Insulating New Zealand

Poverty Bay Herald, Volume LXV, Issue 19758, 12 October 1938, Page 16

Insulating New Zealand

Sir, —Mr. Thomas Todd says the only ways of creating credit and purchasing power are borrowing and inflation. His conclusions are quite wrong. With a return of £65,000,000 from the sales of our exports of primary products, there is plenty of money about and the country is prosperous. Our wool, meat and butter and wheat producers do not care two hoots where that money comes from so long as they receive a good payable price for their goods. If the Government, through the Reserve Bank,- used the national credit to the full advantage, New Zealand could be made immune from the effects of a drop in prices of our exports from £05,000,000 to £30,000,000 by virtue of the fact that the Reserve Bank can produce all the money in Reserve Bank notes at no cost to the bank other than paper and ink to print them. The Government buys all wool, meat, butter, cheese, wheat, fruit, timber and gold produced at a guaranteed price arrived at by a commission; such price to be set at a figure that will allow each producer to pay a wage or salary 10s higher than the present wages paid, plus 10 per cent interest on all money the owner has invested in his land, stock and plant. The price is of no consequence because whatever the Reserve Bank pays out for the goods it costs the bank nothing to produce. If, for instance, the bank pays out £100,000,000 for the year's production, the producers are all fully paid and have no further interest in what the bank may do with that produce. The bank, having bought that £100,000,000 worth at the cost of perhaps £lO for paper and ink to manufacture the money, is free to dispose of that produce in any way it thinks best. The bank can then sell back to the oeoDle for home consumption say £OO 000,000 worth for £30,000,000, and bv so doing' lower the cost of living to all the people by 25s to 30s. That with the 10s rise in wages, means a lowering of the cost of living a round by 35 to 45 per cent, and still the bank makes a profit of £30,000,000 The balance of £40,000,000 the bank exports, and so long as it does not bring less than £20,000,000, which is the sum New Zealand has to find in English money to meet our interest charges, freights and insurance, New Zealand is quite safe. Any sum our exportfill for above £20,000 000 is clear profit to the people of New Zealand, and could be applied to importing goods we cannot produce ourselves, could be used to reduce the national debt, or could be used in New Zealand to reduce our taxation to practically nil. •ROBT, PRESTON, SEN,