PAPER MONEY

Nelson Evening Mail, Volume LXVI, 16 February 1935, Page 8

PAPER MONEY

LABOUR'S POLICY ATTACKED MINISTER’S CRITICISM (From “The Mali’s” Parliamentary Reporter) WELLINGTON, 15th February. An assertion that, the Labour Party’s financial policy would result in a devaluation of the currency until it was practically worthless, was made by the Minister of Lands (the, Hon. E. A. Ransoni) in the House of Representatives to-day during the course of bis speech on the second reading debate on the Mortgage Corporation Bill .

The Minister pointed out that, the Leader of the Opposition (Mr M. J. Savage) had criticised the proposed Corporation on the ground that it would not bn able to issue money. It was true (hat ; t would not be able to issue money, because the Government desired that it should be run on sound lines. The Labour Party’s policy would require a huge printing press with wheelbarrows to distribute the money to its clients. If was far better that the Corporation should be run on sound lines rather than on imaginary ones which would lead only to disaster. Mr F. W. Schramm (Labour, Auckland East): “What about- the £70,000,COO loan that the United Party proposed ?”

THE EXAMPLE OF GERMANY

Mr Ransom said that the money "issued bv the. Labour Party would not be worth the. paper it was printed on. There, was a proposal to establish paper pulp mills in "the Dominion, and these would be a valuable adjunct to the Labour Party’s programme, ns they would alleviate any fear of a. paper shortage. Surely the Leader of the Opposition and his colleagues realised the disastrous effect the wholesale printing of notes had had, in Germany after " the war. (Laughter.) “It is better to laugh in time than. Rugh too late,” said the Minister)., who said that lie had noticed .that the. Labour Part}’ was continually changing its tactics. Mr J. A. Lee (Labour, Grey Lynn): "We might change our tactics, but we do not.change our principles.” Mr Ransom said that when the price of butter was extremely low the Labour Party had offered the dairy farmer a guaranteed price of Is per pound. Now that tlie price had risen to about lid in New Zealand currency, the Labour Party was offering Is 3d per pound, and probably if the price rose to Is 3d, the offer would be increased to Is 6d. Mr F. Langstone (Labour, Wainiarino): “That is clever.” . Mr Ransom said that the Labour Party wanted the financial institutions of the country under complete political control, and if that state of affairs were brought about- the situation in a time of stress, owing to political pressure, would get completely out of hand. Tlie Government’s policy of alleviating the position of the farmer during the period of low prices had enabled tlie farmers to stay on their land, and they would be. in a position to take advantage of the rise in prices when conditions improved.

FARMERS IN DISTRESS

The Minister said that there had been a great- deal of talk , about the amount of distress among farmers, and lie had ascertained from his Department that about 50 per cent, of tlie farmers under the control of the Lands Department were in arrears with rent, or interest. That did not mean that they were bankrupt, but it gave one an idea of the plight of the farming community. The farmers in arrears were receiving every consideration from the Lands Department, and deserving cases were being maintained in their homes. Mr W. Nash (Labour, Hutt) asked if there was. any difference between tlie printing of securities, with nothing behind thorn, and the issuing of money. The Minister of Finance had said that, if necessary, he would pump securities into the Mortgage Corporation. There was a difference (between borrowing money and creating money hut ’.here was no difference in the effect on the price levels of commodities. The Leader of the Opposition had never said (hat he would create money or credit in excess of the value of goods and services already in being or what would he created.

Mr Nash said he would challenge the statement that the Corporation would provide cheaper money than could be provided under any other system. The Bill proposed to get rid of the State Advances Department, which had been carried on profitably and had lent money at a low rate and up to a big margin. The records of the State Advances Office showed that the Department had done better than any other institution. Would the Corporation do better for the small investor than the Post Office Savings Bank ? If it was necessary to bring about co-operation among State Departments, the Ministry could. bring it about without setting up a new body. The Minister had said that the Corporation would not lie a profit-making concern, but if it were not to make profits. where was the dividend paid on the share capital to come from ! ■ It must make a margin over.and above :he cost of its administration. Profits only were the source from which dividends could bo paid. Tiie Minister o f Lands (the Hon. E. A. Hanson): ‘'Limited.’’

Mr Nash: “If dividends are being paid from any other source, then somebody elsi is being robbed.” After the State Advances Department, the Public Trustee was the next interested in mortgages Would he be a competitor? Mr Coates: “He will please himself whether lie buys bonds ” Mr Nash said that the activities of the Public Trust Office might he menaced Criticising Lie directorate. he said that a State corporation with private directors would not b n of much benefit to the people of the Dominion.