MONETARY REFORM

King Country Chronicle, Volume XXVIII, Issue 4605, 4 October 1934, Page 6

MONETARY REFORM

COMMISSION'S REPORT QUOTED. MEETING AT KOHUA. "The Minority Report of the recent Monetary Commission is New Zealand is one of the best brief analyses of the existing monetary system that has yet been published, and deserves careful study by every thinking citizen of the Dominion," declared Mr. J. H. Penniket, M.A., of Hamilton, in speaking to an audience of about one hundred farmers and public works employees at the Kohua camp on Saturday evening last. The meetinghad been organised by the Aria branch of the Douglas Social Credit Movement and Mr. Heath Mason of Te Kuiti, President of the Waitbmo District Council of the Movement, was in the chair, a'nd in introducing the speaker for the evening, referred to the rapid growth of the Movement in the King Country.

In opening Mr. Penniket gave a brief history of the present monetary system and then proceeded to quote extensively from the Minority Report. "The essential weakness of the existing monetary system is expressed very succinctly in the concluding paragraphs of the report," said the speaker, and then quoted as follows: —

"Progress toward greater total production is retarded because consumer buying does not keep pace with production. Consumer buying lags behind for two reasons; first, because industry does not disburse to consumers enough money to buy the goods produced; second, because consumers, under the necessity of saving, cannot spend even as much money as they receive. We are of the opinion that a complete reconstruction of the monetary system of the Dominion is essential, and we make the followingrecommendations: —

"(1) That there should be unification of the control of the volume of currency and financial credit. Without unity of control there can be neither responsibility nor effective useful policy. This control is too important an element of the sovereignty of the State to farm out to private enterprise. The State must become the sole creator of currency and financial credit. All elements of private interest and all statutory provisions subjecting it to the London sterling policy should be eliminated from the Statute relative to the Reserve Bank. We recommend no interference with Savings Banks or similar institutions not empowered to manufacture credit. "(2) In so far as the physical resources of the Dominion will provide, we recommend that through the foregoing mechanism money and financial credit should be created by the State for the purpose of closing the existing gap between production and consumption which arises through the insufficiency of purchasing power in the hands of the consumers under the present system. The classes of consumers for whom money might be con-

veniently created would be a matter of social as much as monetary policy, so we do not enlarge upon this beyond mentioning pensions of every description, the unemployed and incapacitated citizens, a'nd producers in so far as their prices do not realise pre-depression values as types of consumers whose claims might be considered under this head.

"(3) Financial policy secured by the foregoing unified control should aim at stabilising the general wholesale price level of New Zealand produced commodities. Justice between debtor and creditor calls for this as much as does justice between producer a'nd consumer. Credit expansion need then be limited only by the volume of consumable goods produced and desired by the people of the country.

"(4) The amount of credit created for trading purposes, the amount created for consumers, the total amount of debits weekly paid to consumers' accounts in the trading banks, the total amount of taxation levied, are all elements determining the volume of financial credit in effective use. With unity of control vested in the State all these can be so observed and governed as to secure such circulation of money as will avoid deflation and inflation, abolishing alternating booms and slumps and secure steady business activity. "(5) We recognise that it is possible but not easy to maintain a stable internal price level, and at the same time maintain parity of exchange with a country which has a fluctuating price level. We definitely prefer stability of internal price level; and, so far a« exchange variation may become a problem beyond the dimensions of a reasonable stabilisation fund, we would recommend that it be dealt with by rationing the exchange. In such rationing preference should be given to essential commodities not available from our own resources."

Mr. Penniket then went on to point out how the recommendations could he applied to New Zealand, remarking that Egypt, Sweden and Japan had all made beginnings along the lines indicated. At the conclusion of his address Mr. Penniket answered a number of question the nature of which showed how keenly the interest of his hearers had been aroused. A motion to form a branch of the Douglas Social Credit Movement was carried unanimously and a strong committee was immediately set up, with Mr. Bernard Williams as president and Mr. W. H. Yeatman as secretary. The meeting concluded with the customary votes of thanks, a'nd arrangements are in hand for the holding of another meeting in a fortnight's time.