WELLINGTON NEWS
MONEY AND SOCIALISM. (Special Correspondent). WELLINGTON, August 30. It is singular phenomenon that Socialists 'invariably attribute to banks the causes of all Socialistic troubles. The banks are held to blame for the glaring mistakes of Socialism. The Socialistic Government in Britain played havoc with the national finances, and strong though he may be in some respects, Mr Phillip Snowden was not strong enough to stand up against the extravagance of his colleagues. The Socialist Government split over the dole. The unemployment insurance lurid was already heavily in debt, and to continue the scale of borrowing would have meant further borrowing, and it was to stop this that the Economy 'Committee recommended the scaling down of the benefits. The banks had nothing to do with this but it served the purpose of the die-hard Socialists like Mr Arthur Henderson, to place the blame on the banks. St pleases the mob, and the mob votes to place Mr Arthur Henderson in a position to wear a stove-pipe hat and spats. In Australia we have the same thing. That amateur financier, Mr E. G. Theodore, wanted to inflate the currency, and because he could not get the. banks to fall in with, his scheme, they were said to be against the Democracy. The Socialist Government of Australia is now following the course recommended by the banks. In New Zealand also we have had the Socialists shooting at Hie banks from behind the cover of Parliament. They were held to blame for not releasing more credit when all the time ib was apparent that they were lending up to the full .amount of their resources. Furthermore, both here and in Australia the banks have shown their desire to help straighten out affairs, and for this purpose have agreed to reduce the rates on deposits and advances. In Australia they have gone further and have agreed to convert their holding of Government stocks into lower interestbearing securities and they arc strongly urging other holders to do the same. Socialists are obsessed by the idea that banks are sonii-Governmeiit institutions and can be bludgeon* d into doing whatever the Legislative may desire. Banks are trading institutions, they trade in credit just as other merchants trade in goods. The capital of the banks has been found by private individuals who expect their capital to bring them in some return. Socialists are also in the habit of misstating the facts in respect of bank dividends. All the banks trading in New Zealand have big reserve funds which have been built up out of profits and the premiums received on the issue of new shares. No dividend is paid on the reserves, but capital and reserves are employed to earn dividends on capital. The- reserve funds of several of the banks equal the amount of the capital, so that actually double the amoimt of the capital is employed, but dividends are paid only on the capital. With perhaps one exception bank dividends have been very much reduced during tile past year or two, while the market value of the shares have fallen in sornes cases by over 50 per cent. , The depression has not been caused by the banks, nor have they contributed to it. The blame rests with politicians and the worst offenders have been the politicians of the United States, they have wantonly and flagrantly broken every economic law, and they find that they cannot avert or buy off the consequences even with their enormous holding of gold. The United States and France have insisted upon the payment of what is owing to them by other nations, 'cither iit actual gold or in short-term liquid claims. This is a contingency which the normal working of, the international gold standard does not contemplate and for which it does not provide. The depression is not monetary in its origin, as stated by the president ot the 'Sheepowners’ Association, but is the result oj faulty statesmanship. The ' MacMillan Banking Company remarked: “If for any reason a creditor country, after making all the purchases it desired, is unwilling to lend its remaining . surplus to the rest of the world there can be no solution except the ultimate destruction of the export trade of tli’e country in question.”
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Hokitika Guardian, 1 September 1931, Page 6
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708WELLINGTON NEWS Hokitika Guardian, 1 September 1931, Page 6
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