Create More Wealth

Hawke's Bay Tribune, Volume XXII, Issue 152, 13 June 1932, Page 11

Create More Wealth

Farmers Union Project Not Just Inflation Infoimative Address on Currency Problems At the present time, in consequence of the serious economic conditions not only in New Zealand, but throughout the world, considerable public interest is being taken in suggested specifics which it is hoped may improve our Dominion’s prosperity. Public spirited men, obviously with the public good as their incentive, have been touring the country placing their views on currency problems before interested audiences everywhere.

Two such men, Captain F. Colbeck and Mr A. E. Robinson, both members of the Farmers’ Union, addressed u large and interested audience of settlers at the Utamauri schoolhouse on Friday afternoon last. In consequence pf the school not having the capacity to accommodate those present, the meeting was held in the open air, which, however, in no way detracted from tlie close attention which was given to the speakers by their audience. The speakers were introduced briefly by Mr R. li Talbot, president of the local branch of the Farmers’ Union, who said that Capt. Colbeck had been a member of the Farmers’ Union for 33 years, being among the first hundred to join the organisation. He had devoted a very great amount of time and thought to meeting the present crisis, which had been foreseen by the union some three years ago. and ho was looked upon as an authority on currency problems. Mr Robinson wished to place before the assembled farmers a somewhat revolutionary scheme for meeting the present acute financial position. They did not claim that this was the “last word” in currency schemes, but they did honestly believe that it, would not only meet the present difficulties and enable New Zealand to weathei tho storm, but it had the advantage of being possible of immediate application. “The speakers,” said Mr Talbot, “ask for criticism and constructive suggestions, and will be prepared to answer any questions submitted to them at the conclusion of the address.” ORTHODOX PLAN. Captain Colbeck, in opening his brief address, said that he had evolved a perfectly orthodox plan whereby our finances might have been put on a sound basis some two or three years ago. Unfortunately it had not been taken up then, and the time was now too short for its satisfactory application. We were faced with a desperately critical financial situation, and must take drastic action if New Zealand was to be saved from a world debacle which might conceivably shake civilisation.

“During this past year,” said Capt. Colbeck, -‘we have been getting low prices for our wool and butterfat, but it was quite possible that next year they will be still lower. We already have 3d per lb. for wool, and it is possible, even probable, that we may get (id per lb. for butterfat. Should this eventuate it would bo good-bye to New Zealand. We must now take drastic action —piffling things are no good.” He pointed out that prosperity was always achieved by balancing the scales between production and the means of exchange. Where the medium of exchange was deficient, as at present, we could restore the balance, eithei by reducing production, or, preferably, by increasing the medium of exchange. The scheme for effecting this would be embodied in Mr Robinson’s address. OUR TARIFFS. One thing which had helped largely to precipitate the present financial chaos in New Zealand was our tariffs. In the first place tariffs were imposed to supply revenue. In their shelter industries grew up, but these manufacturers, seeing the advantage to their businesses of high and ever higher tariffs, induced the Governments to raise them. As an instance, when tho United Party went into power, tho duty on clothing was 25 per cent.; it had now been raised to 43 per cent. This both limited the quantity of imported goods, and enabled the raising of prices of locally manufactured articles. It would become impossible to buy them, and money would cease to circulate, affecting everyone. “Imports are now decreasing rapidly, and the sales of local manufactures have also fallen off,” continued Captain Colbeck. “The only effect lias been, not increased revenue or increased local manufactures, but that tho cost of essentials has increased eighteen millions during the past year “While the value of our exported produce has fallen, so has the cost of British manufactured articles which wu take in exchange. To-day we can actually get more goods m exchange for our butter in London than ever before. The added cost when they reach us is accounted for by increased duties and distributing costs. “In spite of all these increases revenue has fallen off and unemployment has increased. As a remedy, the brightest thing which the Government can suggest is a poll tax. We have gone back in political expediency to the ideas of Julius Caesar's time, when a hut tax caused a revolution.” “The problem of unemployment is growing daily, and is being added to by the fact that 30U0 schoolboys, for whom no provision can be made, are coming on the labour market each year. Shortly the possibilities of raising funds for Government expenses and unemployment relief will be exhausted, for there will be no incomes on which to pay income tax, and no remaining wages with which to pay wages tax. WHKN FARMING PAID. “In the past, when farming paid, there were ample funds to stimulate every other industry. Qur problem, therefore, is again to bring prosperity back to primary broduction. Can we do this by increasing production ? At the present time the markets of tho world are everywhere glutted with produce which cannot be sold because people have not the money with which to buy it. In China, with vast stores of theii staple food- rice—piled up, fifteen million people are said to be starv;ng. In New Zealand I have seen fat ?iws sold of £1 a head, and people are in want of meat. In producing countries, rubber, wheat, cotton, and almost all classes of produce are being

