LABOUR AND MONETARY

Press, Volume LXXI, Issue 21414, 5 March 1935, Page 8

LABOUR AND MONETARY

TO TUB BDITOIt Or THB PRSSS. Sir,—Under the above heading, that mysterious body styling itself the New Zealand Welfare League published a letter in "The Press" yesterday, in which it alleged that the Reserve Bank did not create the "new money" that enabled it to acquire between 20 and 30 millions of credit in London; but that the New Zealand Government transferred to the bank about £25,000,000 that was standing to its credit in London. If the bank did not create new money (bank credit), will the league kindly inform us the nature of the consideration that induced the Government to part with such a substantial sum? I am assuming that the League is not suggesting that the transfer was in- the nature of a present.

A study of the statements of assets and liabilities published by the bank will reveal to anyone versed in accountancy how the trick was done, but as the league is apparently speaking for the bank, it should have the opportunity of stating in unequivocal terms how the bank paid for the said "transfer." In attempting to prove that the slump was not caused by a shortage of money, the league asserts that there is no shortage of currency in New Zealand, but this statement .has no significance in itself, as the vital question is, not how much money there is in New Zealand, but whether there is sufficient money in the hands of consumers to enable them to purchase their full requirements up to the maxi-

mum of our productive capacity. Our present financial difficulties would undoubtedly be solved by the creation and distribution amongst consumers of sufficient money (issued as a national dividend, debt and interest free) to enable this to be done; and the equation of production with consumption, coupled with the application of the "just price discount," would make inflation of prices impossible. The league admits that 90 per cent, of our 'money is credit (but created by, and therefore belonging to, the community), and as this is practically a costless creation, there is not the slightest reason why any human being should be deprived of the necessaries of life simply because an obsolete money system has failed to supply him or her with these costless tokens. This is a power and machine age, and it has been estimated that the potential capacity of the world's machinery is now equal in manpower to "five times the world's population; but instead of arranging to distribute the huge increased potential output, governments all over the world are destroying immense quantities of foodstuffs and other goods in a vain attempt to raise prices. The Welfare League's letter gives no indication that' it has the welfare of the community

at heart, but rather suggests that it is concerned only with a small section thereof.—Yours, etc.. G. W. ATMORE. February 28, 1935. TU THE EMTUH OF THE I'UKSS. Sir,—ln a recent issue, Mr A. R. Allardyce claims that Labour members of Parliament are inconsistent, in that they fail to speak in terms of Labour's policy when discussing certain bills. He fails to realise that, with the Government holding the views it does and possessing as it does a majority in the House, it is vain for us to attempt what must be, for the time being, outside the sphere of practical politics. We have tried to induce the Government to adopt a different financial policy, without success. All we can do for the present is to seek such limited concessions as are possible within the scope and sphere of the present Government's policy. In Ihc meantime, surely half a loaT, from our point of view, and dial of Ihe country, ir. better than no bread. While we have a Government I hat. regards loans and taxation as the only moms of raising money, we must, under protest, limit ourselves to advocating that such means be availed of, at least with all possible safeguards, and with a minimum of undesirable features.—Yours, etc., LABOUR M.P. Wellington. February 27.