REDUCTION OF SUBSIDIES

Otago Daily Times, Issue 27384, 9 May 1950, Page 8

REDUCTION OF SUBSIDIES

Sir, —After listening with cfireful and interested attention to Mr Holland on Friday I just wondered when our leaders would cease talking like politicians and come down to plain, understandable arithmetic, which can be grasped by ordinary people. The first part of Mr Holland’s address was full of well-worn dramatic words, used to inspire terror of a lurking foe waiting to lay us out—- “ relentless,” “ remorseless,” etc. Had I known that Mr Holland proposed to give this speech I could have helped him to express his meaning in perhaps less diplomatic language, but with more directness. He could have said: “I am going to give you a ‘ crack ’ on the head. It is for your future good, but.ask no questions as to how the remedy is to be worked out.” The world today is being fast borne to destruction in a spate of empty, emotional, and partisan oratory. Politicians are not willing to come down to the simple terms of arithmetic taught in the higher forms of the primary schools. Until the conduct of politics is changed over from being a party contest to a single consideration of the welfare of the citizens in general the national situation is without hope.—l am, etc.. Humanity. Sir—After listening to the Prime Minister’s speech, I think it is about time that we, the workers of New Zealand, awoke and cast aside these politicians and replaced them with the Labour Party that has been tried and has proved its worth by looking after the workers. Before the election the National Party promised to make the £1 go further. They have failed to honour their promises.—l am, etc., Anti-National. Sir, —Mr Holland and his colleagues may be acting according to their lights in the measures just announced by him, but “ if the light that is in them be darkness, how great is that darkness! ” It is a matffer of plain experience that we do not, in the course of our economic activities, distribute to individuals enough purchasing power (money) to buy the whole output of those activities at prices remunerative to the producer. The late Labour Government —which may soon be thought of as the late lamented Labour Government if Mr Holland continues on his present course—tried to deal with this situation by inflation, becoming more inflated as it went along. Now it is also a matter of plain experience that when prices have risen from whatever cause, it is disastrous to try to bring them down. Perhaps that is why Mr Holland has begun his beneficient 11 trying work on the New Zealand £ by making them higher than ever. Will he, bv the way. make an equivalent reduction in taxation when the subsidies are withdrawn? And what will his suggested cost-of-living bonus do, except add to the already inflated costs which must go into prices? Already the situation looks very like “ out of the frying pan into the fire,” and what will it feel like when Mr Holland gets busy reducing the amount of money in circulation by his economies? His horror at the “ millions of paper money" (does he live mentally in the eighteenth century?) will be nothing to his horror at the people’s reaction when they' find themselves with fewer £'s that buv still less—and after his taking them Into his confidence, too! There is a kev to this door, but Mr Holland refuses to recognise its existence. It is to issue the money of the people for the people in the name of the people, as and when required, ■without debt or taxation: money that does not go into costs. The Government that first decides to do that will save its people by its courage and intelligence, and perhaps the world by its example.—l am. etc.. Truth.

Sir,—After the frank, courageous statement of Mr Holland on Friday evening, the replies of Messrs Fraser, Nash and Connolly show up in an exceedingly poor light. Surely these gentlemen so recently In charge of the country’s affairs should have been fair enough to refer to Mr Holland’s plans for raising wages and social security benefits in order to offset the rising prices due to 14 years of their own Labour Government's gross mismanagement. '■ Thanks to Mr Holland, many electors will now have a new feeling of relief in the knowledge that special provision is to be made for those thrifty people whose small incomes will not automatically be increased as a result of social security adjustments or in other ways.— C ‘*

Sir—Allow me to express satisfaction and gratitude for the prompt attack on the ime malpractice of “ subsidies. It' is a feather in. the cap of your occasional contributor, “ Matilda. I admired his bold suggestion that this should be done. In fact, I would have written myself in the same strain, but refrained, not being an economist, or even an accountant. There would have, been a reference to . thqse who ” rush in. otc.— I am, etc.'. ' • ;■ : Ivon A. Borton.

Sir,_What a skilful blend of fact and fiction the Prime Minister put across the air last Friday night for the delectation—or otherwise —of a listening public! The gravamen of Mr Holland’s message was that Labour in office had, last year, pursued a rake’s progress by issuing £26,000,000 of “ paper money .from the Reserve Bank, with nothing behind it but thin air. This, he said, was pure inflation; and if New Zealand was to live within her means her financial requirements must be met out of taxation and savings. But as taxation was already too high, it was proposed to borrow the people s savings, in the form of an internal loan, for the country’s needs. . J This sounds very simple and reasonable, until it is realised that all our savings are invested already, and cannot be used over again. Therefore the loan will have to be raised in the time-honoured orthodox way, i.e., by inflation pure and simple. The individual subscribers to the loan will have to raise the amount they subscribe bv mortgaging their assets to the bank, and the Government will guarantee interest and repayment of the 53 consideration will show that a loan raised in this way creates lusl the same kind of “ paper money . as that issued bv the Reserve Bank and is just as inflationary. Tile only difference Is that the loan a la Holland' is a debt owed by all the people to private finance, whereas the loan a la Nash is a debt owed by all the people to the . Reserve Bank. Both these methods of ” raising the wind are eauallv inflationary: but tl|e Nash method is' infinitely preferable 'from a national point of view to the Holland method. —I am. etc., * Disapproving Listener.