MONEY AND WEALTH

Otago Daily Times, Issue 24430, 16 October 1940, Page 10

MONEY AND WEALTH

/•, TO THE EDITOR

jjir.— In your issue of the 15th inst., “ Shocked-Amusedtakes me to task *for “proposing to establish a real relation between money and wealth ” by /giving taxpayers bonds in return for what they now pay in taxes, and for .Statin" that. When redeemed after the Wap the bond will enable the holders do-buy real wealth, which, they are i how forgoing. He fails to see where the'real wealth which they are ,to receive after the war for their tax bonds is to come from. He becomes a little more confused and incoherent when he.-says that the real wealth they are at present- forgoing consists of armaments and munitions that will bq blown to smithereens in the war. As a matter of fact, our present taxation forms only an infinitesimal part of_ the war expenditure. This is not the occasion to enter into explanations of the real objects of present taxation. I assume, Sir, that your correspondent is

a more or less wise man, and will try to answer him according to his wisdom. He Will.; find great difficulty in meeting .taxpayers who would not be very glad to get tax bonds. The cost .of armaments, munitions. 'etc., in terms of real wealth, is liquidated when they are consumed, destroyed, exploded. The real wealth of Britain, New Zealand, and other countries consists of their assets and productive capacities. Assets are buildings, factories, machines, railways, roads, power plants, men, women, and children, their skill and knowledge, farms, stock, etc. In the aggregate these form the potential power of a country to produce and deliver goods and services; that is weallh. The press is publishing news items from time to time emphasising the great stream of exports proceeding from Britain during the war showing that, notwithstanding the millions of men and women and the machines diverted to the production of war materials, the production of other commodities is still great enough to enable the country to export goods to other lands.

The last great war taught us that when we have won this war and millions of men are released from the fighting forces and armament works, productive capacity will be so enhanced that producers will again find themselves with what they called a “glut” of goods because the people, the consumers, will have no money with which to buy the goods and services which thev require. The redeemed tax-bonds will provide, at least a portion of that desirable and necessary purchasing power. On the other hand, the ever-rising scale of taxation without bonds will bring about an aggravated and intensified condition of penury far exceeding the depressions between 1919-1935, when the world suffered from a plethora of goods and ser- . vices, real wealth, and a scarcity of money with which to buy them—“poverty ,ih the midst of plenty.”—l

am, etc., . . . A. A. Lind St. Kilda. October 16.