LATE CORRESPONDENCE.

Star (Christchurch), Issue 18187, 21 June 1927, Page 5

LATE CORRESPONDENCE.

FINANCIAL STRINGENCY. To the Editor. Sir,—The prevailing financial stringency appears to be growing worse and worse, so much so that many people with money to invest will not do so, even at the exorbitant! y high rates now ruling for gilt-edged securities. This pessimistic attitude is intensifying the slump, amounting to a strike on the part of holders of money to permit their credits to be used for the normal natural progress and development of New Zealand. There are many who think that the day is near at hand when Home borrowing will become quite impossible owing to the large aggregate of the National Debt and the extraordinarily low values our primary products realise in the Home markets. The Prime Minister has accentuated this feeling by his public declaration that everybody, including himself, is living on too high a scale and the greatly reduced rates of pay offered by the Government to unemployed labourers in this Dominion. If a general decline in the wages paid to all workers becomes necessary, then the prices of everything else in this country will likewise slump, for it is the spending power of the worker which sustains the trade and commerce of a country. The more wages the worker is given the more he spends on house rent t living and luxuries which expenditure makes all sorts of business thrive.

, Next there is the question of ability to pay for imported goods, the stoppage or curtailment of which will throw many more thousands of people into enforoed idleness. In my opinion there is one and only one remedy for this financial stringency, and that is the promotion of a New Zealand Treasury Credit Notes Bill, empowering the Treasury to issue legal tender credit notes in the form of paper money on the security of Government and local body bonds, titles to land and the buildings, plant or machinery located thereon, and also upon merchantable products of the land and the manufactured products of industries. This form of money could be easily issued to borrowers at 5 p.c. per annum and 4 p.c. would be paid by the Treasury to depositors of this money when returned for re-investment purposes. The margin of 1 per cent would pay the cost of issue and reissue of this form of credit, and the Treasury would reap the full interest rate advantage on millions of these notes in constant circulation, in free current accounts, in people’s pockets, tills, safes, etc. With this cheap form of money abundant credit would exist for all national undertakings and also for bona fide land cultivation, industrial concerns and enterprises that will have to be enlarged to manufacture goods now imported and the payment for which imported goods could not. be made with Treasury credit notes. If we had this system of finance, London borrowing could cease and timid investors of capital could store their precious money where they pleased, without hindrance to the economic welfare of this country. All unemployed would soon find occupations and immigration could also be restored for there is unlimited work for millions in this country provided the necessary credit is made available, and the only form of credit that Parliament can establish of its own free will in this country to-day is by issuing Treasury credit notes.—l am, etc., F. T. MOORE. Hotel Ambassadors.