THE CREDIT PROBLEM.

Waikato Times, Volume 111, Issue 18622, 28 April 1932, Page 9

THE CREDIT PROBLEM.

(To the Editor.) Sir,—The long letter from Mr Vaile in your Saturday’s issue of necessity puts the present writer on the defensive. Take the opening gem: Messrs Magner’s and Hansen’s contentions rely on self-assertions that prove nothing. I hasten to assure-Mr Vaile and your readers that I am a student of the New Economics and far from trusting to my own imaginative guesses. I atu quoting more or less directly f p om a

large number of eminent and highlyqualified writers on various aspects of this urgent and interesting problem. To mention a fe\y: Major C. H. Douglas, Professor Frederick Soddy, Mr Arthur Kitson, Marshall Ilattersley, M.A. LL.B. All these have written hooks which are successfully making their

way with the reading public. On banking and policy'matters of recent years I have quoted from Mr Reginald McKenna (chairman of directors of the Midland Bank), Sir Josiah Stamp (financier and economist), and a large number of others. I can quote authority for corroboration of all my statements, and I make no doubt Mr Hansen can do likewise when and if disposed. Although the gulf between the writer’s and Mr Valle’s views appears to be widening, I have yet formed a very real respect for this contributor. I am sure that It Is the point of view rather than any essential difference in our motives that makes us as yet un-

reconciled. I venture the opinion that the United Kingdom will never return to the gOld standard, and providing our Empire can stave off revolution and reach a Trade and 1 currency agreement at Ottawa, we will have nothing to fear from the gold-holding coun- : tries, or from the world. .The latter requirement is however the crux of the position, and is far more vital than our public seem aware of. If it were

possible for instance, to set up an Empire Currency and Credit Board, empowered to print Empire inconvertible sterling notes for development loans at a low rate of interest to all Dominions willing to trade wholly with her, the problems of Empire unity, trade, currency, eto., would be solved at one glorious stroke. Tho notes would have to return to be retired at their base of Issue, tire British Treasury and this arrangement alone would hold our Empire’s trade solid. This

is merely an orthodox idea, so perhaps Mr Valle may «ay It is ingenious. I am ready to admit that there have been abundant opportunities missed of saving the situation in the past—opportunities in no way connected with the present-day new economy movement. All the authorities I have quoted condemn the adherence to an inadequate gold standard. The suggestion of a note of variable gold representation was put forward by me as a result of once having read Irving B’isher's book “ The Stabilisation of the Dollar.” I would cordially recommend it to Mr Valle. But lest the modern authorities quoted may be ruled out by my doughty opponent's derision of things modern, I will quote from the famous Bishop Berkeley of two centuries ago. This renowned scholar asks In the Querist: "Whether money be not only useful in «o far as it stirreth to industry, enabling men to mutually participate in each other’s industry and the fruits of each other's labour? Whether the terms crown, llvre, and j pounds sterling, etc., are not tb be j considered as exponents of denoniina- | tions? And whether gold, silver and i paper, are not tickets or counters, for j reckoning, recording, or transferring i such denominations? Whether the! denominations being retained, though j the bullion were gone, things might | not nevertheless be rated, bought and ! sold—lndustry promoted, and a cir- j culation of commerce maintained." This ancient thoughtful Bishop bears , our our now economist theory of fin- ; ance admirably. Money Is only a ' ticket of claim to goods or real wealth. j The ticket no more needs to have an intrinsic value In Itself than a theatre ticket needs to have any other than the use value Intended for it by the Issuer. Tho requirement that bank- j notes should bo convertible Into gold, and that trade balances be paid In | gold, are among the needless evils that are cursing the social world to-day,

I am not insisting on the abandonment of gold even in a monetary sense, but 1 refuse to admit its indlspenslbility. We arc indifferent about it, and our system of economics will certainly supersede it. Mr Laurence Johnstone, our greatest New Zealand advocate of co-operative agricultural banking, also decries and derides the gold standard, and he is not a new economist so l'ar ’as tho writer is aware. With Mr Vailc’s views upon the in-, adequacy of our politicians tho fictitious values of property, tho deplorable reaction of our thoughtless people to the motor car, cinema and >so forth, 1 am disposed to cordially agree. I would | remind him, however, that a national | and constructive system of finance j such as we advocate would soon solve I the Initial problem of food, housing, 1 apparel and so forth, and thence the surplus “community wealth” would permit of a standard of culture and i leisure hitherto undreamed of. Social j conditions tend to make a people rather than vice, versa, and it. is just possible that Mr Yaile may he confusing effects with causes. Trusting that we will have many other contributions to this discussion.- —1 am, etc., C. A. MAUN HR. [April 24, 1932.