PRICES PROBLEM IN PLAIN WORDS

Dominion, Volume 14, Issue 61, 6 December 1920, Page 5

PRICES PROBLEM IN PLAIN WORDS

CREATION GIVES WAY TO DE- ' „ STRTJCTION DURING WAR. , Mr. P. E. Roberts, of Worcester College, Oxford, writing in a recent issue of "Money and Prices," 6ays: "Money, whether in the form of coin or notes or cheques, is in essence nothing more than a kind of stamped and signed p'o mise, or token, signifying that the owner of it, whenever' lie presents-.it, shall receive certain commodities, or command certain .services from his fellowmen.' True in a sense of all money, this is mos essentially true of any currency which does not possess, like gold, an intrinsic value of its own. Looking at tho matter broadly in its elemental aspect we can see'that theie is existing in tho world at any given time o great store of real worth, confuting of all the articles that mux', dos-re; jewellery, clothes, houses, motor-cars, foodstuffs, books (1 purposely ' select the most heterogeneous kinds of tilings), produced by the labour and "apital of tho past, and continually being replenished by the labour and capital of the present. Let us imagine for tho moment' .that this great mass of. commodities is gathered together in one .great heap or dump. t There ,- s,ion tho other 'c.im\, pile of money, coins, notes, and caeques. Those who held these monetary tokens present them from time to time to the man who possess llid l'.eapedup commodities, and take away food, clothes, other whatever they, require. Obviously, if there did not exist thts great heap against which to cash, as it w,ere, in commodities, tho tokens tendered, Hie lar'er would heve no value to their >'otters at sll.

"Now, during all the years of tho j irar two processes wer« g.'i.ng on pari passu. In the first iiiace the great worldstore of material goods was tint only not being replenished as it should have been, it. was being actually diminished. Millions*?? men were called away i'rem the work of. economic productiony-ilio work of ever piling up_anew_il!e great stnfe of desirable commodities to uwell the ranks of gigantic armies. Others* wove" engaged'in making_twnble engines of destruction designed "to destroy and blast and' pulverise the garnered wealth of many generations. In the shipyards, for instance, labour was diverted from the construction of vessels of tho mercantile marine, which create wealth in the economic sense by transporting .commodities to tho -places , where men may use and enjoy them, and whs ompfoyed- in .building wi.rships which preyed "on ' .mid dtstroy«d the sea-borne" commerce of the world. But this was not all, for, In trio m«M>n .dplace, the Government, desiring at alt costs to get essential war work <iane. bribed men -with higher and higher waae9 to abandon the work of creation and take up Hie work of destruction. They paid out more coins and Treasury notes, -unhappily the Treasury notes predominated—iii wages, bonuses, and allowances. Of course, it may have been uece?sary— lam not denying that—but the'price lias to be paid,' NSw all this 6imply means ♦hat, while Hie great heap of real woalth, i.e., commodities, was steadily diminish- .';*<, *he great hcas of money tokens, i.e.. claims on wealth, was as steadily growing. A rapidly increasing number of persons were being given a lien upon a rapidly dwindling store of wei'lth. linjrh of these persons on presenting his ciaim must necessarily receive less than before, or tho amount of commodities simply will not go round, here can only bo one remedy. In our present position increased production is.absolutely necessary to prevent tho high nominal wagea now paid to tho workers from sinking in terms of real wealth till they command, not more, but far less than the old wages, which in terms of money, wore much lower. "If only men would realise that money (espoci'ally tho money of to-day) is not wealth but only a claim on wealth which for the most part has yet to 'be created by their labour, they might understand that a general curtailment, of production, designed to prevent unemployment, can only depress tho real wages of all workers, and so render unremuncrutivo the cmploymont so jealously guarded. It nopears theoretically sound to say tHitt oilher production must be • increased or the currency deflated. But this is the antithesis of logic, not t)f fact. I hold as strongly as anyone that we ought; in time to got back to a gold standard eased and»mado/olnstic by a strictly convertible noto issue, but it will take, many years to bring this about. Deflation is a very difficult- and dangerous process. Any rapid movement in that direction is bound to bo disastrous. The bettor nlternativo os tho present time (and it is ateo a neecssary preliminary ot any sound system of deilation) is to incrense our production, so that tho high rewards won by Labour may havo a real and not merely a nominal value."