OLD AND UNSTABLE CURRENCY SYSTEM

Manawatu Times, Volume LIV, Issue 6945, 26 June 1929, Page 8

OLD AND UNSTABLE CURRENCY SYSTEM

Cause of Unrest

INTERNATiOXAL PAPER OFFERED AS SOLUTION

At yesterday’s meeting of the Palmerston North Citizens’ Luncheon club, Air. A. E. Mansford spoke on social and economic unrest and the quantify theory of money as one of its causes. Air. J. A. Grant was in the chair. In opening his address, the speaker referred to the appreciable change ■which had come over the industrial world in recent years. Employers and employees were endeavouring to settle the controversy regarding wages, which were only measurable in terms of their purchasing power. In England, a solution of the problem was being attempfed in inviting employees to invest their earnings in tho employers’ stock. After quoting Air. E. AlcKenna, chairman of the Midland Bank in England, on the effect of bank credit, in furthering production and the contrary restrictive effect of money shortage on trade and its resulting depression and unemployment, Mr. Mansford drew a picture of a factory managed by a man who believed in capitalism and worked by men who believed it to be all wrong. Surely, questioned the speaker, would not better results be obtained if their minds were in accord.

The suggested cures for the strange condition, following on the war were the old theories and principles. Were employers to be compelled to pay ruling wages, or were they to be allowed to bargain with their workers T In the first ease, production must diminish. In the second, employees could take the wages offered or find fresh employment. Brice of Labour. “Labour has no natural price, ne market price; and, in fact, no price at all.” This doctrine is the basis of our present industrial system, and naturally created a helpless outlook in tho mind of the worker who naturally affirmed that tho capitalistic system should bo swept away. It was this conception which underlaid the pres-ent-day unrest and produced radicals and extremists. After dealing with the present economic order founded on private property, division of labour; competition, with its interest centred on the monetary aspect of nearly all its activities, and the consequent swings of the pendulum of progress. Air. Hansford, before suggesting a means of avoiding extremes of prosperity and depression, dealt with money illusion, mentioning that while most of our units were stable the one by which we measured values, gold fluctuated considerably. While the price in gold standard countries never varied, gold was constant only in gold and varied in regard to other commodities. Tho reason why money changed its purchasing power was inflation and deflation.

In dealing with the quantity theory of money, Mr Mansford stated that it was natural to expect that there would be a relationship between tho goods available for exchange at any time and the total amount of money available to carry out the exchange. The value of any commodity was expressed by its exchange value iu terms of money. But ouc could not express tho exchange value of anything in terms of itself. The value of money was the quantity of other commodities for which it could be exchanged and like everything else, depended upon supply and demand.

Money Supply and Demand. The supply of money was the quantity of metallic coinage in circulation as the medium of exchange, while the demand was only measurable by tho number and value of exchanges which had to be made of goods for their prices. It was not good for trade that prices should be at the mercy of the gold supply, as was the case. Continuing, Air. Mansford enlarged upon the eternal conflict between capital and labour and offered a solution to the present unsatisfactory fluctuation in the prices of commodities and the wages suggesting an international paper currency, so regulated that prices would never vary at all. A further solution which had already been tried and had received the support of well-known bankers, was that the expansion of legal tender money should be based on gold, utilities and produce. This system was in force in the Federal Reserve Bank of America, characterised as the best in the world. In concluding, Air. Alansford asserted that our primary consideration must be production and distribution and the provision of subsistence and the necessities of life for the entire population and these must at all times have tho first claim on production. The economic structure in which wo Jived had been shaken to its very foundations and wo had had many warnings by way of strikes. Why not try tho American banking system, tho finest in tho world, as a chaDge from one nearly one hundred years old ? On behalf of tho club, Air. G. I. McGregor proposed a hearty vote of thanks to the speaker. This was carried by acclamation.