THE CHAMBER OF COMMERCE ADDRESS

Otago Daily Times, Issue 22719, 4 November 1935, Page 10

THE CHAMBER OF COMMERCE ADDRESS

TO THE EDITOR. Sib, —Mr A. H. Allen’s presidential address specifies a long list of problems demanding scrions attention. The importance of them is undisputed, but the knowledge required to understand them embraces practically the whole range of human wisdom and will more than tax the understanding of the average man. From a commercial point of view the address was admirable, constructed with great impartiality and lucidity, but to the great majority it will remain obscure because it gives no technical instruction of a tangible nature. In Mr Allen’s own words, “ The problems relate to such questions as money, tariffs, production, markets, purchasing power, consumption, price levels, capital, wages, unemployment, forme and functions of government and the world’s peace ” —a formidable list of subjects, all within the controlling influence of finance. To gain an understanding of their relationship it is necessary to divide them by separating the division of production from the division of distribution, because it is in distribution that all the financial transaction take place to which all the evils that afflict the nations are due. This will not be admitted by the Chamber of Commerce nor will it be admitted by the Employers’ Federation, but these two.institutions, as everybody knows, are on the defensive against the hostility of organised labour, and the conciliation of capital and labour forms the first step towards the solution of international exchange. The antagonism between capital and labour arises ex--clusively from financial actions, over which Labour has no control nor can the management of them ever come within its scope. Because of the discrepancy that arises from the fluctuation in the purchasing power of money emerges the notion that the trouble is due to an unstaple currency, but that is quite erroneous. For the purpose of determining the monetary value of labour and the price of commodities a paper pound' note performs the function as effectually as a sovereign does, because its function to measure the monetary value of labour is of primary importance in all commercial transactions. In turn, the price paid in wages determines the cost of the goods produced, and it is the volume and quality of these goods that determine their market price by supply and demand. Indiscriminate production is, therefore, a powerful factor in causing great fluctuations in the purchasing power of money, and as this disturbance is never of local origin, but receives its stimulus from the conditions of the world’s markets, we see that no monetary stability can be secured in New Zealand while this system operates from abroad. The disturbance from which we suffer had its origin in the previous trade cycle which collapsed in 1873-74 in Europe and from which we suffered for 21 years. Prices again began to rise in the world’s market in 1895-96, and kept steadily rising for 17 years previous to the outbreak of the Great War, and did so by means of credit expansion which has completely supplanted and nullified the function of the gold standard—an evil which was further aggravated by an issue of paper money in Great Britain during the war. The influence of this external rise in prices reacted upon New Zealand, forcing up prices here to a level which had no relation to the intrinsic value of either commodities or the productivity of the land or the labour that produced them. Every employer of labour knows that to increase the wages of productive labour does not result in a correspondingly increased production. It only causes a rise in prices to the consumer and reduces his purchasing power. Here we see the finger of God controlling the value of money which no financier has the power to enhance. The value of money is determined exclusively by the productivness of land and labour and is not augmented by increasing either rent or wages, for those are both under the control of natural law, involving ethical judgment in assessing the correct price necessary to protect the consumer against the evils of a surreptitiously inflated currency which we all know to be the work of plutocratic financiers.

I have no intention to prevent this letter from being read by prolonging it, but I am far from having finished with all the explanations required. To. give effect to all Mr Allen’s enumerated problems as far from being so difficult as their formidable presentation makes us think them to be, as most of them are due to pure inflation and will disappear when the primary cause has been removed, this consisting in a conciliation between Labour and Capital within New Zealand first of all.—l am, etc., November 3. W. Sivertsen.