The Guardian And Evening Star, with which is incorporated the West Coast Times. WEDNESDAY, FEBRUARY 17, 1932. ECONOMIC CONTROL.

Hokitika Guardian, 17 February 1932, Page 4

The Guardian And Evening Star, with which is incorporated the West Coast Times. WEDNESDAY, FEBRUARY 17, 1932. ECONOMIC CONTROL.

Referring to the question of trie direct economic control of the affairs

j of the Dominion, Mr G. Lawn, lectur\or of Economies, at Canterbury Col- | lege, said that our parliamentary machinery as evolved out of the past,

. has had thrust upon it wider functions involving the management of com--1 plex economic affairs. How far is it 1 capable of doing such, work efficiently ?

State regulation in one part of tne economic field inevitably leads to an ever-widening area of State control in industry and more 'amt more minute regulations. The delimintiom of the sphere of economic control and the definition of the, function of the State are matters very relevant to our present problems. Mr Lawn dealt nrsc with the matter of a statutory reduction ip interest rates. This seem, ed a reasonable proposal, but was much mere cotripkij; than it appeared at first sight- “There lire many questions one might put,” he said. “Will such a proposal, if given effect to. apply to all existing rates, whether voluntary readjustments have been made or .not Will the reduction apply to new loans, and, if so, how far will the State be able to • determine the approximate rate of interest for different classes of risk ? If not will not mortgagees be encouraged to foreclose and to reinvest on new loans? How will the scheme affect the relative attractiveness of New Zealand and foreign investments? Will it encourage an outflow of funds from New Zealand ? Will it necessitate another board to deal with these questions as they arise? The speaker touched also 1 on the question of the pegging up of the New Zeoland-Lon-don exchange to 2o or 30 per cent. Two questions were involved. The first was:—Should the Government interfere in the regulation of the exchange rate or leave it to the “free market” arising from supply and demand for exchange? Much discussion was raging round this subject. To a certain extent the New Zealand farmers would gain a bonus from the high rate, but it was undeniable that the increased cost of imports would tend to raise farming costs and to reduce real wage's. Before it was decided to adopt the expedient of a pegged high exchange as a- means of relieving farmers, more consideration could be given to the possibility of providing special State or corporationguaranteed credits to be applied directly to meeting particular needs. This would ensure relief being applied in the most effective way. Another palliative for present difficulties that was being widely considered was that of the creation of additional credit—an artificial increase in money supnlv. Obviously one of the most important factors to consider was that of monetary control, the adjustment of money supply to maintain nroduetjon at its maximum and to shift the goods to those' who needed them. Mere airnin there were questions py be solved. WIIO was to exercise that monetary cont ml? Who was to decide bow 1 y)nc l ' credit should be supplied, and liv whom, and to whom it was to be supplied, and by what measures it flinuld be regulated?