INFLATION DANGERS

Hokitika Guardian, 3 December 1930, Page 8

INFLATION DANGERS

A SINISTER PROPOSAL. "Putting it into plain English, inflation is nothing but borrowing from ourselves and paying ou,selves with valueless notes,” states a Alelbourne financial house in a circular letter to clients, in which they discuss the position of public finance and condemn Federal and State Governments for not taking proper, steps to reduce-expenses. "Jt is somewhat difficult to understand how anyone with the smallest knowledge of finance- can endorse the extremist’s recommendations,” states the firm. “Inflation is their chief plank, and is expected to be a solatium for all our evils.” One of the fundamental practices of the modern banking system, the firm points out, is that it shall he separate from and entirely' independent of politics, hut the, extremists seek to obtain control and use it in accordance with their own ideas. The result would be that the remaining wealth of the country would be rapidly dissipated. Referring to the “fallacy” that the hanks are unduly “holding up credit,” the firm states that it would rather put it that: the banks are “upholding the country.” “There is not the slightest doubt,” it continues, “that the continued financial stability of the banks is the most vital factor in the weathering of the present storm by this country. If the members of the Party which is at present in power should gain control of the banks this stability will be forfeited, and there will be nothing to save this country from financial disaster. That the banks are lending to their consistent with sound finance and with safety, is obvious from the quarterly returns published from time to time. Doubtless, our Radical friends would be, the first to protest if they felt that their own deposits were being endangered by unwise and indiscriminate lending. In our opinion the banks have preserved a policy in the past which may assist this country to survive the present crisis, and are carrying out a policy now of the utmost loyalty to their country, and one which, if followed by others, would lead quickly to recovery. The effort of some politicians to- secure control of these institutions 'is the most sinister proposal which has been put forward during recent months.”