ONE OF TWO WAYS

Bay of Plenty Beacon, Volume 05, Issue 73, 3 July 1942, Page 5

ONE OF TWO WAYS

WARNING BY BANKER PERIL OF INFLATION Mr A. T. Donnelly, chairman of the Bank of New Zealand, address-' i Jug shareholders at the annual meeting of the Bank, referred to the war situation and the "near threat of foreign invasion" to New Zealand. But they had the protection and help of the Mother Country, the United States, and Australia. Still, the necessity, and indeed "our own pride and self-respect," required that they should conduct themselves and national affairs as though they Stood alone. He showed how tlie war was one not only of valour but of work. In June, 1988, the purchasing power of the public Avas about the same as the supply of goods, but "in June, 1942, there is a wide and Wid-» ening inflationary gap between demand and supply, and the largest spending power in our history is battering at the shrinking supply of goods. "We have two economic choices now before us," said Mr Donnelly. "We can go what some think to be the easy, harmless way of currency inflation. Other countries have gone that May before 1 us. No country has ever gone that way without disaster, without the dislocation of its trade and industry, » without the destruction of its society, its institutions, its savings and its standard of life. "Inflation is the most cruel and least scientific method of making a levy on the people. It presses heaviest on the poorer members of the community, upon those with large families and small or fixed incomes, and Avhen inflation is epidemic the wages of the worker wither in his hands." Mr Donnelly examined the position of bank deposits in September, 1939, when they amounted to £67,094,465, and on latest figures available for 1942—£91,765,354, showing an increase of £24,670,889. "The truth is we must pay now, one way or the other, either directly by taxation and loans whose amounts are known for certain, or indirectly" by the process of inflation, Avhose cost Ave cannot tell, either in advance or as Ave go along. The goods and material to maintain our Forces are required now—not in the future. "We can best pay by lending as much as Ave can of our current income to the State for the purposes of the Avar. This Ave can through the SaA r ings Bonds, and War Loans. "The country did well by the- Liberty Loan, but there must be other loans, and all must succeed as did. the Liberty Loan." All should ' forgo' spending for their own ends and pleasures and' set aside at regular times some part of Avhat they get from salaries, wages, or income, or from any other source.