CURRENCY BILL

Southland Times, Issue 21855, 4 November 1932, Page 8

CURRENCY BILL

A WELCOME MEASURE MR J. HARGEST’S VIEWS OPPORTUNITY FOR DISCUSSION (From Our Parliamentary Reporter.) Wellington, November 3. In discussing the Currency Bill which is being sponsored in the House of Representatives by Mr H. G. R. Mason, Mr J. Hargest remarked this evening that he was glad that the Bill had been allowed to proceed to its second reading because even if the Bill only gave rise to a discussion, that discussion would be most helpful because it would lead to an exchange of views. At present, New Zealand was tied to the pound sterling and prices fluctuated according to the vagaries of that basis. He did not want it to be understood that he was supporting the Bill, but the fact remained that something would have to be done. If New Zealand was simply going to go on producing more and more in the hopes of paying her way, she would end up on the rocks. The export price level at present was so low that if it dropped any lower it would not pay the producers to send their produce overseas at all. Was there a shortage of banknotes in New Zealand? he asked, and said that as far as he could remember the circulation of notes had increased. In his opinion the trouble was shortage of credit rather than shortage of notes. It was a well-known maxim that bad money would drive out good, and if by issuing notes the present notes were driven out, more notes would have to be issued to replace them and there would be a danger of the time coming when currency would become inflated. The effect of inflation would be to increase prices and a rise in price levels would force the Government to return to a policy of high tariff walls to protect local industries from dumping by countries. Where the price level was still low, would a rise in prices that would inevitably folLpw inflation increase the national wealth? he asked. New Zealand exported about 40 per cent, of her produce and it was that 40 per cent, that governed our standard of living. Would the Bill have any effect on prices for those goods exported?, “I have very serious doubts about it,” he said, but added that there was room for two or three schools of thought on currency matters and by discussing the subject fully some solution might be arrived at.