GOLD STANDARD

Hokitika Guardian, 16 June 1931, Page 2

GOLD STANDARD

EFFECTS OF DEFLATION. BURDEN OF INTEREST BILL. DUNEDIN, June 12. A review of the economic position in New Zealand. w&s-rmftda, w ihis. morli.ng by the chairman, Mr W. E. Reynolds, in the course of his address at the annual y-neral meeting of shareholders of the Perpetual Trustees, Estate, and Agency Company of New Zealand.

“Since 1924 and for some years previously, but not including the war years,” cvlr Reynolds said, “New Zealand has ki n borrowing excessively at interest rates consistent with an inflated currency, and is now being called upon to meet these interest payments under a deflated currency. We must suffer accordingly, sending forward, may we say, double the quantity of produce we reckoned upon sending when we borrowed the money. We can only come into our own again when importations come down to values more in keeping with those our products are now realising, and this will take some time.’’

ECONOMIC LAW CONTRAVENED. “One important inference very clearly emphasised from the position made manifest to-day is that paper money can never legitimately be resorted to as a remedy excepting in so far as it is supported by gold, for the simple reason that it contravenes economic law. Gold costs in labour and outgoings about £4 per ounce to win, and is for convenience standardised at this price, whereas paper . money costs practically nothing. Further, we may notice that during the war, and thereafter, the production of gold declined principally because of the inflated cost both of the labour and material required in connexion with winning it, which decline is, I think, much to be deplored. We should always remember that gold is the only one product in the world upon which a definite price is fixed, therefore, as its standard value never alters, products on the average move up and down in accordance with the quantity of available, and when prices of products are high the winning of goiu is not always profitable, and because the reverse applies, already we see signs of a revival of gold mining .in the Dominion. Personally, I should like to see the .Government doing much more than Has yet been done in this direction. HCIPE AND ENDEAVOUR,

“Beyond advocating ths and also a cessation of further borrowing from sources outside the Dominion, I have no further suggestion to make. It is for us by expressions of hope and confidence to contribute our share to the feeling of secunity, a feeling which will hasten the awaited improvment in trade. With this thought before ns we should move into th'3 future full of hope aiiu enuLav " our.