LURE OF EASY MONEY

Manawatu Standard, Volume LVI, Issue 141, 16 May 1936, Page 7

LURE OF EASY MONEY

MR COATES’S WARNING

TO PEOPLE OF NEW ZEALAND.

DANGER TO BE FACED,

WELLINGTON, May 16. The danger facing vhe Dominion through the “Jure of easy mony” offered hy tlie Government formed the keynote of an address delivered at tlie conference of the National Party in Wellington this week by lit. Hon.- J. G. Coates. The activities of the Government to date were reviewed by—creditcontrol, the socialisation of production and the control of industry by the workers through compulsory unionism—and he claimed that there was a stern fight ahead if the Dominion was not to be robbed of its heritage to individual liberty and freedom.

“It seems to me that the people have shown themselves definitely susceptible to the cry of ‘easy money,’ ” Mr Coates said. “Have the new Government the secret of giving something for nothing? I say they have not, and that if wo embark on a prodigal programme of exceeding our income regardless of cost, we are heading for inflation financial chaos and national disaster.” The full extent of the Government’s legislative proposals was not yet known. Mr Coates continued, but under the three main headings of credit control, socialised production, ant! the domination of industry by unionism, there was sufficient already to cause people to view the future with alarm. CURRENCY AND CREDIT.

The cowers taken by the Government to control credit and currency were such that no thinking person could view them with equanimity. The Reserve Bank, as was orginally established, embodied perhaps the most modern principles of central or reserve banking, with a comprehensive strength arising from the association of State and private enterprise. Now it was completely a State bank, and safeguards that had been carefully devised for the maintenance of financial equilibrium had been deliberately discarded. There was only on thin lino of safetly—the directorate appointed by the' last Government —but even that directorate could be removed from office without warning il it opposed the wishes of Labour. “Little or no new credit can be created by a man who merely sits in his office, pen in hand, and issues instructions for the provision of millions,” Mr Coates said. “Credit increases only with increased production or the creation of new assets, and it takes a trained blind to see that the cost of creating an asset does not exceed the final value of the asset created. Excess cost turns the asset into a liability. “SAFEGUARDS REMOVED.”

J “The position to-day is that all , credits in the Dominion can be called 1 up and used by the Government. This credit is composed mainly of the dii--1 fcience between advances and deposits, j free deposits, short-dated money and overseas credits lying in the hands of I all financial institutions. They are all _ at the disposal of the Reserve Bank if the Government so demand. I figure that approximately £136,000,000 could t bo available, but if those resources are rashly drawn on, tlie result will be the j complete destruction and disorganisat tion of business and the smashing of . confidence between borrower and lender 7 on which wc depend for a sense of se--1 curdy. I do not say that the Govern--1 ment will go right to that extent, but i the safeguards have been removed and t the danger is there, if only people 3 would realise it. “The effect of the Government s . financial policy must be to leave doubt - and uncertainty in the minds of those t who previously have received ready ) accommodation for development. It has been stated by the Government : that it does not intend to disturb existi ing financial institutions, but all the ; amendments passed by Parliament m- ; dic-ate that the commercial banks must 1 inevitably have their normal activities ’ curtailed.” ; SOCIALISED PRODUCTION. i The socialisation of production, Mr : Coates continued, could be attained , under the Primary Products Marketing . Bill, which would enable the. Government to acquire the ownership of all primary products at a price which they would fix for themselves. It had been stated that the Bill applied only to dairy products, but is was clearly designed so that wool, meat and all other products could be swept into the dtagnet, at the Government’s command, to some extent the dairy farmer seemed to have adopted the Government’s proposals, but disillusionment was bound to follow. . . “Primary production is the mam industry of the Dominion,” Mr Coates continued. “Indeed, it is the life-blood of the country. But under the Government's proposals disaster lies ahead. A population of 1,500,000 cannot possibly afford guaranteed prices which may be considerably in excess of world prices. We depend on our exports, iiot on what we sell for domestic consumption. If prices are raised artificially to a point which encourages over-produc-tion, the greater will lie tlie danger of an entire financial collapse. “Under the Reserve Bank Act we can guarantee any price we like, but we cannot guarantee wliat the product will lie worth. Tf the guarantee is met by the creation of credit the guarantee will simply be cancelled out in liighei costs.” The position was aheady alarming. Mr Coates continued. The amount of London credits at present was about £33.000.000. It had dropped by about £6,000,000 since the beginning of the year. Although exchange should have been piling up in London, it had actually dropped at the very peak of the export season. Even with their commanding majority, the Government would he unable to check the stone which they had set rolling. COMPULSORY UNIONISM.

“Through the principle of compulsory unionism,” Mr Coates continued, “the control of industry will be virtually handed over to the workers. Tins is an attack on tlic so-called capitalist which entirely ignores the fact that the direction of industry by the employer is largely responsible for the livelihood of his employees. There must be co-operation between the two, lmt it seems that the Government is blind to that. The basic wage and the 40-hour week must both increase costs. As the whole policy is developed the result must be that more and more control will be found necessary until all our activities will be at the direction of the Government and individual initiative, energv and liberty will become things of the past. CALL FOR ACTION. “No thinking person can say that there is not a call for action by those who wish to keep their British birthright of sturdy independence. We must look to the future and see to it that that birthright is restored and guarded for the good of the country as a whole.”