THE CURRENCY AND THE FARMER.

Press, Volume LXVIII, Issue 20492, 10 March 1932, Page 7

THE CURRENCY AND THE FARMER.

TO THE EDITOR OF THZ WtE33. Sir, —My attention, has been drawn to, what might appear as a slight to financial experts in my letter in Wednesday's issue. Ido not -wish to cast any slur on either the ability or the integrity of financial experts. But methods that are permissible in London, Paris, and New York are not always suitable to the less complex and comparatively new civilisation of New Zealand. Our financial and political system is too cumbrous, and we are, like David in Saul's armour, being crushed under its weight. We are not primitive enough to resort to barter, but neither are we in a position to adopt in toto the systems of Europe and America. The suggestion put forward in my letter is not to be taken as any kind of panacea, but merely as an expedient which might be preferable to borrowing a further £5 m. (which the Government would probably do to-morrow if it had the opportunity).

"Farmer Giles dropped in every evening at the Blue Boar for his daily pint and the landlord chalked his score on the slate. Every week Mrs Giles looked in on her way from market and left newly-baked cakes to settle it. A friend suggested to the landlord a cash desk and a girl to manage it (Ministry of Finance). To Mrs Giles he suggested that she should play tennis on Saturdays and get a boy to take the cart to market (Ministry of Transport). The boy was treated to an occasional halfpint at the Blue Boar (Earnings of Transport System). The pints were taken, with borrowed money, till one day the landlord realised that his inn was the Blue Boar and not the Waldor Astoria." Let us make our own cakes and ale in a land of plenty and chalk up the score against each other till better times come.—Yours, etc., CITIZEN. March 9th, 1932.

TO THE EDITOR OF THE PRESS. Sir, —While Mr Forbes is fiddling with Commissions, the farmers' fields lack fertiliser, and next year's production i? being reduced as every day passes. Professor Copland may well be surprised at our* apathy. But it's always like that with Britain and her sons; they put up with the consequences of neglect until things get so bad that even the most averse to change among them wakes up one day and says '' Something must be done about this." Thus we have •'Ex-Farmer's" letter m Tub I'nESi. "Money," he says, ".spent on unemployment has been spent largelyon unremuncrative objects." As an improvement he urges the issue of Bradburys to farmers under strict conditions to enable them to increase production. Similar stimulus, he says, should be given to production by mines and factories. What could be more rational? What plan could be shrewder! When I warned the Government, through your columns, that production would be less next year, my view vras promptiy endorsed by Mr David Jones. I said we wanted money and in a day or two read in your columns that Sir Henry, Strakosch attributes the whole slump to shortage ,of money. It may save a great deal of your space in tha future if you permit me now to offer a few definitions:! — Money and currency are two names for one thing, which is, "Anything that is commonly offered and accepted in exchange for goods and services." Many things have thus been used with complete satisfaction to the users—fish, cloth, bangles of copper, silver, or gold, leather notes, cowries, rations of food, rum—there is no end to them: all that any money needs is the will of the people to use it, to pay with it and accept it in payment. Fiduciary Currency is money issued on the credit of the issuer. It has, and needs, no backing of coin or bullion. Treasury Bills are issued by the British Treasury when it'- wants money. They are three or six months' bills and are sold by auction to the highest bidder. If the highest bid is 94 the bill sold is thereby discounted at 6 per cent., about which rate New Zealand bills are said to have been sold not long ago.

Treasury Notes were issued in England after the War, and took the place of bank notes. They were beloved by the people and affectionately styled Bradburys, after the man who signed them.

Sweden has just issued a fiduciary currency of paper, and likes it. Britain has a fiduciary currency issued by the private company that periodically gets into trouble and has to be helped by the Government. New Zealand has a fiduciary currency issued by private companies. This currency appears to be unequal to the country's needs. Germany, after wilfully inflating her gold-backed currency to a billionth of its former value and thus cancelling her internal debt (besides getting the bqst of French and English high financiers, who, having read no history, were silly enough to buy German marks at various stages of the inflation), issued a new paper currency on the credit of the country's wealth. This currency was an instant success, and has remained so. We are foolish to delay the issue of State currency. It's certain to come, and the National Government might as well have the credit of issuing it. Besides, wo want money, and why throw it away in discount by issuing Treasury Bills! Treasury Notes will do all that is wanted.—Yours, etc., SAMBO. •March 9th, 1032-

TO THE EDITOR OF THE PRE lb. Sir, —The letter of "Citizen" in Wednesday's issue seems to me the most lucid statement of the currency situation I have yet met. It is also written in a manner that would indicate that the writer knew a good deal more about the matter than would appear on the surface. Hence I venture to ask him certain questions. (1) He says: "Make it (the interna) currency) legal tender with the proviso that the Government redeem the issue with ordinary currency when required by banks and traders." Surely we are just where we were before if that is done, as the ordinary currency could always have been used if the Govcrnment.had enougtt of it to redeem the internal currency issue when presented by a banker or trader? (2) Why can't a complete token currency be issued sufficient for all New Zealand's internal needs, and its volume be regulated by the Government to keep its value in commodities more or less constant; as the Romans and Chinese did in their most flourishing periods, and as (I believe) the Soviets are doing now? (3) If I take £IOOO worth of gold lo a bank, and the bank gives me £IOOO worth of notes, is that bank now per : mitted to print another £ 1000 worth of notes (let us say) oil* the strength of the gold now in it 3 vaults, and is that what is called a 50 per cent, cover ? (4) Does it not - appeat (if this is true) that banking is a delightfully

easy way of making money, and that it is time that humanity began to wake up to this state of affairs? —Yours, etc. ; TRUTH-SEEKEJR. March 9th, 1932.