The Christchurch Star. PUBLISHED BY New Zealand Newspapers Ltd. SATURDAY, JANUARY 14, 1933. INTEREST AND USURY.

Star (Christchurch), Volume XLIV, Issue 661, 14 January 1933, Page 8

The Christchurch Star. PUBLISHED BY New Zealand Newspapers Ltd. SATURDAY, JANUARY 14, 1933. INTEREST AND USURY.

' 1 'HE EXTENT to which actual experience has shaken confidence in conventional economic thought is likely to be brought strikingly before the World Economic Conference in an indictment of international payments, which have dislocated trade, lowered commodity prices and impoverished primary producers the world over. The record of international default, however, does not limit the discussion to debt cancellation in an international sense, for untraditional economists maintain that no debts can be paid unless there is a rise in the price level, and they say that the inequalities of the credit system are the main cause of price instability, and that interest, because of its fixity, is the main obstacle to the adjustment of costs to changes in prices. An even more interesting aspect of this discussion is pre'sented by Mr Henry Somerville in ah American publication, “ The Commonweal,” in which he indicts interest as the villain of the economic piece, and suggests that economic thought is now on a trail that will lead it to Saint Thomas Aquinas. The theory that interest is the earnings or remuneration of capital is attacked as fallacious, for the reason stated by Saint Thomas Aquinas that the lender of money does nothing but lend it, and that it is barren until the borrower has spent it for production. The canonist’s argument seems to have been that the lender cannot claim interest on the productivity of another person’s property. Mr J. M. Keynes has put this new economic theory in its most challenging form in the contention that saving by itself is no service to production, and is on the contrary an absolute disservice, being the cause of depression, business losses and unemployment. Admittedly saving, in the sense of hoarding, is a withdrawal of resources from trade and industry, and becomes beneficial instead of injurious to production only when it takes the form of investment. The distinction between saving and investment made by Mr Keynes is virtually the distinction between money loans and investment, and gives point to the saying that it is not the saver as such, nor the lender as such, but the investor in capital goods who makes the wheels of industry go round. The canonist’s prohibitions of interest were directed to the practical end of ensuring that gain was not made merely by the use of money, that is merely by saving and lending, but only by investment in capital goods, and as Mr Somerville says, Mr Keynes's ultra-modern analysis has led him to a conclusion, anticipated by the old canonists, which may open up a vista of far-reaching changes in economic theory.

WHAT ARE TESTS TESTING? "CTEW OF THE 65,000 persons who attended the second Test in Melbourne would agree with the writer in the “ Daily Express ” who finds in the petty bickering and jealousy of these matches a good reason for putting an end to them. It is misleading to say that the Tests are testing the spirit of friendship between England and Australia to the limit. Rather they are bringing to the surface latent family differences that were cleverly indicated by an American epigrammatist, who told his countrymen in visiting England not to expect to like the English, because even the Scotch and the Irish could not bear them. It would be mere cant to say that international Rugby Tests between New Zealand and England have tended to promote very friendly relations, let us say, with the English Rugby authorities, but although an exchange of Rugby visits might be more cordial between Australia and New Zealand, and it would be natural to expect the majority of New Zealanders to favour Australia in the cricket arena, the New Zealander would become actively hostile to anybody who suggested that Australia was a better Rugby country than New Zealand, and this fact tends to discount exaggerated conclusions about the ill effects of international tours. A