THE SUPREMACY OF GOLD

New Zealand Herald, Volume LXX, Issue 21401, 27 January 1933, Page 12

THE SUPREMACY OF GOLD

Sir,-*-Mr. Beats' persists 'tn' 'stating thait* I selected the" goltfe Standard as befog the only standard that would be subject to the effect of compounding interest If he will reread my first letter he will see the following:—''No monetary system can stand up "c the strain of coinpound interest, cue of the major causes of the present crisis." It does not matter .what the system is, if it is based on some commodity, it will eventually break down under the pressure of compound interest. I should except paper to a certain extent, because on paper you can go on compounding interest ia theory and it will stand so long as you are prepared to accept your interest on paper values. The trouble starts whefl there is a rush to translate the' paper into some form of tangible wealth. I maintain that the theory of .compound interest is false, because it will riot and" has not stood up to the test of practical application. If £1 had been invested 2000 years ago -it 5 pet cent compound interest, it would have reached a snm many hundred years ago so huge tUa* if the whole world were mado of cold it would not be sufficient to pay the debtj This is not theory but mathematical fact. As a contrast, if £1 had been invested 2000 years age at 5 per cent simple interest it; would, only am ° u ", to one hundred pounds to-day. !&»» is why I say th.it money cannot contmuallv earn compound interest. What happens is that periodically the world faced with depression. During the of depression the worlds capital va u are written down until they reach sue J a level that we can start again with ou pet system of compound interest ouia it. not be better for the world to adopt some system of finance that would no* periodically brm? ruin in its tram . J not possible that it is compounding m interest that is to a large degrce P 1 ®' venting "the more equalising, of the v> , . wealth and tie distribution of commodities.?" UK ' K -

' Sir, —It would be much , more convincing if Mr. Simmons and bis oracle, Mt. Reginald McKcnna, would abandon * more or less vague and involved abuse o the gold standard and place before us some other standard of values and practical basis for money" likely to be acceptable to the business community as wei of foreign nations as of the country o issue. What sha'l we think of an authority who grandiloquently and loosely advocates "deliberate, skilled and resolute money management" and in the same yea declares that, "Well, ordered international, co-operation . seems inconceivable, challenge our reformative friends to •£ plain how "price levels ' ami the gate value of things in which ~ spent" are to be expressed without gold, in what words will they se f ® ut value of the different notes wlnchl .t■ t propose to issue under then <e 1 ' skilled and resolute policy? L-nUI bey can answer these simple and absolutely fundamental questions they stand • credited and gold remains sopreme• value of gold itself is, as 1 have sho*n, based in labon;:. And I ventme ■ gest that, if values could be ex . directly in Inlour units, it tainlv be well, but I conies* th »Y poor' abilities ire quite f „ r tusk of devising a practical schr noW the application of thus execden ll ( , e . to every day business ha iv , fc m focts of our present finai.nal mav bo it is foolish to make ad of 'curious and false :iccnsatl °- *;* *' gold. One of your corres, t ondents _ lays usury at its doors. 1 pt .., ro t rency were in cakes, won < (|, e always be those ready to undt . a payment of IC6 cakes a ie provided they are „rn > ted ICO cukes at once? K L.vm-e