Deflation as Depression Remedy

Manawatu Times, Volume LIV, Issue 7241, 22 August 1933, Page 7

Deflation as Depression Remedy

Mr Holland Sails Into the Government OPENING SHOTS IN LYTTELTON BY-ELECTION Per Press AssociationCHRISTCHURCH, Last Night. In opening the Labour Party's campaign in the Lyttelton by-election this evening, Mr 11. E. Holland, Leader of the Opposition, paid a glowing tribute to the late member, Mr Jas. McCombs, and declared that Mrs McCombs was amongst the ablest of women iu public life in New Zealand. Ho was confident that she would make history as the first woman to sit in tho Parliament of the Dominion. lie outlined a policy of industrial rehabilitation, which included a comprehensive public works scheme and largescale laud settlement with planned production and guaranteed prices for primary producers and with standard wages and shorter hours for wage workers and others.

lie also dealt extensively with the need for safeguarding and developing tho secondary industries of tho Dominion, urging that these industries were now being menaced from at least two angles—the Ottawa, agreements and the cheap labour products of the East and elsewhere.

He explained the Labour Party’s financial proposals, which included the nationalisation of tho banking system of the country. He insisted that once industrial activity was resumed, tho velocity of circulation of all money, both cheque and legal tender, would be restored and accelerated. Whatever new issue of money was found to be necessary for primary and secondary industrial purposes would be provided, but, in the first place, ho did not anticipate that any very largo amount would be necessary.

There was now no less legal money in New Zealand than before tho slump and their internal troubles largely grew out of the methods employed to meet tho conditions arising out of the overseas fall in prices. Any new issue of legal tender money would be regulated strictly in line with the output of goods and services, which were the basis of credit in all countries. While no one would charge that the Government was responsible for tho depression, even a novice in politics might liavo been expected to know that a deflationary policy would never remedy, but would be certain to accentuate, the economic evil of depression. In their method of approaching the situation tho Prime Minister aud Mr Coates were not altogether unlike two verv unsober visitors to Loudon who chose tho wrong stairway in a Piccadilly tubo station and persisted in trying to climb an escalator which was moving downwards. In that day’s cables Mr Forbes was reported to have said: “President Roosevelt’s programme of reconstruction will lead, the United States and with it the rest of the world to prosperity.’’ A statement of that character must have come as a shock to Mr Coates aud the other members of the Coalition, for the U.S. President’s programme was the direct antithesis of that pursued by Messrs Forbes and Coates and their colleagues. Mr Roosevelt's pronouncement was mainly in line with the minority report presented by tho Labour Party in connection with the special Economic Committee that was so abruptly ended by Mr Forbes. Tho U.f?. proposal included drastic, reductions in working hours and heavy wages increases.