POLITICS AND UNEMPLOYMENT.

Otago Daily Times, Issue 21244, 27 January 1931, Page 6

POLITICS AND UNEMPLOYMENT.

TO THE EDITOH. Sin, —Headers who have followed the I series of letters written on the above subject and the opposition of Mr Maci Manus to the argument and facts oonj tained therein will have noticed that he i hae merely adopted a policy of making a general statement such as that " there is no argument to justify it,” and that “ tile above statements are built on a fallacy.” At a later date he brings to his assistance the Commonwealth StatisJ tician’e advocacy of further inflation to ' help him, and finally, in his last epistle, j he says: “ Mr Moss cannot find an econoj mist who will admit that the rise and ' fall in wages causes the rise and fall in the rate of exchange.” Surely Mr Mac- ! Manus has allowed his enthusiasm and appreciation of the wild advocates of inflation in Australia to run away with hie judgment. Can he deny that the wild talk of further inflation did not affect ! the exchange against Australia? Have i we not seen the rates increasing as the | possibility of further inflation increased i jls it not a fact that all economists i recognise and admit that a depreciated 1 currency will place the exchange agamst a country, while an appreciated currency will tend to place the exchange in its favour? Surely Mr MacManus can understand that to_ keep up money wages by increased note issue would be equivalent to a further depreciation of the currency, and would widen the difference between the Australian pound and the British pound, thus bringing about a further increase in exchange rates. If Mr MacManus requires any economist of note who will support the above statement 1 would recommend him to study Adam Smith, Ely, Wicker, Hobson, or any of our present-day authoritiesv I believe that one cannot be found who will disagree that laws of certain descriptions affecting money value of wages will not affect the exchange rate in one direction or the other. May I ask Mr MacManus to take notice of the effect on the exchange rates of the decision by the Commonwealth Arbitration Court to reduce wages? If he does so, he will see very shortly that the rates will fall, provided, of course, that the workers are not foohsn enough to be led to strike in opposition to the reduction. Further,' he will see a stimulation in industry and a reduction in unemployment as a result of all money in circulation and on deposit account having an increased purchasing power. He will see a reduction in_ interest rates as a result of interest-receivers having more capital to, lend, through the _ amount of interest received j>y them being able to purchase more goods owing to cheaper prices. If Mr MacManus will, note the exchange rate between New Zealand and Australia during the next few weeks he will probably see them coming closer together owing to the probability of a stimulation of industry in Australia, together with political stability and an increasing depression and political chaos in New Zealand. Mr MacManus can rest assured that anything that will tend to bring about confidence in industry and a stabilising of the currency of a country, be it Australia or any other, will always affect the exchange for good. Further, it makes international trade more easy. Anything that tends to create fear and prejudice between Capital and Labour or bring about political chaos will operate .adversely. May I ask Mr MacManus once again to go through the letters written by me and try and forget any-sectional interest, —to try and look at the question from a national standpoint? When he has done so I believe he will see there is at least something to be said in favour of a reduction in production costs by the method advocated by the writer. It must be obvious that an increased purchasing power can be given to the people by a reduction in prices just as it can be given by increased note issue, but with this difference, that by a reduction of prices all people will eventually benefit, whereas by further inflation the workers are likely to suffer greater hardship through increased unemployment. Surely this is worth serious thought. The time has long since passed when we should bother as to who is credited with the ownership of wealth, whether it be lands, machinery, or money. What we should all concentrate on at the present juncture is the use of wealth. We find people credited with ownership of land, machinery, etc., who are worse off than those possessing none, for they are unable to liquidise their wealth in money terms, while their _ liabilities for rente, interest, etc., are still .going on. In other words, the lands and industries are passing into the hands of fewer persons, thus making the many subservient to the few. Surely Mr MacManus recognises that humanity can only be free when it possesses wealth and can use it, and, to use it, justice must be done to all. While justice may not have been meted out in the past few years, it behoves us to see it is done in the future. I believe Mr MacManus will agree that there can be no justice in further inflation as supported by him. In conclusion, may I point out once again that the cause of the high exchange rates between London and New Zealand and Australia is not the balance of exports and imports, but the difference between the monetary standards —i.e., the New Zealand pound, the Australian pound and the British pound. It is obvious that if it was only a question of exports and imports the exchanges would not be so high for, gold being a commodity, it would be very profitable to ship gold to balance the exchange. It is a well-known fact that when the gold points between America and Britain exceed 4.8465 and 4.8865 dollars to the British pound, gold is shipped between these countries and exchange is brought down to between these points or to par. At the present time both Australia and New Zealand are', owing to high production costs, in the unfortunate position of being unable to ship gold or sufficient goods to bring exchange to normal. As before stated, the exchange rates are likely to increase between _ Britain and countries such as Australia and New Zealand if no effort is made to deal with the matter along practical lines.. It must he clear that unemployment must increase if the obstacles preventing production are not removed. Mr MacManus, perhaps unconsciously, in his latest letter shows the futility of strikes, when he states, “In Australia for. several years past there have been a seaman’s strike, the watersiders’ strike, the goldminers and copper miners’ strike, and the coal miners’ strike, which lasted for over 12 months. Yet in spite of these and wage reductions, the rate of exchange has gone up.” One wonders if Mr MacManus realises the effect the enormous loss of wealth due to these strikes had on the exchange question? And further, does he expect the exchange rates to fall through strike action? —I am, etc., C. M. Moss. North-East Valley, January 26.