SOCIALISM AND MONEY

Grey River Argus, 7 August 1937, Page 2

SOCIALISM AND MONEY

rn.i [Wm. L. Robertson, Hokitika] “A modern community is not like y 1 to the interests of financiers and 1 without regard to their effect upon the rest of the. popula ion When thi<; is the case, it is unwise t financiers to the WS Rus ”" ,T / eo ° d ”X,!!Taes r "i? ta the atove “/.SUU Sr« ? s » «— ■ lai Socialist proposition. The public control of the monetary system . nrimarv urgency m socialist theory. The Socialist state must be £ master of finance; hence as G. D H Cole has emphaised, the i tionalisation of banking must be the forefront of the policy of any government which seriously means to advance towards Socialism. There is no denying that capitalism the profit motive dominates banking practice. This is admitted indeed by the bankers themselves. For example, at the last companj meeting of Lloyd’s Bank (one of England’s Big Five), the chairman of directors Lord Wardington, said: A banker will decide whether he will St or withhold a credit primarily on the grounds of its safety and fiquidity -It is only, in a secondary wav that he is influenced by conjecures as to lhe effect of his actions on | “e oranonfic lire or “ hv doubts as to whether any alterna ?ive action would result in greater sodal solo- It is inevitable that this Sh To ld pJt “ bluntly, it is inevitable, in a capitalist world, that in the sphere of finance the interests of a S, privileged i of shareholders, should take preced ence over the interests of the great ] mass of the community. H°w revealing is this admission; h °w pearly i shows the great fault o te P system! Fortunately, however, there are many who are coming to ques “on the authority of Lord Wardington and his friends. The . rebellion ( against the tyranny of individualism is becoming increasingly manifest. Because the question of money is so basic in Socialist thought it is essential that it be thoroughly understood. Moreover, as New z^la nd : day has a Socialist Government, it is . highly desirable to be acquainted , with the precise monetary views of its leaders. These views were admlraffiy put by Mr H. E. Holland tee late leader of the New Zea and Labour Party, in an address in 1932 to the House of Representatives. This speech was praised at the time by M p Fraser, M.P., who described it as beiite “the best analysis and exposithe credit and. currency system that we have had in the House. It has been published by the LabourParty in pamphlet form. I P r °P°® e in this and in my next essay, to indl cate bv quotations from this address the nature of official Socialist thought in New Zealand upon the money question. „ t ■ Mr Holland was speaking to a Labour motion of no-confidence m the Government. The motion, after summarising the shortcomings of the Administration in dealing with the financial and industrial depression, concluded with the indictment: “They (the Government) have failed to give consideration to proposals for dealing with the present financial position advanced from time to time by the Labour Party and others, including a ■ State Central Bank, with complete control of banking, currency and credit.” Mr Holland had barely got. into his stride, with proposals for national recovery, when, as of course was to have been expected, someone wanted to know “where could the money come from?” Mr Polson was the interrogator, and in reply the Speaker, quoting from a well-known financial authority, suggested that a more realistic question would be “where, is , the authorisation of the community to consume its own existing and available wealth to come from? If this authorisation is to come from a power outside the control of the community, there is bound to be a difficulty.” “The object of any worth-while scheme of monetary reform,” continued Mr Holland, “should be to increase the amount of money in circulation, and to keep on increasing it. in ratio with any increase in production. That expressed the Labour Party s policy. , It was not merely the view of men on the I.abour benches. It was also the view of some of the greatest of the world’s economists. Under the existing banking laws in New Zealand there was almost unlimited power for the issue and control of currency and credit. The control by the State of the existing banking machinery must be the first step, towards effective currency reform.” After pointing out the “inherent absurdity” of “people being compelled to go without things in the midst ol natural plenty,” Mr Holland borrowed the words of another economic authority: “If wealth which is produced lavishly does not get into distribution or if production itself is kept down below our needs, of. artificial checks put upon the distribution < f products, that is not because we are under any disability of natural laws governing distribution, but only because our devices for distribution are either stupid or defective in themselves, or have been stupidly permit ted to be diverted to other than their proper distributive purposes.” The capitalist thinks in terms of ■ money, the socialist in terms of ' things This essential antagonism of Sok i recognised by Mr Holland when he pointed out. that the real wealth was in the nations capacity for production and service/ ; “Money” on the other hand, was nothing’ but a “ticket of credit for goods” Production, that is. to say, fs the’ ultimately important thing, and money serves merely to facilitate the processes ot creation and tettlliubon of useful goods. Because the life of tee nation depends upon those processes it is obvious that the control of both money and credit should be tested in the State. Once> this control had been assumed, the State “could create money m e^ ctly same way as the banks did. They ffid not propose to adopt some new < m “The new money created by the < State ” continued Mr Holland, “must ( go into the hands of those who would fne d it immediately for consumers | P oods. It must be used to finance useful labour and especially to put the , unemployed to work on undertakings of national value.” + „ 1 Mr Holland had much more to say £

on how money is created, and how 't should be controlled. I shall give an outline of what he said in my next essay.