"MANUFACTURED" MONEY

New Zealand Herald, Volume LXXII, Issue 22259, 6 November 1935, Page 17

"MANUFACTURED" MONEY

Si r) —To "One of Many" the advent of a Labour Government spells the end of all things. If it is true that so many to-day are obsessed solely with the problem of getting sufficient food, clothing and shelter for their immediate needs, and this in a presumably Christian country, which teems with natural wealth, then surely the fear of change should give place to the fear of standing still. If the economic system is not functioning in such a way as to provide ample security for all sections of the community, then is not the time ripe for a drastic change in that system? R. J. Peter.

Sir, —Your correspondent "One of Many" has drawn attention to the grave danger menacing the security of all those who, owing to their thrift and industry, have saved just sufficient to provide for old age. If Labour triumphs at the approaching elections, as, thanks to vote-splitting, seems only too probable, it will have, in order to give effect to the glittering promises it is making to the electors, to raise money, and plenty of it, and this apparently it proposes to do by the simple expedient of employing a printing press and lots of paper. Wall, we all know how that fatal policy answered in Germany, where the mark rapidly depreciated in value until it was worthless. Also Anxious.

Sir, —"One of Many" may after all be entertaining unnecessary fears as to the effects of the Labour Party's fii/ancial policy upon the value of his savings. He need« not be alarmed because Labour proposes to "manufacture" money—there is nothing new in that. Nor is there anything new in increasing the amount of money in circulation. What is new is that the Labour government proposes to do so itself instead of allowing the banks to do so. And it does not necessarily follow that "One of Many" will be any worse off if prices rise due to an increase of "new" money. Unless his savings are invested in gilt-edged securities at "fixed" interest his dividends will rise with prices. If his savings are out at fixed interest then he will remember that interest rates on such securities were reduced by the Coates-Forbes Government at the beginning of the depression. It will then be for him to join with others in demanding of whatever government is in power that, as interest rates were reduced in had times, thev should be increased again in good times. I think the Labour Party realises better than any other that prosperity depends upon the purchasing power of the people. Another of Many.