SLUMP DANGER

Bay of Plenty Beacon, Volume 7, Issue 92, 21 July 1944, Page 3

SLUMP DANGER

PEAK OF INFLATION

NEED FOR STABLE PRICES

A warning against the possibility of deflation with a resultant depression more disastrous than the last was given by Mr H. J. Kelliher, managing director of Dominion Breweries, Ltd., addressing shareholders at the annual meeting. Pointing out that a vitally important period re readjustment and reconstruction would have to be faced before long. Mr Kelliher said it was reasonable to assume that, with the war entering its final phase, the peak of the inflationary period had been reached, and, under the existing system, a formidable contraction of purchasing power would become inevitable unless definite steps were taken to avoid undue deflation of values and prevent undue contraction of credit, with all the attendant evils experienced during the last post-war depression. The economic and financial policy pusued during the coming years would therefore be of the utmost importance to the people e,f the Dominitn. "The two greatest, evils that can befall any natianal economy are the evil of inflation brought about by excessive spending power, and, its opposite, the evil of deflation caused by the undue contraction of money and credit," Mr Kelliher continued. "The first essential of our post-war policy should be to stabilise our national economy at a just and equitable price level of commodities, just and equitable to both producer and consumer. This can be done only by the effective control of credit and currency. I can see no other practical way to pro- ( mote and maintain economic security and stability, and prevent another period of depression more disastrous probably than the last. Nor can I see how we can possibly achieve stabilised economic conditions unless our legislators make the stability of the internal price level the aim and main objective of monetary control. "In any case," concluded Mr Kelliher, "I hope that a genuine effort will be made to safeguard the economic and life of this country by controlling and regulating our monetary mechanism and shaping our financial policy with a view to maintaining an internal price level that will enable us to exchange our goods and services on a basis of equity, and ensure a reasonable standard of living for the whole of the people."