The Dominion. MONDAY, FEBRUARY 22, 1909. STATE IOU'S.

Dominion, Volume 2, Issue 438, 22 February 1909, Page 4

The Dominion. MONDAY, FEBRUARY 22, 1909. STATE IOU'S.

It was unfortunate that the Hon. A. W. Hogg was not present at tho meeting in.the Town Hall on Monday evening last. He would have had an. opportunity to give in some detail the theory upon which he bases his approval of the issue of -Stato lOU's. In tho telegram which reported the substance of his observations to the Wanganui doputation on Saturday, the .views with which ho declared himself "entirely in sympathy" were not recorded. As given in the Wanganui papers, they; servo to emphasise the extraordinary , character of Mr. Hogg's opinions on this question. The spokesman of the deputation declared that "tho present stringency of the legal tender was restricting industry and causing unemployment," and he urged the Government "to iesue their own paper and uso it to pay for public works." It "seemed absurd," he went on, "to think that we have to pay'interest to .foreign money-lenders for the privilege of cmploying ourselves, making our own roads," etc. And these aro the views -in which Mb. Hogg, after giving tho matter "a deal of study for many years past," is able heartily to acquiesce. Wo should not havo considered the views of the Wacganui deputation of sufficient importance to deservo notico had thoy not been endorsed and adopted in their entirety by a .member of the Government. Although fortunately Mr. Hocg is not the Government, even a threat by a Minister to in any way tamper ,with our currency is a matter that oaunot bn lightly isnorad. Tha views of the deputation on-

dorsed by. the.Minister aro stated in terms sufficiently vague as to. leave, in doubt the way in. which, these financiers would/-propose to dealUvith the currency, but the inference is that, some scheme of ■ inconvertible paper: is in their minds. The seductive lure, off cheap money never fails to trap the unwiry and uneducated. As Mill says: "To-be able to pay ofE the national'.debt,, defray/the expenses of government 'without- taxation, and, in fine,: to rnak'e .the fortune of "the whole community is a brilliant prospect, when onco a man is capable of believing that printing a few characters ■ on/bits of paper will do it." I'. . . ■ . .Mr. Hogg may. be given credit, for having in his mind something not quite sj crude as. unsecured ' inconvertible paper issued by the Government, but .for practical purposes jpaper which is not.at once and without condition convertible into gold/ must be; considered inconvertible, and is liable- to the ills .which ox-' perience. has shown attaches to. all forms, of inconvertible/paper. The assignats of the: French Bevolution "represented" an quantity: of, the: lands of the Grown : and - Church, ;thoy. were assignments' or orders;on. this mass.: of. .land, but land cannot, be';' realised ,at : a moment's notice,' and is niuch more'liable to\ fluctuations/in value/than .are.the. precious metals. These assignats depreciated to; at : least one--five-hundredth,. part/'of their value, and ;we .. are 'told /that it would have:takeri; ah assignat of. 600 francs to. hare'paid. for a,*pound; of but-, tor, although, these .notes "were issued by': tho Government; and '-secured o"h nearly half the territory,of France. : ; America has,had. similar experience.,'' Even if we are to suppose jtliat; the'/New Zealand Government \yiji prove wiser, than other Go'yernments: havo <' been in' the past, and that their note issue will hot exceed the money 'requirements of the time of issue, there:still remains'/.the liability, Day the 7 certainty,: of- depreciation. -The value' of money, i.like the: value of othbr commodi-: ■'ties',-.' , depends: on' :stipply .dehiand, , and notes not in oxcess in times of brisk, trade would .be ;in>excess ,when .trade con'tracted..:lt is easy to issue: notes, but to withdraw .them from , circulation is -'. another , and much moro difliciilt: matter.; Paper, money cannot,be used.for. foreign trade,' and : there j can ..be .no . es'eap'e for' any surplus by exportation.: ■ Gold: must bo: used to pay any., balance: of indebtedriess.'.: Papor money has v thus: the. power,.like:clipped or debased,coin, of driving: the precious.metals' put: of A tho, country. 1 . ' ;.A;premium}would;.thus-iriso on gold. In' other,'words; .papei , would: 'depreciated'-/ ■ ■^~/, ,. ' .■■'-.''.v;/. : '']\}-. '/■:.■■■'■■..'■- :

Ono.of the worst ovils.of paper,money not. based pit a.'solid/gold'; reserve -isthe feeling- 'of -uncertainty.,which:;.would/cor-, tairily/result. Depreciation,,.or,■qvpri the fear /of depreciation, .would," intrPduco instability: into the commercial -world ; ;no man.icbuid : takea;contract with any feeling, of security.; His'remuneration might 'prove-only;one-half -of :what he expected:' Our' 'workmen■:;ujvder .an', Arbitratibn Court-award might,find that , ;their/-ten 'shillings,■;■ a ; '■' day//>; represented,'/.' when changed into goods, not. more/than -five shillings. ;This; : in the .light of : history, is npt'van-exaggerated"' supposition!. Inshort; seeing ) that' tho. money function: is such an important one,: it "pays., a'/nation , to have nothing but the best monoy, even .should that sum. at .first sight be" a little more expensive..-.- After.,all; ,a ; currency -based'on.a. gold reservo,; coupled, with the. credit. syß^ms:'npw,iii .voguei;:;isnoti]an; ;expensive system,•• when.' we consider '• the immense 'anibun'fc of nipney 'work done. It may ibo,.. true that" Mr. ; Hogg's years of study; of the currency have led.him/.to .sbunderi views.'than wo /give'him: credit ■for, arid that-he.merely proposes that the Government, should';own';a ,State':. Bank 'and-issue .notes IWsecl on:the sound prih'ciplo of ; aa adequate gold reserve, but if ;this is his ; proposal,;it'.ishard.io. see.in , ..what- way■ the State can ■ effect any■ econ-/pmy-Jn: banking/;..'-It 'is true .that they might.give, credit on; easier .terms and;on; iWorse , , security: thanvexperionced : bankers! now.'find.safe tb;do, 1 /'This,/of; course, ''Would'.'mean' that: the./taxpayer' ,would ! : have l tp 'meet;loss,' of/interest and bad debts', .'arid Unless'We:are much'nlistaken' the taxpayer has. grown -very suspicious ■and a .little .tired .of experiments which lead : in this direction.',■, ', ; '..'..'.':,;