The Guardian (And Evening Star, with which is incorporated the West Coast Times.) THURSDAY, JANUARY 10th, 1921.

Hokitika Guardian, 10 January 1924, Page 2

The Guardian (And Evening Star, with which is incorporated the West Coast Times.) THURSDAY, JANUARY 10th, 1921.

INEUENCE OK DANCEIiOrs TALK, lilt- Now Year was bu ie ] V three day*; jld » litMl the nows was Hashed over the i to tiles that slorliuk exchange on New ( York had dropped to -l.2uj dollars. ! here is nothing surprising in this drop. , lor tho exchange rate was as low ox i -1.20 dollars on November lllih. last. ) although it sulisequeutlv rose to I .lid ) doth. rs, tho etmeern is with tho cause j of the droit. Jn the cable message of January ,‘S, announcing tho recession in . the exchange value of sterling expresnj id in doilars, it was stated that *'ohI servers declare that the siorlirtg's de- ’ eiine is due to the shifting of funds : from London to New York, owing to ) tint uncertainty of the political posit lion, which is expected to continue I until Parliament reassembles. Dealers ' here- (New York) tile particularly ap[irehensive of the portents of Labour’s > probable ascendancy.” On Dee. 24, a ( London cable message to the New ZeaI land press, stated that for ton days ' hollowing tho general election, tho London Stock Exchange was in a decidedly depressed condition. Many * people were so alarmed at the possibility of a Socialist Government that they i hastened to liquidate their holdings, with the result that prices all round were marked down severely, especially in the gilt-edged group.” What is tho cause of this panicky feeling? The Labour Party headed bv ATr Ramsay Macdonald is not yet in power. Mr MacDonald may he (ailed upon to form a Government hut it does not follow that tlie Labour Government would last' long enough to enact legislation : all the probabilities are against that, and yet Labour has caused a panic. Obviously it is not because Labour has done, hut because of what Labour has said, that capital has become scared. The Labour l’aitv in Great Britain has placed a levy on capital in the forefront of its programme. What a levy would do was the subject of discussion recently in London between a number of f.al.our politicians, hankers, and Trade Cnion officials. The hanking representative who opened the discussion urged that three things were noeex-ary to pro-

duction—brains, labour and capital—and in. taxing any one of those necessities they would be taxing the seed instead of the harvest, and the levy would be certain to lead to great unemployment. Tfe cited the ca>c of Switzerland where the mere threat of a capital levy as expressed in the referendum produced a very serious state of affairs, for there was immediately a very large withdrawal of foreign-owned capital, and a ruinous reduction in the price of securities. It was pointed out- that any at torn) t to inspect hank deposits for the purpose of such levy would have ■i simply terrible effect upon Britain, foi the least breath that money and savings were not inviolate would result in financial disaster. Tn Switberland there was great dislocation of trade and commerce. Switzerland, though an industrial country, is not importaid as n financial centre, and if the threat of a levy on rnpitnl had so disastrous an effect on that country, how much worse would it he on Britain ? London is the financial centre of the world and huge foreign credits are maintained there at all times. Tf any reader cares to examine the balance Shgcti .of any of the six jojpt stock

banks, ir.ding in t ’ is country we wiil see oil assets side an item ‘ .Money at call and short notice in London,” which item would run into millions, and also an item “British Government securities.” If a levy on capital were to be imposed, ibis money would net be allowed to remain in Iliitain but would li.. withdrawn immediately. foreign bankers would do the same thing, and arc apparently doing it now, ine dirge! insurance companies would immediately transfer their seeuririos and their businesses to countries where capital was sale, and shipnwueis would transfer the! i vessels similarly. Britain would h,.-r- her supremacy as the banker, underwriter, an.d seaearrier of the world, and this must have a disastrous (.fleet on the industry, trade and commerce of the count ;y. Hie I.nhour Party in Iliitain have no doubt honest intentions and lofty motives, bid in suggesting a levy on capital they are playing with lire. A Labour Government is viewed as u danger to the* body pcdilie, and that opinion will continue to ho held so long as the leaders of the Party ii will coquet with false doctrines.