Monetary Topics and The Financial System

Manawatu Times, Volume LV, Issue 6789, 22 February 1932, Page 5

Monetary Topics and The Financial System

MR. P. E. FITZHERBERT ADDRESSES MEETING OF LOCAL RESIDENTS,

At the Empire liall last night Mr. P. B. Eitzherbert, of Wellington, a momber of the legal profession and an old resident of Palmerston North, addressed a mooting of residents upon monetary topics. There was a good attendance.

The speaker quoted at some length from the utterances and speeches of British authorities to show that public opinion in the Old Country did not indicate any marked alteration in the methods of finance and that, such being the case, it was not worth while waiting until European minds awoke to their true position. The financial system or lack of system had grown up in a hit or miss fashion, and, though, having functioned in some sort of fashion for a century and a half, had not very definitely broken down beyond the possibility of repair.

The three predominating causes of the slump, all coalescing together to make the consequences catastrophic, were the bank crodit system, the compounding of interest and the use of machinery without making up for loss of spending power. “The bank credit system owes its existence to the shortage of metallic, money such as gold and silver or rather to the methods of its use," he said. "The bank system involves tho use of credit under the misapplied theory ot velocity of circulation which results in the accumulation of huge debts during the period when credit is easily available and then cessation of credit brings about a shortage of circulation resulting in a money famine. ‘ ‘ The compounding of interest also is an important factor and although the compounding of interest is not universal there is always a compounding tendency with tho result that a country becomes after a while over-capitalised and capital has to find an outlet in a new country.

"Tho process has gone on long enough to bring about a condition of over-capitalisation in all European and American States. The use of machinery has become a universal factor in production but it rejects people from employment without providing them with means of subsistence.

"It is not possible under vsent methods to ro-employ the displaced men except in. new production. Tho loss of spending power of the rejected workers is not replaced so the result is that production suffers and people tend to become permanently unemployed." Mr. Eitzherbert then outlined the necessity for establishing a complete clearing house in London and possibly in. Australia and other countries doing all our overseas trade in foreign money; the setting up of a Central State Bank with sole control of note issue; the issue of State inconvertible notes under most careful management by a specially chosen board clear of political control or influence.