LABOUR POLICY AND MONEY.

Evening Star, Issue 21746, 14 June 1934, Page 6

LABOUR POLICY AND MONEY.

TO THB EDITOR. Sir, —Regarding Mr Gilchrist’s letter, may I say that 1 did not lose sight of his statement which read “ adjustment, the result of a scientific system of costing and pricing—all a matter of bookkeeping—will prevent inflation as well as other lunacies of the present banking system.” My reason for not referring to it was I thought that my letter would be sufficient to show the absurdity of such a suggsetion. The only true method of costing anything is naturally oh the cost of labour to produce it. No manipulation of figures will enable any person to sell an article below cost of production without disaster to himself and the community. So far as book-keeping is concerned, the banks are well able to pay for the best ability in the accounting profession, but they are quito unable to prevent their figures _ from showing that the currency is inflated. No doubt they would like to, if it were possible. Fortunately for the people, no banks or country can manage it. They may falsify their balance-sheets by writing down their assets or increasing them, but one thing they cannot do is to prevent those who understand finance from knowing when they have an inflated currency. Financial capital knows no country, no nationality, and no frontiers. It flows wherever it can get the best return. The actions of the financial institutions and the Government always reflect themselves on the foreign exchanges, which are as sensitive as the finest gossamer thread. Mr Gilchrist asks “ If 1 am one who believes that money, a medium of exchange, should possess an intrinsic value, or value in itself-.” My answer is that currency need not, as a measure for internal exchange, possess its named value, but it should be convertible on demand to its so-named value in labour power or goods. To illustrate, paper will function as a means of exchange internally, just as good as gold, provided it is redeemable on demand to gold. It is cheaper to use paper than gold on account of wear, etc. But money must also possess its value in itself if it is to function as a measure for external trade. As a measure of value it is most important. My reasons why money' should be a measure of value are: (1) That money is a commodity just as much as coal, butter, cheese, boots, etc. (2) That it is impossible to have anything as a means of exchange that has not a commodity value. (3) That I know of nothing more suitable than gold at present for such purpose. As to Mr Gilchrist’s other question, “ Why talk in this machine age of labour costs?” surely it is necessary when costing to take into consideration the machine. Has not labour been applied in the production of the machine? Has not the person who has money invested in the machine as much right to interest—if interest is recognised—on his capital, as one who deposits his capital in the banks? So long as we recognise interest, so long, I believe, it will be necessary to take labour costs for valuation purposes. Perhaps my friend will inform me of some better method of costing. I can assure him I shall be indebted to him if he can do so.—l am, etc., C. M. Moss. June 13. TO THE EDITOR. Sir, —It is not my intention to follow Mr Harrison’s policy of being sarcastic. I am only concerned with, trying to help my fellow-man to get on the right track. It is obvious by results—and results are the things the.'; count—that' the Labour movement has long been on the wrong track. Sufficient it is to say that we have approximately 70,000 adult workers unemployed. We have boys by the thousands who have little chance of following the occupations of their fathers. And the working class aro approximately 80 per cent, of the community. Surely there must be something, radically wrong when the workers, with their industrial and political organisations, cannot prevent such a state of affairs. Anyhow, there appears at least to be hope for them, for Mr Harrison now informs us they are willing to learn to be taught. Such being the case, I will endeavour to answer his questions. 1. ” If gold bo the standard of measurement of our internal currency, in what way does gold receive its value?” Answer: Gold, like all other commodities, has no value other than that given by labour. It is labour which gives gold its value. The value of labour is measured in terms of money (currency). Whether currency bo metal, shells, cotton, or cattle, it is valued in relation to gold. Note: All currency has. a commodity value; its value depends on the cost of labour to produce it. A point of great interest is that though its value as a commodity may be small its exchange value as currency may be high. This depends entirely on whether a country is working on* a managed currency or on what is termed the gold standard. To illustrate, New Zealand has a paper currency. Although paper in itself has a low commodity value, paper used as currency has an exchange value equal in labour to the cost of labour in the commodity for which it is exchanged. In other words, one New Zealand naper pound will exchange at the present time for eight hours of labour of the gold miner or any other worker at v!s 6d an hour in New Zealand. In England £1 New Zealand currency would only exchange for six hours at ■?s 6d. If the New Zealand pound was redeemable or convertible to its nominal value in gold, and our people were allowed to take it out of the country, at the present time it would exchange in England for approximated eleven hours of labour at 2s 6d per hour, the reason being that Britain’s currency is also depreciated against gold to the extent of approximately 35 per cent. Labour leaders and others will see the necessity of getting back to a convertible currency, for on a. convertible currency it is almost ir-possible to raise the value of the currency beyond the cost of labour to produce gold. In effect, it means that labour power always exchanges for equal labour power in cost. 2. “Is there any possibility of stabilising the value of gold that we uight have a constant measurement for our currency in the same way that we measure our by the system of avoirdupois weight?” Answer: