"ENLIGHTENMENT FROM LONDON"

Otago Daily Times, Issue 23200, 26 May 1937, Page 15

"ENLIGHTENMENT FROM LONDON"

ro niE EDITOB

Sir. —After reading your footnote I feel I owe you an apology. You say " I amusingly confuse savings with credit." I should have known that it would have been difficult to get you to understand. I should have known that men are what their mothers made them; when they leave their mother's womb the gifts close behind them. To expect a journalist to understand the problems connected with finance would almost be as foolish as to expect a born jobber to understand the problem facing the engineer. Seeing that others besides yourself are interested in the Government's financial policy and have read my letter and your footnote, it will be as well if I deal a little fuller with the- statements made by you in your leader of the 20th inst. With reference to the Government's Marketing Bill you express the opinion that the banks are doubtful whether those who have benefited from the Bill will continue to benefit from it. Sir, many connected with banking interests, like yourself, no doubt, would like to see the benefits taken away, but it must truthfully be said that the farmer who farms the land has certainly been helped. Perhaps it will be of interest to quote an extract from the report of the directors to the shareholders of the Bank of New South Wales on the matter. It reads: " The experiment of guaranteed prices is still in its initial stages, and it is impossible to estimate what success it has had. The basic price for the present season is an, average of that fof a number of previous seasons, and is at present somewhat in excess of what the dairy farmer could obtain on the open market. . . . The policy of the Labour Government, though radical, has so far, I am glad to say, allayed the anxiety of many who had feared that the election would be followed by dangerous financial experiments. . . . The recent Budget was sound in principle even though heavy increases m taxation were made, and the Government has so far shown little intention of abusing its augmented powers of control over the Reserve Bank." It will be seen from the above quotation that the farmer—note, the farmer on the land—is receiving more for his produce than he would have received on the open market, it is not likely he will be dissatisfied. So far as increased taxation is concerned, what matters to the people is whether the return for their labour allows them to meet it. Again, it will be of interest to quote the bankers view by an extract from the report. It reads, "While the Government now in office in New Zealand continues its present policy producers' fortunes no longer fluctuate with overseas prices. It will thus be seen that the farmer on the land has much to thank the Government for. The persons who object, like yourself, form the class of people who desire to gamble in the labour products of the producer and worker. With reference to your statement regarding borrowing for public works md housing, you quote Mr Nash as ;aying that there is no likelihood of internal borrowing. Moreover, you ■jvrile that he discreetly refrained from mentioning that the housing policy is being carried out with borrowed money. You also infer that such a policy leads to inflation. Sir, you overlook the fact of the statutory powers of the present Government. It can. it it desires, raise money for any purpose it thinks desirable. Again, it will be of interest to quote the bank directors opinions. They are as follows: The present Government has been in office a year, and in that time some economic institutions have been drastically reconstructed. Amendments to the Reserve Bank Act have given the Government supreme control over monetary policy and administration. As the Reserve Bank has control over the note issue and the cash reserves of the trading banks, there is practically no limit to its power to increase the money in circulation for any purpose desired by the Government." It will thus be seem from the above statement that the Government can .make by "savings in the cost of raising or creating the necessary money to carry out its schemes. Moreover, so long as it does not create new legal tender money before goods are created, fhere is little danger of inflation. The only trouble from the standpoint of the working class is that the Government is not using its powers fast enough. The trouble from the gamber's standpoint is well illustrated by the remark of one of our local city councillors, viz., "They will lose their power over the workers."

In conclusion I again suggest to you that you alter the policy of attack on the Government and its members. Their fault lies not in the way they are raisthe necessary finance to help the people, but in the way much of the money is being used. If you concentrate more on that point you would get the support of those who understand and are above sinking their opinions to suit the interest of any section. —I am, etc., C. M. Moss. North-East Valley, May 22.