THE GREATEST PROBLEM

Kaikoura Star, Volume LXIV, Issue 63, 14 August 1944, Page 3

THE GREATEST PROBLEM

FACING NEW ZEALAND. GETTING OUT OF DEBT. WELLINGTON, August 10. The greatest problem facing New Zealand to-day was not rehabilitation or land settlement, but getting out of debt, stated Mr F. Langstone, member for Waimarino, in the House of Representatives to-night. There was talk about the four freedoms, but the only way the four freedoms could come was by getting out of debt; but New Zealand was piling up debt upon debt. He believed that most of the debt could be cancelled out through the use of the public credit. A total of £35,000,000 had been put into circulation. Of that, £23,000,0Q0 had been spent on housing. Houses had been built and paid for, so there was really no debt, because all that had been done was to transform materials into houses owned by the State. Through' the use of the public credit the whole £35,000,000 could be cancelled out, and the internal debt reduced by that amount. The people had paid for everything. No Government could give the people anything, all that a Government could do was to organise. Then there was £55,000,000 in Treasury bills. That was the use of the public credit. A tremendous amount of purchasing power had been pumped into circulation, and in the trading banks current accounts had increased from £34,000,000 in 1938 to £87,000,000 in 1944. That was an increase of £53,000,000 in purchasing power at a time when there were fewer goods on thb market, and therein there was a danger of inflation. There was a plethora of nyoney, but not among working people. It had gone to people who could not spend it, so they were looking for investments. As a result bank and industrial shares were in demand, and had increased in value. He suggested that the way to stop inflation was to put all or a proportion of that surplus money into the Reserve Bank and freeze it there. Mr M. H. Oram, Manawatu: How would you get hold of it? Mr Langstone said the honourable member knew the power of legislation. If there was a will to do a thing, it could be done.