MONETARY POLICY.

Hawke's Bay Tribune, Volume XXIII, Issue 73, 8 March 1933, Page 5

MONETARY POLICY.

(To the Editor.) Sir,-—An explanation embodied in your footnote to my letter of 1/3/33 calls for comment. You say firstly: “Our correspondent advocates the scrapping of the old system in favour of another which is tantamount to a partnership with risks of loss if affairs go wrong on those who provide two of the farmer’s requisites, land and cash.” It is futile for any person to blind himself to the fact that our present community system is already a partnership. The reward of the efforts of this partnership is goods. If it were not that we have a medium of exchange (money) each member would receive a portion of these goods in reward for services rendered. A person would then make a contract with another payment, being a fixed amount of goods. It is just that this contract be kept to the letter without variableness or shadow of turning by either party. As this method of contracting is cumbersome we have instituted a medium of exchange (money). I have shown in my letter how this money can be made to represent this fixed amount of goods under any circumstances and have pointed out the faults of our present system of monetary costs and shown how a contract based on our present monetary system is no contract at all. If our present system of monetary costs is allowed to operate a short while longer we will all be in chaos as stated in my letter and it will then be shown quite definitely that we are a partnership (in sorrow) where no contractor by the power of money will be able to place his burden on another’s shoulders. You also say: “The point to remember, however, is that neither a mortgage nor a lease is a partnership contract. The farmer leases the land he occupies and works and borrows the money he requires under definite contracts to pay for the obligations at an agreed rate of interest.” By our man-made laws H mortgage or lease is not a partnership contract, but by the inexorable laws of nature the contractors are partners, and it is the failure to recognise this fact that is causing the economic instability today. What does an agreed rate of interest mean ? To-day it represents a certain number of pieces of silver or gold or paper—useless things in themselves and having only the powers we give them, but in terms of goods it means nothing definite. Therefore “agreed rate” is a definite fraud. To-day all contract debt payments in money remain the same, but in terms of goods they have, on the average, trebled the contract value. Instability by our present method of fixing costs is brought about in this manner. We will place manufacturer in place of farmer as each case is identical. Being unable to meet fixed charges from income from goods produced he is forced to draw from capital. This becoming exhausted he is forced to dispose of employees so that the money paid in wages is avail, able to meet these charges. Resultunemployment, lack of purchasing power in markets, further depression in prices and general lack of confidence. Trace this into every walk of life and we find the result the same, the whole having a snowball effect. Had these been originally fixed to the value of the goods produced the relationship of each to the other would never have varied under any circumstances—excepting a national calamity—and prosperity and stability would have remained. Your advice that groups of individuals can make this partnership would be futile as they could not isolate themselves from their relationship to the rest of the community. I believe 1 have said enough in my letters to your columns to enable an intelligent, unbiassed mind, not blinded by prejudice to see that it is in the interests of every individual in the community to work for the stability of money in relation to goods as the obvious end of our present system of costs is chaos, and that not far off. Unless called upon to explain further this will be my last letter on this subject.—l am etc. CONCERNED. Hastings, 3/3/33.