STABLE CURRENCY

Manawatu Standard, Volume LVIII, Issue 227, 24 August 1938, Page 11

STABLE CURRENCY

SEPARATION FROM POLITICS. “WRONG TURNING LIKELY.” “Whether we are Socialists or not —and I believe that New Zealand is well divided on that point—and whatever our political colour, we should all agree that under a national system we must have stable money. As far as I can see at present,. we are quite likely in this country to take the wrong turning, but I do not want to politicalise tip's discussion,” declared Professor B. E. Murphy, of Victoria College, when addressing the Palmerston North branch of the New Zealand Society of Accountants, last evening. Time was, Professor Murphy said, when debtors went round in fear and trembling. Now it was the creditors who went round in fear and trembling if the debt was large enough. The World was over-plagued and overplastered with debt, and when the quantity of money in circulation was increased it diluted the value of money, and consequently of debts. So the bias was always towards inflation. He believed that the time would come when democracy would wisely endeavour to put the money system entirely outside of party politics. Whether by Socialism or private enterprise, society wanted a stable money. That was a hard thing to define, yet all knew it when it was unstable. STAYING'OFF GOLD. “Now that the world has gone off the gold standard,” added Professor Murphy, “I think that it will stop off it. The task for the next generation will be. to separate their money from politics. It does not look as if it might be that way in New Zealand at present, but unless we do it, we will have a series of disastrous experiments.”

Manipulation of money, the speaker said, upset price levels and caused changes in income. People became alarmed, panic developed, and the runaway stage of inflation, bringing ruin to many, was reached. Though its system was contemptuously referred to as that of orthodox finance, said Professor Murphy, England’s Conservative Government had kept its money relatively stable since the departure from the gold standard. There were suggestions of “kicking over the traces” and “the sky is the limit,” but whether New Zealand was entitled to do that, or whether it was desirable, - would never be known until the experiment was first tried in Britain with a radical Government m power. People hero wanted to use money as a general implement of social reform, but the problem would not be solved until the experiment of a paper currency was tried under a radical, as well as a Conservative Gov ernment, in England. London had managed its money discreetly, and Paris and Now York indiscreetly. In these days of economic nationalism and isolation nations did not desire to subject themselves to an international currency system. National structures were too rigid. Wages were fixed, and heavy interest overhead. There were unions, cartels, controls, and restrictions, tariffs and quotas, designed for good or ill, to isolate the national economy from external influences. , , “It is ridiculous that our monetary system should depend upon the accidents of geology, or what comes out of a hole in the ground,’’ said Professor Murphy, “but it is accepted because it would probably be attended by less disaster than that which would attend politically managed money. Gold had a significant past and an uncertain future—very uncertain—but it would be centuries before the preference for gold would be eradicated, from the mind of man. “The problem of this age, when the restoration of the gold standard is not likely to be made,” concluded Professor Murphy, “is to get enough collective sense to establish paper money on a rational basis outside of the accidents of politics.”