CURRENCY REFORM

Otago Daily Times, Issue 21627, 23 April 1932, Page 8

CURRENCY REFORM

TO THE EDITOR. Sir,— Shallow thinkers of the. type who tell us that the only cure for the depression is reduced expenditure and a lower standard of living have recourse to strange tactics in attempting to prove their- ease. The New Zealand Welfare League has nfisquoted its former letter by putting in inverted commas words which it did not contain. What the league did say was: “We see all sorts of absurd proposals to meet the situation by some trick with currency.” If the league believes that any of the proposals are not absurd, why did it not say so, instead of .dismissing the matter so summarily? When I’ quoted the 'Macmillan,! Report I did not infer, as the league affirms, that the note issue should be increased by £400,000,000. As the committee suggested this figure as the total note issue, such an inference could be drawn only on the assumption that the present note issue is nil. My only inference was that this would make unpleasant rending for the league. The league has confiTmed this impression by citing the disapproval of Lord Bradbury, who was the only dissentient of the 15 members. The philosophy of reduced expenditure and a lower standard of living, which the league preaches so regularly, would be intelligible if a world-wide famine existed. But when we find that the world is experiencing unparalleled plenty and possesses the means for producing an unprecedented volume of goods, would it not be more reasonable to s6ek an improved method of distribution ? The world, has solved the problem of production. The problem of consumption now awaits it, and there must be the- least ’ possible delay. For delay offers to the propagandists of Communism the opportunity of disseminating their dangerous doctrines amongst the malcontents who are bearing the brunt of the depression. For this^reason, the constant reiteration by the Now Zealand Welfare League of the necessity for a reduced standard of living, as being indispensable to recovery under the present financial system, is productive of more harm than the most rabid Communistic propaganda. It is indisputable that the troubles in New, Zealand are due to the fall in the national income which resulted from the drop in export prices. Therefore any sound proposal to restore those prices merits our closest attention. From the highest authorities we have the assurance that reflation, or the, restoration of prices to a payable level, can be accomplished by the concerted action of the Central Banks. It is for the nations concerned to move, in the matter, and .first and foremost for such debtor countries ns Australia and New Zealand, whose burden of debt has been at least doubled as the result of the fall in prices. Currency reform will be discussed at Ottawa, and the British Empire will have the-opportunity of giving the lodd to the rest of the world.

It is of vital importance to have a currency system which will serve as an adequate medium of exchange, and also admit of a stabilisation of prices at a reasonably high level. Gold has been tried, and has failed, chiefly, it is claimed, because of such non-monetary phenomena ns high tariff walls and war debts. It is significant that, before 1925, the value of the English paper pound was much more stable than that of the gold dollar.

If a managed currency was successful then there is no reason why it should not be so now. Currency management should aim at stability of prices rather than at the maintenance of the value of money at an artificially high level. We must not forget that the farmers, the manufacturers, and the workers—not the bankers —produce the world’s wealth, and no currency system is honest unless it recognises that fact.

It is a pity that some of tiiose people who are so strenuously urging the Government to reduce its expenditure by cutting down wages, and by wholesale dismissals, and at the same time hold up their hands in horror at an arbitai-y reduction in rents and interest, would not drop their selfish propaganda and realise that their own prosperity depends on the prosperity of every person in this country. New Zealand will recover, not by throwing people out of employment, but by finding a means of distributing the wealth which our farmers and manufacturers are creating.—l am, etc., Exchange. Dunedin, April 22.