URGES INFLATION.

Star (Christchurch), Volume XLIV, Issue 376, 18 March 1932, Page 3

URGES INFLATION.

Dominion Needs More Money. MR L. R. C. MACFARLANE’S PLAN. Only one method of defence and protection remains for New Zealand at present, declared Mr L. R. C. Macfarlane, president of the A. and P. Association, last night, and that was inflation of the Dominion’s paper currency. The speaker stated that increased currency would result in less taxation, which would immediately stimulate every industry and solve the growing unemployment problem. What of the Future? “What of the future?” asked Mr Macfarlane, who made it clear that he spoke as an individual and not as president of the association. The world was eager for trade, but the trade lubricant, money, was in short supply. Until it was in over-supply there would be no real recovery. “Our hope will not come through more and more laws, regulations and restrictions but in more freedom,” he said. “We want real money, not credit. There appear to be three ways, or a combination of two or more, of getting more real money:— “(1) A free bank rate of exchange with the outer world. “(2) Inflation of our present paper currency by the issue of Government paper money. This would be used as a direct bonus on all exports or used by the State in its usual functions. ‘‘(3) The slow financial starvation of the community by the tightening of belts, the reduction of all wages, interest, and hope and faith, and the establishment of charity as a permanent institution. “Any one of these methods would have the effect of stacking up surplus money in the banks at first, but rather than let the stuff lie idle the banks would very soon have to reduce their rates of interest.” “Farm finance in New Zealand is in the most shocking state of any country in the world, and yet the financial advisers on whose words of wisdom so many of you hang, would increase the farmers’ facilities for borrowing,” said Mr Macfarlane. “The country is doomed if money is not available for land mortgages, they will tell you. A farmer’s job is farming, not borrowing money. “Farmers must have extra money, not borrowed, during the next twelve months. They must have 30 per cent more, or have all costs reduced by 30 per cent, in order to maintain production at its present level. Politics and Patriotism. “To-day politics must give way to patriotism,” declared Mr Macfarlane. ‘‘We cannot at the present time find glory in our country; we soust rather admit our shame, but hold our heads high till we can see the remedy. For years we have resisted and fought monopolies of any kind, and it is a sad thought that this country is at present being run financially from London. “One hates to advocate inflation of cur currency, but it is our one method of defence and protection at the present. Reduction of costs, of course, is necessary in many directions, but the reduction of one man’s income will not necessarily increase another’s finances. Wage cuts are no doubt long overdue in some directions to balance budgets. Interest not already down must also make some sacrifice, but I think it far more important that taxation also should fall. Less taxation will immediately stimulate every industry and solve the growing unemployment. “The only method to bring this about is to increase our internal currency.”