CREDIT AND CONFIDENCE

Hawera Star, Volume LIII, 26 August 1933, Page 14

CREDIT AND CONFIDENCE

■DEFERRING to inflation at a fare- ... well gathering in London, Mr A. W. Mellon, .the American Ambassador, said it was impossible to carry out v'oluntarily an orderly or controlled inflation, and aL proposals to that effect were worse than useless. Inflation, its he understood it, was the expansion df the total supply of credit instruments out of proportion to the volume of bona fide productive business being carried bn at 'the time. The financial system would not absorb the now credits unless there were commercial or industrial opportunities which held out the promise of profit. When this happened there was an expansion of the total amount of credit in use, and not before; but this, needless 'to say, could not be done by artificial means or in accordance with preconceived plans.

What is needed now would seem to be not so much an increase in the

Balance in Economic Relationships

amount of credit or money available as a revival of business activity based upon a confidence that goods and services would soon be in demand, and that a state of balance would again be achieved in the various economic relationships between groups of individuals with something to buy and something to sell to each other. When that would be he did not know, but he had lived through similar crises in the seventies and the nineties, when he heard predictions of disaster just as at present, and when he saw such predictions followed in the United States by a speedy and complete recovery. The day of miracles might bo over, perhaps; but where America was concerning many things were possible that could not be done elsewhere. Certainly one would be very rash indeed to disbelieve in the future of a country fin possession of 'the territory, the climate, the Taw materials, and the industrious population which went to make up the United States.