CURE FOR DEPRESSION

Taranaki Daily News, 20 June 1931, Page 6

CURE FOR DEPRESSION

REGULATION OF NOTE ISSUE

FREEDOM FROM THE BANKS. LABOUR CHAIRMAN’S PROPOSALS. The regulation of the note issue by an independent commission in place of commercial banks was advocated by the president of the New Zealand Laboui Party, Mr. H. G. R. Mason, in an address to a well attended public meeting al Hawcra last night. This, he said, would be the first step .from the slough of depression. The quantity of notes, in circulation governed prices and Biisindss activity. Regulation as at present by private banks had been a failure and had contributed to collapse of prices. It was universally acknowledged that the depression in New Zealand came from overseas, said Mr. Mason, and was caused by the fall in market values ol produce on overseas markets. This 111 turn was due to a general decline in world prices. The change in values generally had affected tile world before as shown in long periods of rising prices and long periods of falling prices. These periods, he said, had been observed to coincide with fluctuations in the amount of the world’s gold production. “The lesson to be learned from the effect of gold discoveries,” said Mr. Mason, “is clearly the fact that world prices have depended on gold production. Geologists agree that gold discoveries on a large scale are most unlikely. Me are entering a depression from which we will not automatically emerge, and it lies with us to find a way out. The present scarcity of currency has altered its own purchasing power. Must we submit to this alteration in the purchasing power of money; an alteration which takes place overseas?

“If the country is to have prosperity,” continued Mr. Mason, “the average of export prices must be kept uniform. It is known that the currency of One country need not have the same value—as that of another country. New Zealand money at present is worth about 10 per cent, less that English money—our farmers receive for their produce 10 per cent, more in New Zealand money than the same produce’s value in English money. If an adjustment of 10 per cent, can be managed there is no reason why any other desirable adjustments should not be made. By this I mean, the adjustment could be made big enough to bring our prices expressed in New Zealand money to the same average figure as in days of prosperity. This would solve most of our problems.” Mr. Mason maintained that it would be useless to think that this could be done with a gold standard. It would obviously be a futility to talk of increased production under the present circumstances. Enough currency was required tb do business with, he continued. If thcic were not enough, as at present,. prices would fall; too much and they would

rise. “The right amount is that amount of money in circulation which will keep prices at a constant level. Notes, could be issued or withdrawn from time to time to secure this result. It would be expedient to bring prices to the level existing in recent periods of prosperity because most of our contracts are biased on that level. By regulation outlie note issue they could be kept there.” . ■ “The result of this would be prosperity to the farmer,” Mr. Mason said. “That would mean prosperity to everyone. “.To achieve this regulation of note issue an independent authority would be required having a similar status. that to that of the auditor-general—a status that could not be altered by any Government but only by a vote in both Houses on the occasion of such a thing as misconduct. It is as necessary for our general price level to be free from the influence of the Government Budget as the commercial banks.”