STATE BANK V. BORROWING.

New Zealand Herald, Volume XXXVII, Issue 11280, 25 January 1900, Page 7

STATE BANK V. BORROWING.

TO THE EDITOR.

Sir,—With your permission, I should liko to write a few words in reply to Mr. John Johnson's criticism of my article, entitled, "New Zealand's Borrowing Policy." It poems to me that Mr. Johnson has altogether failed to gra.«p tho saiient points of my contention, viz., tlw pernicious effect of borrowing, and the advantages that would acoruo from tho establishment of a State bank issuing an inconvertible papor currency, liavin? for its security, instead of a searco metal, gold, tho national wealth and the productive power of tho people. Mr. Johnson accuses mo of lack ol knowledge of political economy. I would remark that if the study of political economy was likely to have such a remarkablo effect on my mind as it evidently hai had on Mr. Johnson's, I would much rathor leave it alono, and use a little common sense and observation instead, for it does seem to me that his idoas are somewhat mixed. In the firnt place, I did not advocate borrowing, am! believe it necessary to prosperity. I certainly cannot accept Mr. Johnson's contortion that a country becomes prosperous when compelled to pay away vast suras of money, and that the country roceiving those Bums becomci depressed. Our taxation is already heavy enough without increasing it to meet an extraordinary expenditure. Mr. Johnson snys we are not short of capital. If ry capital he means money or circulating medium. I claim that we are. Nothing is moro felt in this country thitn the want of capital; for luck of it enterprise languishes, and the purchasing powei of the peoplo i 6 reduced to the minimum, fncroased capital would moan increased purchasing power, which in turn would stimulate production and triulo. The Boe- war is a striking illustration of this. This stagnation of trade and enterprise, brought about by tho lack of purchasing pewer by tho people, causes the rato cf interest to fall, and capital to go a-begging, end produces the apparont anomaly, what sli\ Johnson styles "too much capital," or wealth, in the midst of.poverty. "Poverty," wrote Robert Owen in 1818, " is universal, yet wealth abounds—indeed, is in a measure the cause of poverty, for every market is glutted with goods. " The power of production exptods tho capacity of coirumption; manufacturers are obliged to cease from their labours, and dismiss their men, who are left to starve. It is therefore, desirable to increase tho markets, whereby tho excess rf production may bo carried off. The way to effect this is to enable every man to bo himself a market; each individual has an abundant desire to be possessed of tho various articles that now uselessly crowd the markets; the only misfortune is that he cannot get them, and tho reason is that society has introduced an artificial system oi exchange. Unless possessed of that very useless commodity, gold, we are left to starve, gazing on plenty; and thus it comes to pass that *he working clas.-es are made the slaves of sn artificial system of wages, more cruel in •its effects than any slavery ever praotieed rn society, oithor barbaious or civilised. Tho remedy for thi.- disastrous condition lies on thu surface. Every nvirr is possessed of labour power, whioh is the source of all wealth, nnd should be its only standard; abclish, therefore, gold as a standard of value and substitute labour in its stead. As everyone" can labour, everyone would have in his person a command of wealth, whether ho had o purse of gold in his pocket or not." I should like to know Mr. Johnson's reason for asserting that if the State issued paper money all the gold would leave the colony. There is a paper currency in tho Argentine, but nil the gold has not left that country. In fact, the paper currency gives the inhabitants of that country a distinct advantage over ours, in the sale of their produce in the London market. The samo applies to India and Eastern countries, with thoir depreciated silver currencies. New Zealand- adopting a paper currency would not nffec.t the gold mining industry, unless the system became universal. Then we could afford to look on gold mining in tho same light that wo do on armaments— as a necessary evil that we would be very glad to dispense with. Thore are at present 130 labour oxc-hange associations in America, operating in 30 States. These associations carry on all sorts of industry and enterprise without the use of gold money. They usn inslead labour certificates, which constitutes their currency or means of exchange. When these associations can flourish in America, in the midst of hostile surroundings, what could we not accomplish in this colony if tho schemo were taken up by tho State, bricked up, as it would be, by our splendid natural ro-ources and an energetic people? But with that strange perversity of human nature, we cling to old nistoms and traditions even when limy occasion us gr<>at suffering, an>l arc entirely opposed to the dictates of reason. In this colony wo clamoui for roads and railways and lands to be opened up, and hundreds of other needed improvements; we ha\e idle men seeking employment whose labour would nrrfnrn' these necessary works, (hereby enriching themselves and tho State, Where!)* nou being idle oi only partially omploye'l, ,h<.y .tre deadheads and a draff on tlic community. Tint our rulers, in their Hind worship of tho poldcn money, can sro no other w.iy of bringing this labour—the trite ereatoi of wealth—and the material to hi' operated on into contact, excep' by mortgaging our colony to the foreign moneyletidei, llierehy enslaving ourselves throuirh thi> ever-increasing interoit tribute that haslo be paid on the monoy borrowed.—l am, ot<\, J.C. Clcveclon.