THE MONETARY SYSTEM

New Zealand Herald, Volume LXX, Issue 21552, 25 July 1933, Page 13

THE MONETARY SYSTEM

Sir, —Mr. Older is misreading his facts when he assumes that difficulties in the way of selling goods must be due, either to over-supply of goods, or under-suppl.v of money. No matter how small and inadequate for the requirements of mankind the output of wheat may be, and 110 matter how abundant the supplies of money, if the output of other commodities is even more inadequate, the wheat will be difficult, or even impossible of sale, because equivalent value has not been produced to givo in exchange for it. If people starve in China, while wheat is almost unsaleable in Australia, it is because the Chinese produce so little in excess of their own requirements that their exports are only four times those of New Zealand, though their population is three hundred times as great. They have almost nothing to offer in exchange for imports, and the difficulty is thus due, hot to over-production, in Australia, buff to under-production in China. Farmers throughout the world are suffering because the output of farm produce approaches far nearer to the requirements of mankind than does the output of merchandise, henco produce is relatively cheap and merchandise is relatively dear, and farmers are impoverished by the inadequate output of others. Also, as has been pointed out often enough, when markets are arbitrarily closed against exporting industries, goods must become difficult or impossible of sale. The volume of money in circulation has no connection with these difficulties. J. Johnstone.