT WAR LOAN

COMMITTEE SET UP

APPEALS TO PUBLIC

PLAIN TALKING URGED

(P.A.'i WELLINGTON, May 12. A national war loan committee has been formed to deal with the next New Zealand Government war loan. The committee consists of the acting So verb or of the Reserve Bank, Mr. W. F. L. Ward, the Secretary to the Treasury, Mr. B. C- Ashwin, the chairman of the National Savings Committee, Mr. I'. N. Smallwood, the president of the Federation of Labour, the Hon. A. McLagan. the Undersecretary to the Prime Minister, Mr. ,J. Thorn. M.P., the general manager of the Bank of Now Zealand, Mr.. 11. R. I-I. Chalmers, the chairman of the Associated Banks, Mr P. R. M. Ilanna. the Director-General of the Post Office, Mr. J. G. Young, the president of the Associated Chambers of Commerce (Auckland), Mr. N. B. Spencer, the Mayor of Masterton and chairman of tlie Municipal Association. Mr. T. Jordan, the chairman of the Counties' Association. Mr. W. Morrisdn, the chairman of the Life Offices Association, Mr. W. T. Ikin, the chairman of the Fire and Accident Underwriters’ Association, Mr. FI. G. Wiley, the chairman of the Newspaper Proprietors’ Association, Mr. C. W. Earle, the chairman of the Stock Exchange Association of New Zealand. Mr. A. Hamilton, the vice-president of the Associated Chambers of Commerce. Mr. S. Paterson, and the president of the New Zealand Farmers' Union, Mr. W. W. Mulholland.

Ample Money About

The deputy governor of the Reserve Bank. Mr. Fussell, at the first, meeting of the committee, stressed the need for raising money from the public and not from credit expansion. The success or failure of the loan would depend on the decision of the people; and the public was entitled to a plain arid frank explanation of the reasons. Their decision would be guided by their knowing the real truth about their country’s need of their help. “There is now much more than enough spendable money in circulation "to enable the people of this country to purchase the goods and services becoming available, from day to day,” he said. “According to the bank’s calculations, the supply .of spendable money, riot counting deposits in the Post Office, Savings Bank, increased from £54,000,000 at the outbreak of war to over £120,000,•• 000 now.” ,

Mr. Fussell said that this was more than a 100 per cent increase, and it would be idle to suggest that the volume of civil goods and services m the country had also more than doubled. On the contrary, civil goods and services had been very heavily reduced. “That is just what we all expect, to happen in war time,” he saia, ‘ because so much of the country’s productive capacity, and our imports, too, have to a very great extent, been switched over, to another kind oi goods and services—not for civil consumption but for enemy consumption. Doing this uses, up a large share ot our energies arid thoughts, a large share of our materials and a large share of our spending power.

Dangers of Inflation “To raise all the money from the taxation of income would be unjust, because incomes alone do not measure the ability to help. Sonic peoples income! is large in relation to their available cash. Some peoples’ cash holdings are large in relation to thenincomes. Loans from the public provide a means of tapping that voluntary source of available funds which is not reached by income taxation.. “The taking of deliberate steps to make large artificial additions to the already teeming money supply would only liarm the people of New' Zealand. Money that is already in existence is competing strongly for. the restricted supply of goods. To issue new credit for war purposes as a substitute for publicly subscribed war loans would set the price stabilisation organisation an impossible task. It would simply lead to the reduced purchasing power of wages and of all family incomes and cut down the real value of hard-won savings. And if, as has already happened in some countries, the pressure of prices becomes too great, the dam bursts lind an uncontrollable deluge follows.” , „ Mr Fussell added that if there was not enough money In circulation to do the job required of it, there was a case ‘ for issuing more—but not otherwise. “Inflation represents the result of trying to get something for nothing on a large scale. AS the dangers of overflow money are known it is intended to- do all that is humanly possible to protect the people of New Zealand from its consequences. If all support the lean according to their ability to do so, their contributions will, in the aggregate. carry the loan to victory and. at the same time, help to build a rampart of stability against inflation.”