PROSPERITY IN N.Z.

Poverty Bay Herald, Volume LXIII, Issue 19135, 2 October 1936, Page 2

PROSPERITY IN N.Z.

1 MONETARY POLICY ''QtTTLOpK SATISFACTORY" ScfiRISTCHURCH VIEW A continued period of prosperity for the* Dominion, provided the Government's policy of monetary expansion was kept under reasoned control, was foreseen'by Mr. F. W. Hobbs,„retiring president of the Canterbury Chamber of \Comifferce; in his address to H* annual meeting of the chamber in Christchurch. ' . . .. Mr. Hobos said the present prosperity in "the Dtfwnion had resulted from increased prices for exports, and as tlio indications were fdv a continuation oi fair- prices, the outlook for .the near future would, on that ground alone, be satisfactory. There was another factor of great importance which .should ensure a continuation of prosperity, and that was >he monetary expansion wlucii would result from the heavy expenditure bv-Tthe Government on public works as part of its policy of relieving unemployment, reviving trade and placing more spejidiug power in the hands of the community. . . . ".This inflation of currency is against the-principles which have been generally observed in tlve past, Mr. Hobbs sai'd, "but we are living,in a new economic world in which many old-estab-lished orders are going overboard, ami noncinfiatiort is being replaced by a governed inflation." ■*, ;' WORLD SITUATION In a review of the monetary situation taken from. the Economics intelligence Service of the League of Nations, it had been stated that no major country had recovered from the depression without resorting to some form of monetary expansion. The onlv two capitalistic countries in which there had been no recovery were Holland rind Switzerland, whicl'i were the only two that had persistently checked monetary expansion. France had. failed to-move forward until heavy expenditure in armaments brought an 'immediate "increase in production and a rise in prices. Germany's product ion had increased 79 per cent; that of the T nii'ed States, 49 per cent-; Japan s 08 per*'ce'nt r-amd- the United-Kingdom s 36 percent. Low interest rates and credit expansion had been the rule in every country that had made appreciable progress., towards pxospevity. Another interesting- fact in the review was that no-'country had achieved a recovery .bv .The reduction of costs. anctit seemed' to'hove been proved bevoild doubt that the once orthodox method of countering n. slump was hopeless in a world-wide depression. It was further stated that it. was not the volume of money that counted, but the total stream of 'money spent on finished goods, so that the' monetary policy should be to raise the level of employment and kesfc tho stream of money demand mov--jng-steadily. Mr. Hobbs said he presumed there was.no higher authority than the Economics Intelligence Service of the League, of and if it was right, the Dominion could accept the Government s polity of monetary expansion so long as it fas kept under reasoned control.