WELLINGTON NEWS

Hokitika Guardian, 30 March 1931, Page 7

WELLINGTON NEWS

PLENTY OF PLANS, (Special Correspondent.) WELLINGTON, March 27. There have been at least five plans submitted for setting Australia on the road to recovery. The first and best plan was submitted in August of last year by Sir Otto Jsiemeyer. Later, Mr E. G. Theodore, the Federal Treasured, propounded a scheme which, however, it may be disguised, is pure inflation. Then there was a scheme by a Mr Gibbons which was also on the lines of inflation. Lang, the Premier of New South Wales, suggested a scheme of repudiation, and finally the Commonwealth Bank came out with a plan which was practically on all fours with the Nemover plan, .dr Scullin', the Federal Prime Minister, and the State Premiers endorsed the scheme proposed by Sir Otto Nie-

meyer but, while the politicians were willing, they were too \veak to stand up against the powers behind the throne, thd Labour Caucus, and all schemes have been abandoned except the Theodore plan which Mr SculUn says the Government intends to submit to the Federal Parliament, Mr Theodore proposes what he terms a fiduciary issue of notes to the amount of £18,000,000 for the purpose of helping the wheat growers, financing the unemployment and raising the price level. Mr Theodore has stated that his plan is a temporary one, but inflat-

ing the currency once begun has a way of continuing for it seems so easy to spawn money or credit through t]ie medium of the printing press, In the London '“Bankers’ Mngftjdne” Dr H. Ifoisch, President of the Australian National Bank, contributed an article on this subject of inflation which is appropriate. After remarking that, many arguments can he urged against the nationalisation of hanks of issue, he says:—“lndeed these have been brought forward for centuries in favour of the independence of banks of issue from the Government and at present are recognised practically all over the world.’' .Just because banks of issue can create credit i.e. purchasing power, there is, in a high degree, the danger of inflation which until now no Government- in the long run has proved able to resist Although the banks of issue nowadays have to pay attention to their main task of defending .monetary interests and controlling the general credit situation, in granting credit they chiefly consider the liquidity of their claims and the solvency of their debtors according principle of the capitalistic economic -.•-'em. Credits are grant-

eel in an impartial way only to .such persons as, in following their private interests, proceed in accordance with the economic principles generally iecognised as sound, and likely to lead to satisfactory results. It would be extremely dangerous if credits extended by banks of issue were in future to be granted under Government inilueuce, and according to other points of view in favour of certain branches of production or, for example., to promote emergency’ relief work or to beneiit certain classes of the population, Such a procedure would infalliablv create a general u»certninit.v among the applicants tor credit; as to whether they would he. able to procure any credit at all, and consequently would cause disturbances to the whole of cur economic life, Probably a great economic chaos, certainly an increasing inflation would be tlie consequence, Guilder the present economic system creditis imlexpensable. It cannot he organised on entirely different lines from 1-hose on which the whole economic system is bused. Who ever nationalises credit will he consequently forced to tolerate ever-growing Governmental influence in industry and further nationalisation It is for this reason that X remind you of the Homan

“principus obstn” —beware c»*f the first step. The- Commonwealth Bank is still independent oi the Government but how long van it remain so or be allowed to remain independent if the Theodore plan is pur into operation. Australia’s position and Mew Zealand’s position also are practically the same hut differ in degree. The national income has contracted and a fiduciary note issue cannot alter me fact. When an individual finds his income reduced he immediateHy sets about lowering his costs and therefore standard of living. He is obliged to forego one thing and another that he had become used to when his income was unimpaired and so reduces his cost of living and standard of living. Can it be said that a man on partial work, even at full award wag-

es, has not had his .standard of living reduced? The slate is merely an aggregation of individuals, it is all the people, and if the income of all the people is lower, the. cost must be lowered and the standard oi nv,.ig lowered. This, of course, is taking place, but there is one section covered by arbitration who do not desire to make a single sacrifice and they are being misled by the mandarins of the Labour party.