"OUT OF CONTROL"

Evening Post, Volume CXXVI, Issue 86, 8 October 1938, Page 23

"OUT OF CONTROL"

BACKING FOR BANK-NOTES

"I simply cannot understand why the "wage earners of this country do not rise up in their wrath and protest against the way the Minister of Finance is depreciating the value of their currency," said Mr. O. C. Mazen- ' garb, National candidate for Wellington Suburbs, at Belmont last evening.

- "A week ago I drew attention to the X:S&ct that when the Government came into power the backing of reserve assets for the notes and other demand liabilities of the Bank was 99.16 per . cent, and that this reserve had been reduced so much that two weeks ago it was only 63 per cent. The week before last it went down by a further 3 per cent. The Government Gazette published yesterday shows 'still another drop of 3 per cent, last week, leaving us now with a cover of only 57 per cent, for the paper money which the Bank issues. If Mr. Nash continues to use up the Bank's reserves at the present rate he will -be down to the statutory danger level before the end of the year and then -there will be wailing. It won't be "the squeals. and groans of the ■wealthy" which will be heard then, but the pleadings of the people who have to depend on their weekly pay envelopes for the necessaries, of life.

X: "I cannot believe that .Mr. Nash is unaware of the impending trouble," said: Mr. Mazengarb, "but it does look as if he has lost his way in the mysteries of finance arid is now flying blind."

Mr. Mazengarb proceeded to say that ■what was now happening in New Zealand and what Mr. J. A. Lee suggested should be deliberately followed as the policy of the Labour Party had been tried in various other countries at different times in their history and had always • proved disastrous. The Government was now following a policy of plain and unabashed inflation of the currency and dissipation of those bank reserves which alone gave value to the paper money which the Bank issued. It was a mockery for the Labour manifesto to talk of controlling the credit and currency of the country when their own returns from the Post Office and Reserve Bank showed that they had already lost control and were only waiting for the election to be over before taking those drastic steps which would open the eyes of their followers to the situation they were in. What was the use of giving increases in pay and pensions and of offering social security benefits if the assets were not there to back up the money that was already in circulation?