PRICES AND WAGES

Press, Volume C, Issue 29503, 3 May 1961, Page 12

PRICES AND WAGES

Stable Level Wanted (N.Z. Press Association) WELLINGTON, May 2. A growing country with an expanding population had to have an increasing supply of money so that a stable level in both prices and wages could be maintained, Mr F. P. Walsh, president of the Federation of Labour, told the federation’s annual conference today. If there was too little money about there would be an increase in its value which would call for a reduction in prices and wages. If such reductions balanced each other, no-one would be worse off. Purchasing power would remain * the , same, although the amount ; of money would decrease, but ! for a large number of years New Zealand had been oper- : ating on exactly the opposite system. “’We have had more money going into circulation than was Justified by the increasing production of the coun- ; try. In consequence, prices had been going up all the ‘ time and the vahie at wages has been decreasing. It has been necessary continually to ask for increased wage rates. ' just to - keep up with the falling value of our currency.” Business Arms with a quick turnover had profited from the use of loan money, but those making the greatest profit were the banks them- . ggJiVgg, “Money lent by the banks is actually nothing more then a book entry and it is a very profitable business to i get 5% per cent, for book : entries,” Mr Walsh said. ; Approximately £l7B mil- ■ lion had been advanced by . the trading banks during . 1860 and this would return s approximately £9 million in . interest—“a good return for , the expenditure of inks, pen ' nibs, paper, and other incidental expenses. “Banking is, surely, an ; undertaking of such national ! importance that it would be : better if it were operated by . the State, but this appears to ; be too prickly a subject for i any Government to handle,” , Mr Walsh said. “I can see no good reason, either, for the operation of five private banks when one State-owned bank could do the whole job. and believe that public opinion will force a change, probably within the next 10 years.” For financial stability all that was needed was the Reserve Bank to direct and control banking without political interference, and a Stateoperated trading bank could conduct all the banking business of New Zealand and conduct it for the advantage of the country; not for the profit of private shareholders. It was altogether wrong that the country’s money supply should be a private profit-making concern and that Governments or individuals should be allowed to tamper with the value of money.