MONETARY SYSTEMS

Northern Advocate, 27 July 1935, Page 10

MONETARY SYSTEMS

MANY ADVOCATED. CHANGE NOT FAVOURED. [Per Press Association. — Copyright.] INVERCARGILL, This Day. “Discussions of the monetary system are much in evidence at the present time. Many different systems have been, and still are being advocated by monetary reformers as being preferable to the worldwide existing system," said the acting Minister of Finance, the Hon. A. Hamilton, in an address to the Southland Provincial Executive of the New Zealand Farmers’ Union. “Because the present system is not working perfectly, so-called reformers advocate that some other system would work and serve the people better,” said Mr Hamilton. “So far, I am bound to say that none of those advocating a change of system has been able to inspire confidence in those experienced in this subject and responsible for its operation that there is a better system than the present one. Today Great Britain appears to have adopted the soundest of all monetary systems, and is managing her money in relation to both gold and goods, Britain’s pound sterling is at present linked to gold without a fixed gold value. “The value of her pound is determined on the price level of goods. Britain has put aside many millions of pounds as a secret fund to maintain her pound sterling as an agreed-upon amount. Since Britain went off the gold standard, her pound has depreciated very materially in terms of gold, but it remains fairly constant in its purchasing power of goods. This appears to be the most practical method of handling any monetary system. Indeed, this is New Zealand’s policy, and what many of the so-called monetary reformers are advocating is already being done. “In these days we hear such expressions as “costless credit,” and an issue of credit,” and we are asked to believe that money can be created. These are pleasant phrases, but I would be sorry to think that our people would be misled into believing that our problems could be cured by any of these methods. I am afraid that if any of these methods were practised, the consequences v*ould be disastrous. We are told that there is not enough currency, and that currency should balance goods and services, and that adherence to gold as a standard for money is a barbarous lic. What we have to be careful of is that we don’t throw away the reality for the shadow. Money must represent something real—that is, a physical reality. Credit is built upon security and confidence. We are living in a practical world, and we must face practical realities. Pleasant and easy methods usually fail in the end.