CURRENCY AND THE FARMER.

Press, Volume LXVIII, Issue 20491, 9 March 1932, Page 9

CURRENCY AND THE FARMER.

f||||* Botxos or thjb pasaa. aiffi. foor issue of the 7th inst. jjßffs',_*Ppears from "Ex-Farmer," Mr S. B. Macdonald, is cerSHgM'te help the farmer no matter consequence to the rest of To-day business, and I'SBBWHy labour, is suffering from HMsr too high taxation of the HMptt Mid public bodies, due to BHiPtais squandering of millions Hk|s? fa*y money times in this HnSF. productive works HHpigWt showing any returns, and ■KjSWfr. to under present condiHHEH&*nnner" in my opinion JHMMMm the effective results of ■fflMpj-by fully 20 per cent., and ■■pntaste return can hardly IHIK this. Let mo state m there is to be relief HHlB' <tonld be carried out under HHPjiiw, and on piece-work, for the money paid .could for to-day' the average e *rn more than half the ||HBg®> &* everyone must see who HH~ •*■B* working throughout fe* suggestion, no matter H|||fe« » other countries, is not ■jMffiSjWjt.of the people generally, to be imposed by any Hi to legislate and HHflsfc*** general good and prosHHeES? P*°plc, especially without HJHRfIRP ai f them, it means added higher prices; ■SBHKtWI *l«o apply to the pro-

duetion sales bonus suggested, since it wouldl <be paid out of taxation from the general public. Increasing currency to aid production, be it from, the farm or the factory, is only a way of depreciating present monetary value, and must rebound on the market value of the country's currency. The suggestion to pay the farmer 15 per cent, more next year on his production means that the home consumption has. to pay this, as exports cannot, being in world competition with countries that make farming an industry. To state that the farmer, if his credit is not improved, will' not produce, is tantamount to holding the gun at our heads and asking us to deliver, and this is not ths time for this, for his is not the only industry that is suffering. There need be no fear that the farmer is going to walk off his land to-day, for bad as it may be there are many thousands worse off than he is, and plenty ready to take his place at the - current value of the land at to-day's produce prices. No one disputes the fact that the farmer is the bedrock producer of our exports. I presume he is so from inclination, and for the generous livelihood obtainable when he has the land at value; but I fear that many of our farmers to-day purchased land foi speculative purposes more than for farming, and if this is the cause there is no use flogging a dead horse where payable production is impossible. To expect, now that we are passing through strenuous times, that taxes should, be imposed on other citizens for the farmer's benefit is not equity, and should not be countenanced by our legislators no matter how much they are interested, or in sympathy, as all should be. Candid expressions should be valued by all, and the real reason that the man on the land is in such a sad plight to-day is that he purchased his land beyond its value for present day prices, and in the time of peak prices he made no provision for depreciating his land value, or in other words for making a reserve fund for evil days. Extravagance on the part of our Government in the past generation, supplemented by that of public bodies, has contributed to make things in this country considerably worse than they should be, and now they are using the scalping knife to the public detriment, by curtailing public services and prohibiting private enterprise m opposition to municipalities that work on public money. State and municipal undertakings should be prohibited for the country's good, as they are no use to it, and the taxpayers could be relieved of considerable expenditure if such trading was stopped at once, and this is the only way to get the country on a firm foundation. Take away private enterprise, and you will soon have a bankrupt country, for it is the people and not the Government that make for the success of any country. If you stand for democracy, you cannot serve a few to the detriment of the many; and farming is just as much a business as selling groceries, only not in most cases so ably managed. I bear no ill will towards the farmer, but I was brought up on an Old Country farm whore we had no favours shown us against the rest of the worJd.-Yours, otc - J VERITAS. March * Bth, 193". ro tub «hw»- 0F THE ***** Sir,-The letters of "Ex Farmer" and D. 0. Davie in your issue of Monday, indicate a certain dissatisfaction with our currency tem ' raised by Mr D. C. Davie requires to be

emphasised, as many business men even are not quite clear as to the methods by which banks can . and do create and issue new money. An overdraft granted by one bank is regarded as an asset in that bank, while at the same time it is in the possession of the recipient or banked. elsewhere, and new money is also created when a bank buys Government Bonds. There is no suggestion here that there | is anything immoral in these operations. Par from it; the banks have evolved a system of credit money without which modern business would be impossible. They have done it by means of countless experiments —and countless failures. In fact, their technique is now so perfect that it might be adopted with safety by Governments who have at their disposal large assets in the form of land, labour, and an industrious population. It may, however, be pointed out that the banks are concerned mainly with the interests of their clients. They may advance large sums to importers of luxury goods in a manner profitable to themselves and to the importers, but detrimental to the interests of the country as a whole. The recipient of an overdraft may set to work in business and repay his overdraft and interest by means of profits made in privato trading; in other words, the overdraft is ultimately made good by public money. For this, no doubt, the public receives goods and services, but it seems to be lost sight of, both by traders and Governments, that the public purse is not bottomless; money can only come into the possession of the public by way of wages and dividends, and this is always insufficient to buy what has been produced by labour and invested capital. This may not be apparent when large sums are being borrowed by a country and are through the community to find an ultimate resting place in frozen credits. Nor is it- so apparent in a creditor country where interest is accruing from foreign investments. And yet if business is to go on and goods are to be distributed, some means must be found to maintain the flow of currency or to insure that it returns to its source. No currency system which does not secure this will be satisfactory. Certainly not a system of continual borrowing and virtual inflation. There wc-uld appear to be two kinds of money, one of which is regarded as real wealth and valuable in itself, and one which is of no intrinsic value and only of use as a medium of exchange. It is here that * some kind of internal currency might be of benefit, especially if it could be issued in such a way that it would not be accepted by the banks as deposits bearing interest, but merely as deposits in custody, dn exception being made in favour of the Government Savings Bank. It should be issued by the Government and kept separate from the ordinary currency, otherwise that will be depreciated. It should be issued only as required by way of wages and salaries or relief, and should be available for the purchase of goods produced in the country. This may seem difficult and complicated. In reality it could be effected by the simple expedient of making it legal tender with the proviso that the Government redeem the issue with ordinary currency when required by banks or traders and use it again to circulate in the manner indicated. It would bear only a small ratio to the funds handled by the Government and would, of course, only be available for internal payments. It should be large enough, however, to appreciably lighten the burden of taxation and at the same time to employ idle labour and relievo distress and want, but it must be admitted that it would not be

a source of profit to anyone but the 1 public. As an example of how the traditional method of meeting a difficulty works out, take the following. A road is required in a certain district. The materials are all there, labour is available, food, clothing, and shelter in plenty. The problem now is to find some token of exchange whereby the labourer may exchange his labour for the articles he requires. The financial expert gives his advice: "Take these tokens which I can supply, they will be accepted in any part of the- globe, you may purchase with them diamonds from Africa, cars from America, or curios from Japan, but you will have to repay i 3 to the extent of twice their value by way of principal and interest, even though the value of vour goods should fall by half." Surely this is the "reductio ad absurdum" which shows' that the right solution has not been given. It is true that certain materials and foodstuffs have to be imported, and wc must do the best wc can to give value for them. But to go on half rations and double taxation because we have not the wit to devise a token of exchange for our own goods and our own labour is—well, perhaps what we deserve. —Yours, etc., CITIZEN. | March Bth, 1932. „