TIMELY TOPICS

Northern Advocate, 23 October 1936, Page 6

TIMELY TOPICS

THE NEW MONETARY ORDER. Recent developments in the Dominion should give New Zealanders a special interest in an article, “The New Monetary Order,” by Dr. W. H. Hardwicks in “The Accountant” <T.ondon):

“Many changes,” he states, “have taken place in currency affairs since the withdrawal of the gold coins and the abandonment of the gold standard. The pound of account still remains

but as a mere symbolic and visionary abstraction; and what was financially known as ‘ sterling ’ can now be understood only as ‘ British money ’— p&per and specie at par.’ This disappearance of gold as the sole standard cf value since 1817, and the genesis of the new monetary order, has established two facts, viz.; - that sterling has ceased to be dependent on gold for cover, but is now backed solely by public confidence and national credit; and is redeemable —not in gold—but in the general wealth of the nation, and is actually redeemed each time it is accepted in exchange for goods or services; the wealth of a nation being dependent on and proportionate with the industrial and productive activities of its, inhabitants. Its dsappearance, however, need cause no regret, for it has served, and can serve, no better purpose in the currency than have or can the Treasury notes. As cover, however, for the settlement of trade balances abroad —where' the barter system still prevails —gold at exchange value will continue as at present to be indispensable.

mi ni g§ @ FIDUCIARY NOTES.

Dr. Hardwicke’s article continues: “Histpry i s obtainable for proof of the benefit to be derived from the issue of fiduciary notes under Government control backed by national credit, and leads to the conclusion that such paper money is a facile, safe and economic means of raising money for public and national needs. They possess the advantages of being capable of increase or diminution as required by the expansion or contraction of industry and prices, withput any special cost to the nation. A plentiful supply of money is a necessity for the development of industrial and productive activity; and, on the contrary, a scarcity of money invariably results in industrial stagnation and misery. “The fiduciary notes of £1 and £2 issued under William Pitt’s administration in 1797—during the financial distress following the long-continued, Napoleonic Wars and the Irish rebel-' lion —withdrawn later by Peel, saved the country from financial ruin. When the National Debt ih 1815 had risen, during the previous five years, from £247,000,000 to £861,000,000, and a mania for reckless speculation swept the country,'with daily failures, ruining thousands of people, prices rose exorbitantly, affecting the food supply of the industrial classes and producing frequent riots. The issue of fiduciary notes again saved the country; Incidentally, at a later period of trade depression, a foolish and unjust, tillable cry was raised of ‘note inflation,’ as the cause of the. distress; but this was fully and convincingly refuted in the ‘ Quarterly Review ’ for January, 1919. During the Great War ; the country had occasion to have recourse to the • issue ■of ‘ currency'’ notes by - the Treasury to finance it, withput which we could not have carried on. Yet, notwithstanding, the success and popularity pf the issue by the Treasury; by the surrender of its i right to the Bank of England—a pri--1 vate trading company— (by the Gold Standard Act, 1928), a monopoly was granted for the issue of ‘ promissory ’ notes, without any obligation on the part of the directors to honour them 1 in specie—-one of the worst acts of - post-war administration. A burdensome liability was thus placed unnecessarily upon the shoulders .of the taxpayer for bank interest, charges, ' and credits against covering bonds ” gi ii a s’ Words of Wisdom.

Blow, wind of God, and set us free From hate and want of charity; Strip off the trappings of our pride And drive us to our brother’s side —Braithwaite. 511 HI Eg £3 Tale of the Day.

Sailor: “We’ve just dropped our anchor, Mum.” Old Lady : “Humph! I thought you would. It’s been dangling outside for some time.” •