LABOUR POLICY AND MONEY

Evening Star, Issue 21752, 21 June 1934, Page 14

LABOUR POLICY AND MONEY

TO THE EDITOR. Sir, —I notice that Mr Harrison does not attempt to refute the truth of the statements made by me in my previous letter. The only thing lam concerned about is their truth; whether they are orthodox or otherwise matters not. What is of importance is; Are they of benefit to the people? Mr Harrison writes: “ The solution of our problem does not lie in the question of inflation or deflation. The banking fraternity are no more responsible for the present chaotic conditions than the Employers’ Federation or the chambers of commerce.” I heartily agree with the above statement. I can assure him that both Mr Coates and Mr Forbes and all who understand will also agree; but I am afraid Mr Harrison’s Labour colleagues will differ with him. Seeing that Mr Harrison does not understand the cause of our trouble, allow me to put him on the track. The cause is psychological—mind, fear, the result of ignorance. The monetary problem is a reflection of that fear. Gold contains no power, nor any value, except what labour puts upon it. It is not the fault of gold or any mineral that we have starvation in a land where it is possible to have plenty. The cause is “ fear ” born of ignorance. My object in writing is to try to allay that fear and do a little to make the conditions better. Mr Harrison appears to be greatly concerned about the stabilising of purchasing power. In my letter I pointed out that it was impossible to stabilise —make permanent—the value of money or goods. They varied according to the labour cost to produco them. What Mr Harrison apparently wants—but does not understand—is the' fixation of prices for goods, labour, hours of labour, conditions of labour, etc. —in other words, a system of State slavery. If the workers follow many of the Labour leaders they are likely to get it very shortly. Mr Harrison is on the wrong track. “ Cow Cocky ” holds mistaken ideas in connection with the gold standard and exchange. He writes: “As Britain is off the gold standard, and as her currency is 25 per cent, to the bad, it follows that if we get on the gold standard the farmer who sends £IOO worth of butter will only get £75 for it instead of the £125 he now receives ; and' because the Labour Party will not agree to a scheme to give the fanner £75 for tho £IOO he now receives in Britain, which under theexisting arrangements gives him £125 in New Zealand, it would seem, according to Mr Moss, it does not understand finance.” It will immediately be seen from the following examples that “Cow Cocky”-is entirely wrong:— Example (1): Currency, value as at present, . New Zealand 125 equals British 100. Brown, of London, requires lOOcwt of butter. Cost in New Zealand £6 5s per cwt, equals £625 New Zealand currency. Cost to Brown in British currency, £SOO. Credited to farmers account in New Zealand, £625. Additional £125, the difference between currency of two countries, given to farmer at the expense of the people of New Zealand. Example (2): Currencies, New Zealand oh gold staudax-d, equals 100; Britain 25 depreciated, as stated by “Cow Cooky.” Currency values: New Zealand 100 equals British 125. Brown, of London, requires lOOcwt of butter. Cost in New Zealand at £6 5s per cwt, £625. Cost to Brown in British money, £7Bl ss. , .Credited to farmer in New Zealand, £625. “Cow Cocky” will see from the above two examples that the farmer would still get £625 credited to his account for his lOOcwt of butter by New Zealand being on the gold standard. Further, he would get it at the expense of Britain, and not of his fel-low-citizens of New Zealand. Further, he would get his commodities cheaper in New Zealand as the result of a lower price level of imports. 1 suggest that “ Cow Cocky ” think a little deeper; he will find that thq advocates of the gold standard are not such bad fellows after all. The real effects of the exchange on New Zealand are: it has lowered the price of our exports and caused an increase in the price of imported goods; it has lowered the purchasing power of money in New Zealand by keeping up the internal price level of goods. The sooner the people realise the necessity of getting back to a convertible gold currency, or that the bank paper be kept at parity with gold, the sooner we shall have security and progress. I agree with “ Fernleaf ” that there should be no scarcity. I agree that the machine can keep us in abundance —if we as a people will allow, it. Today wo have many going short, the reason being, as outlined in my reply to Mr Harrison, “fear.” One of the first things to do is to rectify our monetary troubles, as outlined by the writer, doing it in such a way that it will “ render unto Caesar that which belongs to Chesar, and unto God that which belongs to God.” I did not advocate such an absurd system as a commodity mopey system, although this is advocated by many. What 1 wrote was that whatever is used as currency—whether it be paper, shell, nuts, etc. —it should be convertible to its named value in commodities on demand—in other words, it should be convertible .to gold. The currency I advocate * is one of paper. Paper being cheaper than metal, it can function just as well as a means of exchange. All that is required is to make it compulsory on the banks to redeem it to its full value .stated in gold. If this is done you have a sound currency, one that will prevent inflation and deflation beyond what are termed gold points, and further prevent the exchange value being manipulated. In conclusion, I would ask your readers to think over the following quotations: — (1) Seeing that the banks’ note issue is legal tender money, and that legal tender money can purchase land, buildings, machinery, how is it that the banks do not issue to their shareholders sufficient notes to purchase the entire lands, machinery, buildings, etc., and so enable the few shareholders to own all the wealth of New Zealand? (2) How is it that the banks wil give full value for their notes in any commodity other than “ gold?” It will be understood that in New Zealand the pound note can be exchanged for its value in any commodity, barring gold; further, that any commodity can be exported by the community if they wish, excepting gold. Why?—l am, etc., C. M. Moss. June 19.

MR W. GOODFELLOW AND THE EXCHANGE QUESTION. TO THE EDITOR. Sir, —With reference to an article in your issue of Juno 18, within reason, I believe in every , public man airing his opinions; but if he shows by his utterances that he does not understand what he is talking about, then I believe that he should be pulled up. I point out, therefore, that in Mr W. Goodfellow’s remarks on behalf of the Reciprocal Trade Federation, he says: “ The Government (New Zealand) was reported to have purchased large quantities of railway and other materials from Australia—goods which, but for the currency depreciation, would have been purchased more cheaply from Britain.” Now, this is exactly opposite to fact, because by increasing the exchange to 23 per cent, from .10 per cent., Mr Coates made no. difference at all to purchases in Australia as compared with purchases in great Britain. The position can be set out thus:—

From Australia (ai £IOO f.0.b.) From G. Britain (at £IOO f.ob.) Difference in lav our ot Australia.

Freight tan be ' ignored for the comparison—also fluctuations in Australian exchange, which actually was more favourable. I do not know whether New Zealand has bought any such material from Australia or not, but I have written merely to show the folly of persons attempting to lead when they have not the necessary knowledge of their subject.— 1 am, etc., Merchant. June 20.

Before the Exchange ' .vas raise d to 25 pet cc from 10 per cent j£8J ' £110 £25 After Exchange was rai sed to 2 '5 per cent, from 10 per £125 £25