MONETARY REFORM EPIDEMIC

Evening Star, Issue 21747, 15 June 1934, Page 6

MONETARY REFORM EPIDEMIC

A BANKER'S WARNING "COSTLESS CREDIT" PHANTOMS A little tilt at the monetary reformers was indulged in by Sir Harold Beauchamp this morning at the annual meeting in Wellington of the Bank of New Zealand of which he is chairman oi directors. “ A feature of the present depression,” he said, “is the number of people who, without any qualification for the role, have become ardent mone•tary reformers. A lack of knowledge of ordinary business and banking principles does not deter these people, and unfortunately their disabilities in this respect are often accompanied by complete in tho efficacy of their plans to restore national prosperity. Such mysterious catchwords as ‘ A plus B theorem,’ ‘ costless credit,’ and ‘ nationalisation of banks ’ —whatever these terms may mean—have lately become familiar and are designed to convey to the community the impression that the various schemes, it adopted, will provide an easy way out of national and individual difficulties, which arc attributed to the present monetary system. Human nature being what it is, any plan, however fantastic, which promises results without hardship, will attract adherents; and there are many people in this country who have been persuaded by well-mean-ing but irresponsible theorists to believe that the present system is responsible for the depression and is standing in the way of a restoration of good times. Those who persist in advocating apparently attractive but unsound theories, which could not be put into practice without disastrous consequences to the public, undertake a serious responsibility, for they are leading people from the beaten track to be lost in a maze of by-ways. “It is necessary, in order to preserve a sense of perspective, that we should look back now and then to the years following the war. What do we find? A world which, according to eommonsense standards should nave been poorer as a result of the war, Jived as if the war had in fact made it richer. In New Zealand our national debt has increased approximately £134,000,000 since 1918, and local body debt over £36,000,000. The good sense of the community must lead it to realise that to an individual who has lived on borrowed money, or to a nation that has lived on borrowed money, there must come a day of reckoning. It is inevitable, and Ido not see how a people can blame the monetary system for its consequent trouble, any more than an individual can blame the monetary system for his difficulties. The same good sense of the public should also make it disbelieve in schemes which promise an easy way out. “ The schemes submitted by the would-be monetary reformers almost invariably involve the issue of indefinite amounts of paper money to give what is called more purchasing power. They would have the country entrust itself to the slippery path which leads to uncontrollable inflation. They do not tell the people of this danger ahead, but only of the easy progress that can be made. 1 believe that many of those who support these unsound schemes consider that if anyone is hurt through inflation, it will not be the worker, but the capitalist—not the poor,' but the rich. There could be no more tragic mistake. Every person who by hard work and thrift has provided something for the future of himself, his wife and family, who has a post-office or bank deposit, a holding of debentures or mortgage securities, a life assurance policy, or who is relying on a pension fund, would be most < disastrously affected by the indiscriminate issue of paper money. It is apparently not realised that the number of creditors in this country —and it is the creditors who would suffer by inflation—considerably exceeds the number of debtors. For instance, the number of depositors who are of the Post Office Savings Bank alone is over 800,000. “The people of .New-Zealand will, I am sure, firmly refuse to regard seriously fantastic and ridiculous schemes which promise much without cost, and will choose rather to follow the example of the Mother Country, which squarely faced its difficulties making steady progress toward recovery.”