WHO CONTROLS N.Z.?

Star (Christchurch), Volume XLIV, Issue 579, 8 October 1932, Page 21 (Supplement)

WHO CONTROLS N.Z.?

Creation of a Central Bank. THE FLAW IN THE STORY.

(Written for the “ Star " t by

E. J. HOWARD, M.P.)

“ Whoever finances a business controls it.” That applies equally to a country, or even to a home. The big business, New Zealand, has been financed by oversea people. Whilst the actual money has been contributed by investors who may have owned only small amounts, the actual business of lending to New Zealand has been controlled by a very small group of individuals. The movement to form a central bank means really that the receivers are being put in all the British colonies that owe money I overseas. Of course, we won’t like that term, and so we will demand that a better term shall be used. But when we get right down to bedrock that is what it means. We are in for a long term of falling prices. They will not fall in a steady downward track, but in a series oi jumps of peaks and valleys, like the bounce of a rubber ball. These peaks and valleys are artificially made to a great extent. It may be that wool will rise to a high peak for a flutter. It may be that butter will rise to a high peak for a flutter. Like a Business. If we Can grip the first essential fact that finance is a business and is managed and regulated like any other business, then the mystery of why these things happen is cleared away. We know to-day that we are around the corner? But what corner are we around? We know that the depression is lifting, and we will soon be all right again. Is it? The man who fools himself is indeed a fool. Let us examine our own position. All our big business men, bankers, economists and what not will tell us that our hopes are in the London market; that with a rise in the price of our exports overseas our troubles will disappear. For a moment let us think we are in England. We are John Smith, William Brown and Fred Jones, working men of England. Before New Zealand can get a rise in prices our working men of England must get a rise in wages. Is there any tendency along that line? Our argument out here is that we must cut down the working man’s wages because our export prices have fallen in England. The income of England comes from investment money. Our cablegrams tell us that the spending power of Britain has been cut down by millions as a result of a conversion loan. Follows then a further cut in wages for the British working man as sure as night follows day. If the Smiths, Browns and Joneses get a further cut in wages, then they cannot increase the price they will pay for New Zealand butter. Now what comer are we around? Theory Rejected. That would be a pessimistic story if we let it stop there. But we are not going to let it stop there. We refuse to accept the theory that we live by sending goods away. We refuse to accept the theory that if we were cut off from the rest of the world we would starve. We could feed ourselves. We could feed ourselves on beef, mutton, pork, fish, flesh and fowl, because all those things are here in abundance. We could clothe ourselves in wool, cotton or artificial silk, because the means to produce those things are here in abundance. We could house ourselves in wood, stone or concrete houses, because all the things to do the job with are here in abundance. We could ride in trams, trains or motor-cars made in New Zealand, because iron, steel, copper, lead, zinc and tin can be produced in New Zealana. Oh, ye men of little faith! Someone outside must save us, some one from overseas who cannot save themselves! Oh, ye blind followers of the blind, in charge of a treasure box containing every treasure known to man, but no faith! Let us recite again the story of the trans-Continental railway of Australia. When Australia was joined up as a Commonwealth she agreed with Western Australia that a line should be constructed from east to west, over a country almost barren. From Adelaide to Port Augusta there was a State railway belonging to South Australia. From Kalgoorlie to Perth there was another State railway belonging to West Australia. That left a gap of 1050 miles to be joined up, as far as from the North Cape to the Bluff in New Zealand Debt Nearly Paid. The cost to construct that railway was £5,300,000. There was not a town or village in between the two ends of that 1050 miles of line, no water and no timber. And yet that railway was constructed by Australian labour, Australian steel for the rails and Australian money. The first railway constructed in New Zealand was from the Heathcote river at the tanks to the city. That was twelve and a half miles. Coming from the port to Christchurch the earthworks of that railway can still be seen. At the back of the annual Budget will be found the account still unpaid for that railway. Rotting away up on the east coast of Marlborough and Gisborne and other parts are millions of pounds’ worth of unfinished work, rails, trucks and all the offices in connection with railway construction. We pay annually bales of wool and thousands of sheep, 'tons of butter and other things, to people who don’t care a hang about New Zealand so long as the interest is paid. But that debt on the trans-Continental railway is nearly paid. At least £3.500,000 is paid and they are paying 3i per cent to themselves on the £1,872,000. But in a few years that railway will be paid for and every inch pf it can be scrapped if they want to scrap it without asking permission from any authority in England. Story of Guernsey. The story is so easy that people won’t believe it is true. Adam Smith wrote a book and called it “ The Wealth of Nations.” It put the nations wrong, and it is only now beginning to dawn on the world that Adam Smith was wrong. Let me tell the story of Guernsey. Guernsey is one of the Channel Islands. After the Napoleonic wars things were as bad as they are to-day. Guernsey was in just as bad a way as it was possible to be. They couldn’t balance their budget and so wages were reduced, men put off from work, taxation increased and all the silly things we are doing to-day were done in those days of 1815.

They tried to borrow a loan in London just as Brother Dowme Stewart is trying to get his “Uncle” to part up now. Then, as now, “Uncle” said: “ You can have the money at 17 per cent.” But the Guernsey people said: “ No, we have the timber, the slates, the iron and the paint here in Guernsey.” So they set up a committee to go into the question of building a market. It was decided to build a market to cost £6OOO. They printed the notes, built the market, charged rent for the stalls payable in notes. They destroyed the notes as they came in and, 10, they had a market, and the debt paid. We gave Britain a dreadnought. We borrowed the money to build a dreadnought. The Germans saw that we had given a dreadnought and so they borrowed the money to build a dreadnought to fight our dreadnought. Both dreadnoughts are at the bottom of the sea, but both debts are still afloat and doing very well, thank you. Not one penny is paid off either dreadnought, but the full price of both dreadnoughts has been t>aid in interest. Funny, isn’t it? “ Inflation Bogey.” But inflation! Beware of inflation! The Guernsey people said they would build another market for the sale of meat. They took a vote. The inflation bogey was trotted out, and the vote was lost by one. So they borrowed from “ Uncle.” They borrowed £SOOO. In seven years they had paid £ISOO in interest, but not one penny off the principal. Then they woke up. The other market is still standing, still paying rent, but no private person received one penny in the way of tribute money for that market. In twenty years £BO,OOO was issued in notes to do real jobs. No interest to any group of private people. The notes circulated as freely as our notes we use to-day circulate. But it is a fool story isn’t it? There was a hall built in Nelson on the same principle, says Flurschem, but I cannot find the details But says you—there must be a flaw somewhere! Of course there is: The flaw was that Governor Brock issued a charter to a bank and Guernsey has never done a piece of public works that way since 1832. There must be a flaw in the story of Australia’s East-to-Wast Railway. Of course there is. Jack Lang proposed to do public works the same way and he was proved to be everything that is bad. We know he is. We have read it everywhere. And the man who tries to do it in New Zealand will be proved to be a bold bad man and a danger to the country. Of course!