THE CURRENCY PROBLEM.

Waikato Times, Volume 111, Issue 18619, 23 April 1932, Page 7

THE CURRENCY PROBLEM.

(To the Editor.) Sir, —I thank Mr Magn&r for his kindly remarks on my humble efforts to put before your readers what I regard as the sane and sound aspect of finance. Mr Hansen says he cannot let my last letter go unanswered. Then why does he? Both Messrs Magner’s and Hansen’s contentions rely on ipse dixit—self assertions that prove | nothing. “ Gold is an unnecessary fetish and can and presently will be done without.” “ I say that whatever use gold may have had In more primitive times . . . to-day the only satisfactory basis for money is real wealth—goods and services obtainable on demand." “He (Mr Vaile)' is derisive of those who, backed by the soundest of evidence ” etc,, etc. All hot air, and that naturally "cuts no ice." If there is any evidence that gold can be advantageously superseded as a medium of exchange it has not been produced by my friends. I have already pointed out many practical difficulties in the adoption of my friends’ utopian ideas. One is' that a note must be payable in something. Mr Hansen says' goods and services obtainable on demand. I Imagine a note reading “ On demand I promise to deliver in a butcher’s shop in Auckland 1001 b. Of beef; or at Westfield one well-fattened Hereford-Angus bullock to dress 7001 b.; or at Hamilton one ton of potatoes free from Irish blight and of a size that will not pass through a 2A inch mesh; Or the services of one farm hand for a month; or of one trade unionist for a week; or of one doctor for half an hour; or of one lawyer for ten minutes.” The thing is too absurd. To get over this the Ingenious suggestion of a note representing a variable amount of gold has been made. This is still surrounded with difficulties —and anyhow we have arrived back at the loathly metal as our basis of finance. And in my judgment we can never safely get away from it. Let us take a simple everyday illustration: My good new-economist friends Messrs Magner, Hansen and Hodgson and I enter a shop to buy our dally bread, I with my gold, they with their notes. My endeavour is to get as much bread for as little gold _as possible, but my friends chip in saying, “Brother baker,'this fellow is beating down your price.’ Take you our nice notes based on goods and services on demand. J There is abundance of these notes so J your price will bo maintained, if not i raised.” Who will make the best bar- j gain In bread —I with my ready gold , or my friends with their pretty paper? j So when England was on the gold standard she entered the world’s shops on tiie best footing. Now that , she is on her “ own honourable credit and pound sterling” she. enters those ; markets at the ghastly discount of 20 i per cent. My friends fail to explain j the advantage of England’s 20s being worth only 15s 6d in the world’s markets. In their confusion of thought they attribute to the malign influence of gold the very evils that arise from a departure from it —from an already dangerously enlarged paper currency. They fall to see that goods are at present the basis for the greater part of our monetary system. Most business of any consequence is transacted by cheques—that Is bankers’ credit based on the goods and assets of his constituents. But the value of all goods is at present based on gold the best, j indeed the only possible, common denominator. j

My friends claim that the world’s undoubted troubles are duo to insufficient currency. ' I say they are due —(1) To power being in the hands of the uninformed, inexperienced and irresponsible part of the population who return a paralysed Parliament who, from their own ranks, appoint an incapable executive Government; (2) high tariffs prohibiting exchange of goods; (3) misuse of the money already available. Think of this: Two shillings a 'week on our population means £7,800,000 a year. Once a week less to the pictures and the situation is saved! Then there is the mad misuse of motors —wasting capital, wasting time, burning benzine, wearing roads. Also the imbecile “ values ” placed on land —more especially in the cities and suburbs. These fictitious values were based on too much paper and too little work. The people cried for mbke and yet more paper and credit. The whole credit system became overloaded and crashed down. These be the causes of poverty—not good gold. All of course recbgnlse that a period of rising prices means prosperity—the psychological effect of rising prices is very great; but prices cannot always'rise. They reach the peak —and then the crash! Paper kites are flown to raise them; but solid gold ballast tends to keep them within reach and reason. My friends say that gold should be used only as a commodity to provide ornaments and earrings and wedding rings and suchlike necessary things; but I say It should bo put to every use for nature has provided it and the principal One is as a sure anchor for Nuance for it takes much labour to produce it. I cordially acknowledge and admire mv friends’ enthusiasm for the betterment of human affairs and envy them their easy acceptance of an easy way out or a most difficult position. They want paper money (a very dens ex m a( .hina —a god out of a machine) "managed” by politicians, and an international commission to “manage" foreign exchanges. As for niy unenlightened self I would sooner trust to gold and hankers than to paper and politicians; nor would 1 desire British trade to he controlled by any commission of foreigners.—l am, etc., E. EARLE YATLE. Rrondlands, Rotorua, April 21, 1032.