Gold or Notes?

Maoriland Worker, Volume I, Issue 1, 15 September 1910, Page 7

Gold or Notes?

+.- The State Bank Proposition.

(By CHARLES BICKERTON.) Gold or notes? A question known to all. Which will you have? It is risky to take gold, one might lose it; notes stick better to the lining of the pocket, but the bank might break. What tragedies lie in the possibilities ! And yet a broken bank means simply there is not enough gold to pay the promises. The very word gold is thrilling, representing unlimited possibilities of satisfied desires, holy or satanic, removing mountains, bridging seas. We do not think of this marvellous power as we handle and exchange the small round discs. All the average man knows is that he cannot get enough of them. Yet there must be some underlying principle that gives this uncanny force. The metal is very little different from other metals, but mankind has endowed it with this power by simply accepting the idea that this metal is the final payment for work done or goods received. Debts are wiped off the slate by the mere passing of the metal. Notes are only a promise to pay, legal tender in limited areas only ; good as gold in those areas, because of the faith that gold may be obtained at any time, but woe to the holders if that belief be shaken by a whisper spreading that there is not enough gold to pay the notes! When this doubt arises gold must be found by the issuer, be he bank or government, on pain of bankruptcy and extinction. Goods will not do, property will not do, gold it must be; gold or death, as a corporate body. Here we have the secret of this strange power. We now see tvhy a Government cannot print bank notes like newspapers. They must be backed by gold, not property or work done, but by gold only, because in time of stress, were property the only backing, an exchange must be made for gold, and this often entails great sacrifice. In international crises goods and land have been sold at one-tenth of their ordinary value. Thus we see that the exaggerated value placed on the issue of State notes is largely fallacious, the fallacy being caused by taking one small country, such as New Zealand, and ignoring its relations with more powerful countries linked to it by means of commerce and debts. Plainly, if we were isolated, our Government could issue notes on the security of work done, or property acquired, making them legal tender or final payment of liabilities, thus keeping all the inhabitants profitably emSloyed. Similarly the whole world could o the same; but, while the rest of the world will not accept our legal tender, and we have no power to compel them to do so, the notes must be exchangeable for gold on demand for the purpose of paying outside debts, and if this were done without sufficient gold backing, individuals could seriously embarass the Government by exchanging goods to the people for notes, and demanding gold from the Government, which gold could be sent out of the country. The only advantage of a State bank and State monopoly of note issue is thus comparatively small; but it is a very real advantage. Briefly put, it is the profits of all the banks, with additional security. To gain this advantage we assume that the Government officials consist of as careful and honest men as the average bank officials, and that the notes have the proper backing in gold that experience has shown to be necessary. The machinery we have already in the Post Office Sayings Bank, with its branch in every village and ibown. The system would need very little extension: power to draw cheques, the issue of notes (which is already done in a limited form), the negotiating bills, loans, etc. All this could be done with comparatively small increase in the expenditure for salaries and buildings. The convenience of this system would be hard to overestimate, and the profits enormous, as the returns of the banks for the last ten years will testify. In this profit the depositors could share directly, by the Government continuing to pay them the interest they already get, with the additional advantage of a more liquid account. A possible objection to this system is the fact that the Government would have one more monopoly. Some of us think a Government should not have monopolies, but it is well to remember that the people control the Government, and the choice lies in the future between the nation and trusts. The day of private competition is nearly past. The fight for our little bit is {>assing, the little bits are segregating, inking themselves together, forming irresistible combinations. It is idle to talk of private enterprise. The choice that must be taken is a choice between forming a living unit in one of these

great organisations, working as our collective wills direct for the benefit of all; or we must be forced, passive captives, to do the will of the autocratic owner of the forces in the midst of which we exist. The life of the future is being made now, the thought of one generation is the environment of the next. The real reforms are not mere palliatives, but are made in the brains of the people. Only ideas, only a thought to change, enlarge the thought of payment to willing service, from private property to ownership for all, from justice to love, and lo ! we have the millenium.