FINANCE FOR HOUSES

Nelson Evening Mail, Volume 79, 16 August 1944, Page 4

FINANCE FOR HOUSES

QUESTION OF INFLATION

C HAMBER OF COMMERCE DISCUSSION The Nelson Chamber of Commerce at its monthly meeting last night was asked to support a motion passed at a meeting addressed by Mr J. Hogan, urging that loans to returned servicemen for houses be free of interest. Mr F. G. Gibbs asked how it was intended that the money should be raised—from new moneys or from moneys already existing? The secretary, Mr E. R. Neale, said that the resolution had nothing to do with monetary reform.

Mr Gibbs said that the Government method of financing houses was purely inflationary. The Government had called on the Reserve Bank to find the money and the bank had •created the i'uhds without taking them by taxation or by subscription from the public. The chairman, Mr L, E. H. Bnigent, considered that it was no more inflationary than creating new money for loans. If a loah was not subscribed out of savings, and the money was created by banking institutions to lend it was just ns much inflation as if the Reserve Bank created It.

Mr Gibbs replied that the banks had enormous deposits, so they had any amount of money to draw oil. In a discussion on what constituted inflation, Mi* Gibbß emphasised that one must take into consideration tho velocity of circulation of currency. He disagreed with Mr Baigent’s statement that the real test of inflation was the average level of commodity prices and quoted an instance in America where shares rose in price but goods did not rise till months later. He moved that the chamber while it Was strongly in favour of any method of enabling returned servicemen to acquire houses (including remission of interest) as long as such methods Were hot inflationary, J.i A strongly oppose any methods of an inflationary character. He added that the men should be assisted out of savings or by taxation. Surely the chamber was opposed to inflation, The chairman: ‘‘Up to a point, It is When it reaches the detrimental stage that it is harmful.” Mr Gibbs said that lt had reached the detrimental stage now. The motion was seconded by Mr C. S. Beechey and carried unanimously.