MONETARY SYSTEM

Otago Daily Times, Issue 22197, 26 February 1934, Page 10

MONETARY SYSTEM

MEETING OF COMMITTEE PROPOSALS BY MAJOR DOUGLAS LIMITATION OF BANK DIVIDENDS a (Pee United Pbess Association.) «' WELLINGTON, February 24. A special meeting of the Parliamentary Monetary Committee was held to-day to hear evidence from Major Douglas, the founder of the Douglas Credit Movement. When he was first invited to appear be* fore the committee with a proposal or definite scheme which might be made applicable to New ’Zealand, Major Douglas pointed out that, owing to inescapable commitments, he was obliged to leave Wellington at an early date, but suggested that a judicial inquiry into the current monetary system on behalf of the New Zealand Government might suitably be held in London. He asked whether the committtee did not wish to comment on or investigate the current working of the financial system, and, in reply, it was stated that the committee was prepared to hold a special meeting in order that it might hear Major Douglas, and it was also pointed out that it was felt that any inquiry into the monetary system applicable to New Zealand should be hold in the Dominion. The committee ther stated that it could not approach its, work with other than an open mind and obviously could not prejudge any issue, nor at this juncture make any statement in respect to the existing financial monetary system or any proposed system while the matter was sub judice. Mr J. A. Nash, who presided, welcomed Major Douglas as a distinguished visitor to the Dominion and one who had taken l a keen interest in monetary schemes. He said that if necessary the committee would probably be prepared to hear Major Douglas at greater length in any other part of the country than might be possible at the present juncture. That, however, was entirely a matter for Major Douglas to decide. Major DouglaS’s proposals are contained in a letter which he wrote when he agreed to appear before the committee. He set out what he considered were the defects in the present industrial, social, and economic system, and attached proposals for the consideration of the committee. The letter stated, however, that these proposals did not deal comprehensively with defects which, in his opinion, resulted - primarily from a radically defective conception of the proper function 'and ownership of financial credit. His proposals included limiting the banks to paying a dividend of not more than 6 per cent, on the subscribed capital; preventing a bank from increasing its capital in such a manner as to affect the gross amSunt of the dividend distributed in respect to business carried on in New Zealand, except with the consent and through the agency of a legal enactment of the Legislature; every bank to make an exact return of it s assets within three months of the'enactment of the proposals; where the assets are the real estate, buildings, furniture, fittings, appliances, etc., of the bank, and it is found’ that their valuq on the books for balance sheet purposes is lower than the market value, the difference shall be transferred to an account called the suspense account No. 1, and all profits earned from any source over and above the amount necessary to pay a 6 per cent, dividend shall be transferred to a suspense account No. 2. The first account is to be applied to overdraft reductions, and the second to the reduction or reimbursement of interest paid on overdrafts. He proposes a scheme on a similar basis regarding insurance companies, The monetising of the concealed reserves within the existing financial system with a view to improving the overdraft of the community on a pro rata basis, Major Douglas argued, would lead to increased purchasing power and unem. ployment would be eased.' The hearing was very lengthy, questions being asked for the purpose of obtaining in detail bow members of the public would benefit from the proposals which Major Douglas made after the groundwork had been prepared. TENDERING OF EVIDENCE.

The Government recently set up a monetary committee to inquire along the lines as set out in the following order of reference: —“To inquire into the monetary systems or standards which have been advocated as preferable to our present system, and, having regard to the nature of the trade and industry _of the Dominion, our economic relationship with Great Britain, with other parts of the British Empire,* and with foreign countries, and generally all other relevant factors, to report upon such proposed systems or standards, with particular reference to their examination or adoption by other countries, their practicability, and the probability of their adoption promot. ing the development of industry, and the welfare of the pfeople of New Zealand.” The committee invites those interested to place before it -their proposals .for changes in, improvements or alternatives to the present monetary system of the Dominion. Those desiring to put forward proposals are requested to make application to the secretary, Monetary Committee, Parliament Buildings, Wellington, and enclose a concise outline of' tlieir proposals for the preliminary consideration of the committee. Those who wish to appear personally in support of their written statement should indicate accordingly, and they will be notified later as to when and where their evidence will be heard by the committee.