LEGAL TENDER MONEY

Otago Daily Times, Issue 22023, 4 August 1933, Page 7

LEGAL TENDER MONEY

TO THE EDITOR. Sib, —In your issue of August 1, Mr C. M. Moss states “that it is the political pressure brought to bear on the banks that is the cause of our trouble and not tinkering with the exchange.” I don t know if Mr Moss is a banker or exbanker, and I cannot imagine why he should suggest that I blamed the banks as I did not suggest such a thing, but if political pressure is brought to bear on the banks, then,, naturally, it is tbe Government which is to blame, but if the bankers advise the Government and they took the advice, then it is both. In my letter I did not blame either, but mentioned the system, i.e., tinkering with the exchange. , When Britain and America went off the gold standard they practically declared they were not going to recognise the necessity of making settlements in gold, and that in my opinion was the actual cause in the fall of the exchange, and not anything to do with legal tender note issue, which may or may not have followed. America also declared that her gold

dollar bonds were not redeemable in gold, wdiich declaration affected all her gold dollar legal tender notes then in existence as well as those issued later. We must remember that “ goods for goods ” is the usual settlement of exchange, and not internal notes and any balance if on a gold standard country may be settled in gold. Mr Moss’s statement “ that the value of gold on the world’s markets is found by the labour cost of producing gold ” is, I think, quite wrong, because labour has never been cheaper in all parts of the world than it is to-flay, and gold in most countries is dearer —in New Zealand it is worth £6 2s 6d an ounce. If it was not the fact of the British Government going off gold, together with the unsettled state of the world, that ran the price of gold up to what it is, these factors had a lot to do with it —far more than the cost of labour. I hope I have convinced Mr Moss that “ tinkering with exchange,” and not note issue, has produced the present conditions. Would Mr Moss state the difference between the price of gold just before America went off the standard and its present-day price, and if the difference represents the big issue of legal tender recently issued in the United States? He says, “ The price of gold in countries that are on a managed currency depends entirely on the volume of currency in circulation.” He seems to be astray in saying that New Zealand placed a tax on her exports, the tax being not for the benefit of her own people, but foe the British moneylender. If the export belongs to the exporter the London price goes to the exporter. Incidentally, to our own farmers we pay a bonus, hut that others tret advantages from our crazy system of paying the bonus is quite evident, hut it does not make his argument any the less wrong. I agree with Mr Moss that we are being sold to the moneylenders, and this will continue until some party or organisation rises up and insists that the power of issuing credit must be taken over by the Government and not he allowed to the banks as at present. All increase in the wealth of New Zealand belongs to the people, and the credit should b e issued for the people as a whole by the Government or its appointed authority—and without interest. Till then the position will not be righted.— I am, etc., Equity. Wellington.