EXCESS MONEY

Auckland Star, Volume LXXIII, Issue 165, 15 July 1942, Page 6

EXCESS MONEY

GROUND FOR CONCERN

WAYS OF ABSORPTION

(0.C.) WELLINGTON, this day. Dealing with finance, Mr. W. W. Mulholland, in his presidential address to the Dominion conference of the New Zealand Farmers' Union today said that the rationing of certain goods had so far only been a nuisance without hardship, but it had drawn marked attention to the fact that the accumulation of money in the hands of the public had become unpleasantly large.

The average monthly figures for 1936 were:—Trading banks (demand and time deposits), £65,856,000: savings banks credit balances, £52,916,000; trustee savings banks credit balances, £11,773,000; notes in the hands of the public, £7,500,000. Total: £138,045,000.

The figures for May, 1942, were:— Trading banks (demand and time deposits), £92,124,000; savings banks credit balances, £70,530,000; trustee £16,226,000; notes in the hands of the public, £20,699,000. Total: £199,579,000.

Mr. Mulholland said that the figures showed an increase of purchasing power in the hands of the public amounting to just over £61,500,000 from 1936 to date. "But this figure does not fully indicate the enormous buying pressure that it represents," he continued, "for savings banks deposits which are much more apt to be used for the purchase of consumer goods have increased from a little over £64,500,000 to £86,750,000, while Reserve Bank notes in the hands of the public which are direct and immediate demands for goods have increased from £7,500,000 to nearly £20.750,000.

"There is ground in these figures for genuine concern on the part of all who have the interests of the country at heart, and the figures stress more than any words that I can utter the urgency of a policy which will draw off a large amount of this excess money."

The Government's war loan policy had been designed with some intention of bringing this about, Mr. Mulholland said. He would be surprised to find, however, that the recent issue had affected materially either the saving bank balances or the notes in the hands of the public. "I would again strongly recommend the Government that action should be directed particularly towards absorbing this surplus purchasing power," he added. "I have only time to mention the means being adopted in Britain, which really amounts to forced loans collected in the form of wages and income taxation and repayable in the future at the discretion of the Government."