COSTLESS MONEY

New Zealand Herald, Volume LXXIII, Issue 22398, 20 April 1936, Page 12

COSTLESS MONEY

Sir, —Those who are looking to our Labour Government to lead us into an age of leisured abundance are in large part led to these expectations by two beliefs they hold in regard to money. First, we have the belief that interest is extorted from borrowers for the use of a commodity, the creation of which costs practically nothing, and that this burden could be removed by Government creation of money. It happeus to be the fact, however, that none of the wants of the borrower's body or the borrower's mind can be met with money, money being useful only to facilitate the transfer of the things that count. Thus the family that borrows £IOO is benefited, not by use of that amount of money, but by the use of the goods or service purchased with it. If the borrower is wise his loan will be used for the purchase of such capital goods as will aid; him in his business by making his labour more productive than it otherwise would bo, such being the function and use of capital. The lender loses the advantage the use of his capital gives, and he will not part with that advantage for nothing; the borrower gains that advantage and he cannot expect to get it free. Both the needs of the borrowers and the demands of the lenders are factors that have no connection with money, and both are beyond the control of Governments. Next, we have the belief that the cost of any work done, that is paid for with money, is the cost of the money used as payment. From this we have the vicious and dangerous theory that with the costless creation of abundance of money by the Government all manner of undertakings, not now practicable from want of money, could be put through without loss or sacrifice, since the money would cost nothing. If this theory were sound our entire population might be employed by our Government in levelling mountains, and if liberal payment were made, with costless money, no loss would accrue. Iri fact, however, under such enlightened leadership all our useful possessions would rapidly pass out of existence and the nation would be ruined and starved in a few weeks. In a world of realities the cost of any commodity is not money, but the labour and material used in its production. Nations grow rich, not by devising cheap methods of creating money, the cost of which is insignificant in any case, and the abundance of which is of no consequence, but by the useful work they do, and no Government can alter that fact. Manurewa. J. Johnston®. :