INFLATION OF CURRENCY.

Waikato Times, Volume 114, Issue 19051, 15 September 1933, Page 9

INFLATION OF CURRENCY.

(To the Editor.) Sir, —“Equity’s” assurance that he does not wish to abuse the League places tills discussion on a different basis. The League’s membership is not so "tiny”—as he continues to infer—that it may not choose its own name, as it did iff years ago. in order to clear the air from error we may inform “Equity” that we do not bother about financial newspapers, because they arc not (as lie says) impartial, our figures are from official and Parliamentary returns —s>o let’s get at them. Where did we say “that £00,000,000 (out of £703,000,000) is invested by institutions in which savings are kept”? We recorded official figures to show that in England about 00 per cent, of the population are investors in loans, directly or indirectly, through trade unions, savings banks, friendly societies, etc. \Yc do not agree with his figures, but that does not matter very much because they si ill support our original statement. If “80 per cent, of investors has an average (as he says) of £i>6 invested and 10 per cent, have an average of f io00," then inflation, by reducing the value of investments, hits the greater number, not only tlic few big men. The ffff 1-3 per cent, loss, which lie mentions, would be felt far more by the email Investor than the large one. “Equity” says “four-fifths of the mortgages are under £IOOO, but these are he'd by men who have many interests." We gravely question this estimate, but, even so, let us examine the statement. Friendly societies arc

the workers’ and small-savers’ institutions. They have £3,500,000 out on mortgage. Building societies handling the small man’s savings (average under £l2) have over £5,000,000 on mortgage in New Zealand. Take the A.M.P. Society—its policy-holders average somewhere about £SO. It invests millions on mortgage. State Advances Department probably carries nearly half tho mortgages in New Zealand. This, money is borrowed from England. British Parliamentary returns show that the average holding In loans works out at about £125 per investor. Bank mortgages, again, are held by institutions composed of large numbers of small investors—no fewer than 3100 shareholders in the Bank of New Zealand hold under £2OO, while the whole average is about £IOO. These figures, we submit, conclusively prove that inflation, which reduces the return from investments, will hit the small investor (including thousands of wageearners) far harder, in proportion, than the big investor. The personal big investors are very l'cw in comparison with 1 lie institutions handling Hie small man’s savings. “Equity” sums up thus: “Tho wage-earner (with 50 per rent, in11alion and 50 per cent, more pay) would benefit to the extent of 121per cent, if he had no investments, and this would decrease according to his investments up to about £I2OO invested." We cannot follow this argument at all, or see how it is arrived at. Fifty per cent,, in nation reduces Hie value of the, £ by 50 per cent., thus prices would double; but 50 per cent, iullatlou would not give

50 per cent, more wages, and that is the point. To halve the value of the £ will double the cost of living, but does not double the wages. Excuse the long reply, but we are endeavouring to place the actual cold facts before your readers.—We are, etc., N.Z. WELFARE LEAGUE. Wellington, September 12, 1033.