THE MONETARY SYSTEM

Wanganui Chronicle, Volume 79, Issue 183, 7 August 1935, Page 6

THE MONETARY SYSTEM

Sir, —J have recehtlv read with interest several articles in your paper in defence of the present bunking and monetary system. There are your own leaders, articles inserted bv the N.Z. Welfare League, reports of speeches by our acting Alinister of Finance, and a two-column report of a speech bv Sir James Grose general manager of the Bank of New Zealand. Apparently a coVicerted effort is being made to restore the public’s somewhat shaken confidence in our monetary policy, and to intimidate the pusillanimous bv an affected com-. th for the safety of the people’s savings." Even your new serial story, " Without Defeat,” attempts to belittle the Labour Party by suggesting that their aim is " something for nothing." Now, sir, although not yet a supporter of the Labour Party, J can see no hope for the permanent improve nient in the financial state of New Zealand and of the world until the control of banking and currency is taken out of the hands of private individuals and vested in the State. I have no quarrel with the banks, but by the nature of their system they have no power of improving matters. Sir James Grose informs us that banks have plenty of credit available for suitable clients. That is true, but who is going to embark on any new venture nowadays when the demand is Jacking. In your leader of July .16 you rightly state that supply is controlled by demand. The reason why so many factories are closed or working at half capacity to-day, and so many of the workers are unemployed, is then due to the lack of demand. Aly contention is that demand is no longer an adequate indication of the wants and needs of the people; in other words the people want the goods but lack the purchasing power. Now, how has this lack of purchasing power come about, and how can it be remedied? An extreme example will at once make this clear. Let us suppose that inventions have wholly, instead of in great part, done away with the need for workers. All the workers, including yon and me. Air. Editor, become unemployed and receive a mere sustenance wage. The owners of the machines receive something at first from the products of their machinery, but they put it behind the clock ‘‘because times are hard.” Very soon there is no sale for the products of the machines, for there is no purchasing power. The machines are therefore stopped and the populace goes unclothed and unfed. The banks are unable to help because they can advance money only on a security, and all securities are now 'worthless. The people ultimately, using their intelligence, take the banking system into their own hands, and issue a national dividend. Thus purchasing power is restored and the machines are again set working for the purpose they were intended, the benefit of all. Now, sir, we have not arrived at this state yet, but machinery has already done away with the employment of millions of workers, and until some form of national dividend is declared a great deal of that machinery will be idle, simply for lack of purchasing power. Recently the Bank of England installed calculating machines with the result that some hundreds of clerks were thrown out of employment. To each of these the bank paid a dividend of £lOOO. Now, were the bank able to pay similar dividends to all men who become unemployed through the introduction of machinery, some good might result, but no bank has the power to do so. In regard to the people's savings, about which our leading banker feels such deep concern. Does he feel so deeply about the savings of the returned soldiers which disappeared over night, together with the results of years of toil, when they walked off their holdings/ Does he think of the savings of the business man, of the landlord, of the holder of mortgages, which have vanished like the morning dew as a result of the splendid wording of our financial system? i will admit that the banker make.'the best of a bad job. He tries to terrify us with the thought, of the dire results of political interference with our wonderful financial machine. Does he allege any political interference with justice because the Depart inent of Justice was set up by the state? In conclusion, 1 should like to ask of what use is our boasted civil liberty when the most important factor in the nation's well-being and prosperity lies in hands which have pro'ed themseh es conservat i\ e. inefficient, ami regardless of the pqin and suffering of the people. 1 am, etc., CONSTANT READER.