NOTES AND COMMENTS

New Zealand Herald, Volume LXIX, Issue 21245, 27 July 1932, Page 10

NOTES AND COMMENTS

THE PRIVATE BUDGET A member of the House of Commons recently asked the Prime Minister if he would initiate a national campaign to emphasise the injury caused to the State by unnecessary private economy by private individuals; and if he would take steps to make it widely known that it was the duty of everyone to find work for the unemployed out of their private resources wherever possible, arid that such employment, by reducing unemployment insurance, reduced expenditure and made it possible to reduce taxation. Mr. Baldwin, Lord President of the Council, who replied, said:—l do not think that the occasion has arisen for a national campaign 011 this subject. I am glad, however, of an opportunity to reiterate what the Prime Minister has stated, that it is the imperative duty of private citizens and employers to maintain, so fnr as is possible, the ordinary employment which they give to labour, and that wise and courageous expenditure by private citizens where their incomes will bear it should be regarded by them as an obligation which they must not avoid. WAR DEBTS AND ARMAMENTS Commenting upon Mr. Hoover's disarmament proposals, the Financial Times remarked that their association with the war debts question was misleading. " 'lf Europe can afford to spend so much money on its fighting forces it can afford to pay its debts to us,' is the theme which has hitherto been the one link between debts and disarmament, but it tells only one-half of the story. One of the clearest lessons of the presesent crisis is that there is a very broad distinction between providing the local currency sufficient to pay foreign obligations and transferring the requisite sums abroad in the currencies in which payment is due to be. made. Such a difficulty was envisaged long since in regard to Germany's reparations payments. It has cropped up frequently in the last year or two in regard to loans made in the ordinary course of business to countries in South America and elsewhere. It has played no small part in ' bringing about the accumulation of most of the world's gold in a few centres, aggravating the troubles due to other causes. The fact that debtor countries may be brought to spend less on their navies or their armies, therefore, will do nothing to facilitate, payment to their creditors." BILLS OF EXCHANGE A return to the former commercial practice which made larger use of bills of exchange is being discussed in London. Sir Harry Goschen, chairman of the committee of London clearing bankers, has written to the Association of British Chambers of Commerce pointing out that at one time it was the recognised custom in many trades for accounts to be settled by means of bills of exchange. Indeed, their utility in commercial transactions was regarded as of paramount importance in the facilities they afforded in the development of the trade of the country. These bills have now been superseded to a largo extent by bank overdrafts or, alternatively, by varying credit according •to the custom established in each trade, very often to the disadvantage of either j the purchaser or seller. Owing to the 1 existing low rates prevailing in the disj count market, Sir Harry thinks that tho i present time would seem a suitable opportunity to revert to the old practice, and the committee of London clearing bankers have expressed the wish that the council of the association should give consideration to the advisability of recommending /their members to institute arrangements whereby the practice of the periodic settlement of accounts by means of bills of exchange should be revived. The comj niittee believe that in addition to other ! acknowledged advantages, such developments offer better prospects than any other method known to them of cheapen-ing-the supply of available credit. ~ - WAR DEBTS AND GOLD " War debts caused the gold disease, but the cancellation or suspension of war debts, although obviously necessary and imperative, will not now stop the disease," said Mr. Winston Churchill in a recent speech. "You may rub a sore place till you engender a cancer. You have to leave off rubbing then, but when you do tho cancer still goes on. What we have to deal with now is the progressive devaluation of all human effort in terms of gold and scrip, and this carries with it week by week the progressive weakening and shrinkage of all the credit instruments and confidence upon which civilised society stands. The monetary system of the world is now in a sta,te where the mere cessation of the original evil will not arrest the progress of its lamentable consequences. To find tho cure we must do something quite different from the simple adjusting 'of war debts and reparations. That is why 1 am so glad tho Government have favoured the plan of a world conference on the money question in order to arrest this remorseless deflation still in progress and to rcvaluatc commodities up to the normal level of prosperity. There are two tasks before this world conference. The first is to discover the best technical method by which the devaluation of commodities can be substantially arrested, and the second is to invest that process with the authority which v ill command and hold the confidence of the nu>st powerful States and communities, apd of the investing classes in every ip.na. •