SAVING AND SPENDING

New Zealand Herald, Volume LXX, Issue 21504, 30 May 1933, Page 13

SAVING AND SPENDING

Sir, —"Fairplay" is in error when ho assumes that additional money means additional purchasing power. Tho purchasing power of mankind is determined entirely by output of goods and service. An individual commodity, or even a whole group, such as farm produce, may, by being produced in relative abundance, depreciate in purchasing power, but to say that all output can lose its exchange value is simply nonsonso. Money values have nothing to do with this question. If a farmer's output of buttor-fat is valued at £IOOO ho can purchase £IOOO worth of goods. These goods are tho measure of his purchasing power. If the butter-fat ho sells and the goods ho buys each fall to £SOO in money value, his purchasing power remains unaltered. Similarly, our output of exports determines our power to purchase imports, and in this case also money values are of no consequence so long as'they do not change in relation to each other. The purchasing power of mankind, expressed in money, is simply the money value of tho total output of goods and service. The theory that output is now abundant, or could easily be made so by purely monetary changes, takes no account of facts. With a given equipment and organisation the maximum output must bo achieved when mankind are fully employed. Three years ago this was practically the position. Some few millions were idle, but countless millions were working over ten hours a day, and many millions of women and children wore employed in productive work who should not have been so employed at all. What was tho result of that vast human effort with an equipment practically the same as wo now have? Vast massos of mankind were living with one room to a family, practically without furniture, without conveyances, and with a bare minimum of food, clothing and education. To provide the whole of mankind with tho commodities and services most of fis consume in New Zealand would probably necessitate trebling tho output of three years ago. How this vast increase in output could be achieved by circulating pieces of paper, manipulating bank credit, or simply working five hours instead of ten has novor boon made clear. Manurewa. J. Johnstone.