'lumped because there is no sale for them. All over the world stores of ■stuff are being destroyed, and yet people are stalling because there is a shortage of the medium of exchange which is required to purchase them “Mr Rushworth, lecturing recently ui Auckland, described the present plethora of commodities and shortage of money aes ‘The Summer of our drscontent.’ [f this was the ‘summer’ of our discontent, God help us when, with a shortage of commodities as well as of money, we came to the winter of our discontent. If we wait to apply the remedy to the situation until the ‘winter’ conies, no means can save us. BE SERIOUS. “Do not laugh at Mr Robinson’s plan,” said Captain Oolbeck. “Sweden is already trying it, apparently with success, but strangely enough its re. suits there are never given newspaper prominence. “Financiers,” he said, “may not welcome Mr Robinson’s plan, but perhaps they fail to see that if the present crisis continues, and the public’s securities become worthless, they themselves will be ruined. “Hanks and financiers are already losing their securities. Should they attempt to call up their advances today they would be ruined. The Government is bankrupt. Only recently they had to mortgage the soldiers' settlements at C per cent to the bank, and strangely enough, had then to guarantee their own . overdraft as well.” t NEED FOR HASTE.

Mr. Robinson, a prominent member of the Auckland branch of the Farmers’ Union, said: “Things are so bud that the time in which we cun do anything is extremely short.’’

“This scheme is no new thing, for we have foreseen this crisis for some years. However, we have previouslybeen unable to interest the publie, and indeed we have been accused by Ministers of the Crown of trying to damage New Zealand’s credit by fortelling evil times to come.’’

He went on-to say that numerous authorities on finance and currency had independently evolved the same plan. To recapitulate the position briefly ho pointed out that although we had surplusses of commodities everywhere, we were apparently not overproducing, for, in spite of a vastly increased world’s population, our world production was no greater than in 1929, when everyone was prosperous and well fed. In fact our production was less by 25 per cent. In some goods production was still less—textile manufacture was down 50 per cent, and coal output down 70 per cent. “The present position,’’ he said, “is similar to that of a crowd of passengers who arrive at a railway station, only to be told by the stationmaster that only half of them can bo allowed to travel. Enquiry elicits the information that though there is ample rolling stock, and everything fa In excellent order to transport the whole company, but there is a shortage of tickets. We,’’ said Mr. Robinson, “are short of tickets —in this case pouuu notes.’’

In 1920 we had eight million notes in circulation. To-day, with a vastly greater production than iu 1920 we have slightly over live million notes in circulation. Sir Robert Gibson, of the Commonwealth Bank, Australia, recently said that his bank had control of the note issue, and it was their duty to create currency to meet the needs of increasing production.

Many other authorities were quoted by the speaker to establish the principle that the issue of notes must bear a constant relation to the volume of nroduetion, and that this could bo safely done irrespective of the reserves of gold. He quoted, also, Mr. McKenna, ex-Chancellor of the Exchequer, and now chairman of the Midland Bank of England, as saying: “I am afraid that ordinary people would not believe that banks can and do create and destroy money. Every loan or overdraft creates a deposit, and every repayment destroys it. Thus they have in their hands the fates 'of peoples. Those who control banks co'utrol Governments.

“His Holiness the Pope,’’ said the speaker, “is obviously conversant with the cause of present financial conditions, for in June last he said: ‘ln the first place it is patent that wealth has been accumulated in the hands of a despotic few. These control money and credit, and hold in their hands the soul of production, so that no one dare breathe against their will.’

NOT INFLATION. “We can create more wealth in New Zealand by putting more money into circulation,’’ said Mr. Robinson. “If money is just issued through civil servants, that will be inflation. We must avoid inflation. Our issues of notes must be based on production. “New Zealand does not live through what tho farmers spend, but it does, nevertheless, live through farmers. Farmers’ products are converted ’ into clothes, cars, and all the commodiI ties we use. A large part of our ■ population, the bulk in fact, are making their livings in handling, either farmers' products, or in distributing the imported goods purchased with farmers’ products. When imports .are blocked, many men are thrown out of employment. “In our scheme.’’ said the speaker, “it is just as easy for the Government I to issue. ■: iiirlo. mi nv as the banks.

They have tho securities and could save tho interest they now pay. Our proposals will not hurt, but will rather help the banks, for we will restore tuo value of their securities.

“Our scheme is that, irrespective of the price of our produce abroad, our Government should instruct tho Bank of Now Zealand, iu which we hold large interests, to issue credit to bring the local value of the produce up to a level which will pay tho cost of productiou and leave a small margin of profit. The money would find its way to producers through merchants and dairy factories. Farmers could then pa y their creditors and tradesmen, and money would cornu into circulation ‘again. Ultimately this money would find its way back to tho bank again. At the end of each year the Government could find out from tho bank what it had cost to print and circulate the money and keep a record in its books. This cost the Government could refund to the bank. “Some will say we are giving something to the farmers for nothing. Acmally we are not, for we are just paying thorn a fair price for their products and for tho heroic work they have done for New Zealand, and through them setting the wheels of industry iu motion once more. “This scheme could bo put Into operation at once and without much cost. Wo may not be able Io stop tho

crash which throateps the world, but by this means wo can step out of the puth of the avalanche.'' In reply to questions Mr. Robinson explained several matters which wete not clear to hi* bearer*, and on tie motion of Mr Monson, seconded by Mr. Hildreth, a unanimous vote supporting the submission of the scheme to Parliament was passed. Votes of thanks to the speakers and chairman concluded a very enthusiastic meeting.