THE WAR LOAN

Otago Daily Times, Issue 24698, 29 August 1941, Page 10

THE WAR LOAN

TO THE EDITOR Sir,—Mr Nash says the response to the invitation to subscribe to the war loan is encouraging. The Otago Daily Times, through its leading article, says it is disappointing, and traces the fact to the distrust of persons in a position to invest, regarding the financial policy of the Labour Government. There is not, howevei'. any fundamental difference of opinion between Mr Nash and the Daily Times on the major question of war finance, or indeed of public finance, in general. Both regard with complacency as right and inevitable, the further loading of the community with debt, and both seem to regal’d money as the controlling factor in our war effort. It reminds one of Douglas's complaint, made neai’ly ten yeai’s ago, that the British Navy was being reduced. at the bidding of money, to the point at which Britain would be almost helpless if and when war should break out. “It is not.” he said, “ that we cannot build the ships. Our shipyards are idle, our steel furnaces are unlit, our men are sick for want of work. It is because, God help our poor turnip heads, we have no paper tickets—monev.”

The same people—experts they call themselves —who thus disarmed Britain. said that Germany could not rearm or make war because she was “ bankrupt,” had no money. Just so, the “ economic experts ” said in 1914 that the war could not last more than a few months because "there would not be enough money.” There was, as Lord Milner pointed out. however, no difficulty about the supply of money. “ So long as the things needful were available, the counters for dealing with them would always be forthcoming!”

The banking system, with the Bank of England at its head,. manufactured the money by the million—-by the process so simplv and effectively described by the banks’ representative in New Zealand—“We wrote up the Government account by that amount and put it to investments.” But don’t forget, that they wrote up the people’s debt at the same time and by the same amounts. The Bank of England invited selected clients to subscribe to war loan on overdraft, to any amount they liked to name, and the ultimate debt was to the bank, not to the subscribers. No wonder Lord Haldane said of Mr Lloyd, George, with engaging simplicity. “He did everything we wished.” Now the same old game is being plaved. It is interesting to note the list of the institutions so retiring in their modesty but blushingly dragged out into the public gaze by Mr Nash as the patriotic leaders of subscription to the present New Zealand loan., Every one of them except the Union Company is an insurance combariy. a purely finan-' cial institution and of the. kind notoriously linked up with the banking system as the agencies of the present system of money control. It is time we learned a few things from our enemies in financial as well as in military matters. According to the London Times, fifty years out-of-date methods in finance may be as disastrous in war as fifty years out-of-date methods in strategy on the field. And as to the post-war era. are we <ming to leave the New Order to the Old Blunderers? Mr Mitchell Hepburn, Premier of Ontario, issued, on January 18, the following statement under the heading, “ Need for Monetary Reform .My first proposition is that the authority for creating money now vested by the Constitution in the Dominion Government should not be delegated to any other authority, public or private. The Government being the sole creator of money, it, therefore, follows that during this time, when the very existence of the State is threatened, the Government should not be required to hire or’ borrow money from others and to pay . . . for the use of the very thing ' which the Dominion Government alone has the right to create. ' Attempting to prosecute the war. which is, in fact, a great industrial and economic effort, by means of money either exacted at burdensome rates from the taxpayers or borrowed at interest, is merely to load down the Government with extra burdens which discourage and prevent an all-out participation in the war effort of the democracies. In times of war. Governments must face these facts and must realise that so long as the goods and services necessary for the prosecution of the war efforts of the nation are avail-

able, the problem of creating money to secure these goods and services is of very secondary importance.

Hitler and his associates found this out long ago. If we do not learn the lesson, our stupidity will unduly postpone that “ ultimate victory ” to which we all look forward, and it will certainly make of the anticipated New Order as much of a failure and a hissing as the vaunted “ world safe for democacy” of 1918. As I saw in a shop window to-day, “Success does not mate with hide-bound ideas.”—l am. etc., Truth.