THE MONETARY SYSTEM

Otago Daily Times, Issue 21993, 30 June 1933, Page 9

THE MONETARY SYSTEM

SUGGESTION OF REVISION

MR H. M. RUSHWORTH’S ADDRESS,

At his meeting in the Town Halil last night Mr H. M. Rushworth, M.P., Bay of Islands, expressed the view that many of the conventions observed to-day would he discarded within the next few years. The need for currency reform was stressed, and New Zealand, he urged, could do just what it desired in that respect, as other countries had done to their advantage. Mr Rushworth spoke for 90 minutes, his remarks being freely punctuated with applause. The Town Hall was filled downstairs, and in the main gallery there was a large attendance. ■ The chair was occupied by the Mayor (the Rev. E. T. Cox). Mr Rushworth said he did not claim to be an expert: he was there as a private individual, driven by a sense of duty, answering a scries of invitations, and he would have been a coward to sit quietly by his fireside while people were willing to discuss the dry subject of money and to listen to his opinions. One of the most outstanding features of the present situation was that too many people were content to accept anomalies without question. That had been the fate of this country and:of other countries for the past few years. A change, he thought, was taking place now. In this country the volume of real wealth had increased amazingly—in the last 10 years the increase had been most astonishing. They all knew, he proceeded, how the primary pioducts had increased in volume. They also knew how the primary products of other countries had increased in volume. They knew, too, how the output of coffee, cotton, and other commodities had been restricted. This had created the idea that there was an “ unbalance ” between primary production and manufactures, but such an idea, he claimed, was false, as was shown by- a report issued by the Columbia University, of America some months ago of the investigations of a committee of 53 experts who had spent 10 years making an energy survey of the United States. The sum-ming-up of the report-was to the effect that the industries of the United States, primary and secondary, if allowed to work to full capacity for half time, could supply all the requirements of humanity. Such were the results of the application of power to production. This technocracy report was one of the most valuable, and, at the same time, one of the most frightening reports ever issued. The question of the “ unbalance was one of the many popular fallacies.of the day. They still heard it said that the people must consume less and produce more. There was no solution along those lines. Another thing that was said was that they must live within their income. Of course, they must, but, ae no one had yet devised a means of consuming nextyear’s crops, who was to'nominate that income? In the nightmare of finance it was said that income was money. It was not. It was produce, and they had produced more and more, so that their income, in reality, had been enormously increased. Then it was said there was no short road to prosperity. They did not want one. They had prosperity now unless he did not recognise it when he saw it. What they did need, on the other hand, was a short cut to avoid catastrophe.” (Applause.) Another thing that was said was that there must be no tinkering with the currency. There had been a tinkering with the currency for over 100 years, but the people had not been allowed to do the tinkering—that was in the hands of a privileged few. It was the present form of currency that was wrong. The position, to his mind; was that, there was a gap between purchasing power and financial costs. This was a fundamental fault, and there were two schools of thought on the question. Some said that costs must be cut down until there was'equation. That had been tried, but it meant that as costs were cut down the purchasing power was cut down. Another school would bring up purchasing power to the level of costs —the raising of loans, increase in wages, and so on—but, as purchasing power was increased costs also went up. The problem that had to be solved was how to increase purchasing power without at the same time increasing costs—in other words, the bridging of the gap—and what was desired was to increase the purchasing power in such a manner that the increase did not appear ill the costs. Professor Bellamy, of Liverpool University, had made a most interesting suggestion in a jocular remark. He said: Great Britain has now reached the stage where there is only one way out for the Government of the day, and that is to manufacture large quantities of money and give it as a free gift to the greatest spendthrifts that it can find." The idea was to clear the decks of the accumulated goods, so that employment would be provided in tbe production of new goods. There was more sense in Bellamy s jocular remark than there was in the popular fallacies the community had been feeding on in the past three years. ; But he did not agree that it was the proper way out, or the only way out, because there were alternative methods. For instance, a war would solve many problems, but anyone who knew the realities of the Great War would admit that war was an emanation of the_ devil. Or, there was the method under which a wholesale destruction would take place, and this was being practised in some countries to-day. Still another way out was to reform the monetary system and make it fit the national requirements. The only way in which a solution could be found was, in his opinion, through the avenue of common sense. — (Applause.) Major Douglas had provided an analysis of the situation which was the only one to meet all the factors. — (Applause.) This analysis he propounded 14 years ago, and in spite of strenuous opposition it h;fd forced its way round the world, and to-day adherents were to be found in every country. Major Douglas had discovered a way of closing the gap between purchasing power and costs of production. It was because of the existence of the gap that trade agreements, combines, tariff barriers, and quotas came into existence, all of which evils would disappear if the monetary system were revised. Last year he visited different parts of the Dominion, including Dunedin, and as a result there were resolutions carried urging the Government, in the present circumstances, to hold a full and open inquiry into the existing monetary system and any possible alternative thereto. Petitions were also sent to Parliament with the same request. He was urged to call a conference of organisations interested in the subject, and as a consequence a deputation, 40 strong) representing S 3 separate organisations, urging monetary reform, waited on the Prime Minister. They urged the case strongly, and the Prime Minister informed them that he knew nothing about money, butsaid he would take the advice of his experts on the subject. Every constitutional step had been taken to secure the full and open inquiry so eagerly desired. There had been no response whatever from the Government. In his opinion, the refusal was particularly cold and callous, and this was added to by the fact that one of their national leaders had recently stated that the Government had not felt any need for such an inquiry, because the demand emanated from a few disgruntled people in

Auckland.—(Laughter.) That was the childish excuse one had to put up with, and, against his will, he was driven to the conclusion that the Government was afraid to hold an inquiry, because there was something to hide.— (Applause.) There had been despair, destitution, and suicides, and as long as an inquiry was not held his conscience directed that he could do no less than charge the present leaders with the personal responsibility for these happenings. The' question was sometimes asked. How could New Zealand pay for its imports and meet its overseas debts if it reformed its monetary system? The reply was that no payments were made overseas with New Zealand money; such payments were made with the goods that were exported. New Zealand could do what it liked with its own monetary system. Egypt, Malaya, and Sweden had done that, though it was hard to obtain information.'These countries had proved that it was possible to reform the currency without endangering overseas trade. •* ’ “There is a ray of sunshine,” Mr Rushworth concluded. “ From one end of New Zealand to the other there has been a great awakening of public opinion and, conscience in the face of destitution and poverty. People will no longer stand the abuse of common sense.”—(Applause.) “In the next few years we will see, probably, most of our conventions and principles discarded. New generations will discard those that have been our safeguards. There will be a new -era.” On the motion of Miss M. H. King, seconded by the Rev. Percy: Paris, Mr Rushworth was accorded a hearty vote of .thanks for his address.