BANKING PROBLEMS

Poverty Bay Herald, Volume LV, Issue 17228, 7 April 1930, Page 10

BANKING PROBLEMS

(To the Editor of the Herald.) Sir, —Much is said at the present time of the unemployment problem, but it is quite evident, lliat despite superior scientific knowledge, experience and educational attainment, orthodoxy lias no euro. The academician cannot help ns. He can tell ns how the economic principle has operated and how il does operate, but lie cannot, or will not, tell us why it does not reach the earning power, the driving force, in fact., the people. We are told that “the consumer pays wages, interest and proiil. and that as wage earners constitute the largest body of consumers they pay their own wages.” 'The obvious retort to this is “then let them go ahead.” The national retort is: “We must keep them going.” Without the legal tender currency, wliit'li enables the nation to do so, the banks would have been forced lo close down upon the overcapitalised i farmers, and put. others in on a revenue producing basis. With the legal tender currency operating the farmer indirectly gains the benefit of long dates. Our exports are not of sullicient value to provide ns with the sound currency, based upon productive value—when they are the sovereign will appear in circulation, because standard value tlion becomes the more profitable exchange principle. The Stale can do no more than it. has done, without defeating its own ends, except by forwarding a. borrowing policy, and our only problem should be how best, (o spend the money on soundly amortized lines.

The judicious handling of loan moneys supplements the currency and incidentally provides longer dates to the farmer. How judiciously it is spent, determines its actual cost. Furthermore, we are told that the cost is nothing il" we get our money’s worth. Various insurance schemes have been mooted, but no insurance scheme would give the same immediate and communal benefit. The objective is to insure against unemployment, but it. must, be apparent, that if money secured by taxation or levy, is being used to pay for unemployment, it is being used uneconomienllv. If used economically in labor, the levy is unjust, as the labor must be paying for itself. If unemployment is rife the scheme is bankrupt, because the activity of labor and capital is automatic, and the nation, to honor its obligation, stands committed to the dole. If not, capital is being aggregated and the world’s problem is not how to make capital, but how to use it. The soup kitchen, etc., however it may appeal to the humanitarian, is a poor business proposition, and if Hie sum used were capitalised and used for employment, that would he evident. Labor is the world’s" capital principle and it is for the business mind and common sense, to find investment for it. At the present time the (State welfare is at war with domestic welfare. The State must have international gold valuo. Gold value represents the basic asset of the individual. A contracted currency depreciates its values and promotes difficulty in holding it. An expanded currency creates ;a wall of debt and further difficulties between the individual' and his asset. A commonsense subsidising of a, contracted currency, or the circulation of loan money, per medium of labor, enables him to bold bis asset through the period of lean years. When the asset, with the riso in price, becomes revenue producing, it supports itself —with, perhaps, a little to spare. Surely a. better proposition Ilian dumbly losing the whole. The employment of labor to-day is not philanthropy, but good finance. If the individual will not help himself in lean times to retain bis gold value, the State is forced to liquidate it through tlio banks, in order lo maintain its own international credit. Part of our bewilderment originates from the professor’s endeavor to standardise bis terms, for ’the benefit of students. We are told that iri order to prevent confusion betwen utility valuo—which is welfare or domestic value—and market value—which is of international gold value—the one is called utility, and the other price. Unfortunately we have been led to consider that finance hovers around price only, but that is not so. Finance hovers around domestic activities. ami finance, like charity, begins lat home. Finance must not bo considered as a substance, but as a process or organisation. The international clearing bouse, if it gets its start, which God forbid, for it will reduce us all to coolie level, destroy all individual asset and security, as well as all thought of Empire preference, as its extremity is international free trade —will have but a set of books, notes of band, and a, long term deposit of 400.000,000 German marks. All worth nothing, until organised and operated upon by the peoples’’ activities. A bridge must be formed and maintained between utility and the glittering price, so that tho reaction of our justified haste after price may not destroy our domestic standards. Private banking, with its fundamental short dates, destroys this bridge. State banking, with announced long " dates, that really mean a legitimate partner-

ship with its people, can build and main tain it.—l am, etc., JAMES MORRISON.