MORE ABOUT MONEY

Wanganui Chronicle, Volume LXXXIII, Issue 20169, 11 June 1928, Page 6

MORE ABOUT MONEY

Sir, —I am afraid that your correspondent 4 4 Gold Bug ’ ’ is hopeless. First, ho sends Mr Tingey hunting through dust-covered files at the library to verify “Gold Bug s” definite assertion that a definite statement had appeared in a certain periodical of a stated date. When friend ‘ 4 Gold Bug ’ ’ was confronted with the fact that the periodical definitely mentioned by him did not contain what he stated definitely it did contain, he admitted that the statement previously made had been culled by him from a magazine “with the dato torn off.”

Naturally, one would have expected the retirement from the discussion of such an unreliable controversialist as “Gold Bug,” but in his latest effusion he “out-Hcrods Herod.” I do not remember reading anything quite so amusing on this subject as the letter of your correspondent which appeared in the “Chronicle” on June 4. 1 asked the question (in one of my communications) “what would happen if all the gold held in New Zealand as a 4 backing’ for currency were to be shipped away?” “Gold Bug” replies to my query alleging that 1 wished to know what would happen if the banks exchanged Government securities for gold. I did not wish to know anything of the sort. I think, however, that the gem of this amusing document is when “Gold Bug” states “the real measure of a country ’s indebtedness is determined by the amount of silver that country demands.” The gold and silver “commanded” by our own country is at the extreme limit, £8,000,000. Is this the measure of our indebtedness? Upon how much do wc pay interest? “Gold Bug” has evidently been reading books either 1000 years old or 1000 years ahead of us or perhaps it is that he is quoting from that reliable memory of his. However, enough of “Gold Bug.” This controversy commenced with an address by Mr P, E. Tingey before the Hotary Club where Mr Tingey advanced some radical and ingenious ideas and opinions about modern finance. Mr Tingey is not orthodox. He is also not infallible. When he makes a statement he can usually produce some definite authority for making it and no doubt he can produce his authority for his statement re the amount of gold in England in 1914. But, in any case, does it affect the broad question of the function of gold in our currency system whether there was £5 or that many bundled millions of gold in England in .1914? Gold as a “basis” for currency has no “basis” upon which to rest except the wealth of the community. This latter, is the final “resting place” or “basis” for all currency. Each note that is in circulation directly represents a certain portion of the produce of the country—butter, wool, meat, etc., and the gold as a “go-between” is no better than the note and, of course, not so good as the pound of but.cr or the carcase of mutton which it may represent. What, then, is the function of gold? It is simply a restriction upon the issue of bank-notes by private banks which might very easily (without this restraint) issue notes against no security, have them accepted generally by the people and then go into liquidation, leaving a trail of misery and unhappiness. To that extent it must be applauded. But does not the nationalisation of credit policy aim to do away with this gold anchor? Why should it not do so? For some years past the bank-notes issued by the trading banks in New Zealand have been “legal tender” —that is, there is no liability upon the banks to show gold and no liability upon them to redeem their notes in gold. This is, of course, quite contrary to the time-honoured practice of being able to “demand” gold for notes. The people once regarded the ability to obtain gold for their notes as being one of tho essentials of a noteissue. Has it not been got over by the nationalisation of note issue—i.c., making the notes “legal tender.” This is a sort of nationalisation that gives the bank the advantages of tho “community guarantee” whilst it retains the profits for itself. Real nationalisation will give the community control of all forms of credit—and, logically, tho control belongs to those whose efforts make the credit possible “SALT PETRE.” Wanganui, June 6.