DEPRECIATED PAPER CURRENCY

New Zealand Times, Volume XLVI, Issue 10614, 12 June 1920, Page 11

DEPRECIATED PAPER CURRENCY

(To the Editor "N.Z. Times.”) Sii —The thanks of the community are duo to Professor Murphy lor his endeavours to educate the public on tho currency question and to the "New Zealand Times'' lor i(n excellent report ot his address. The question is an absolutely vital one and until those who hold tile reins of government realists this awl take the actions which they alone cun take, the coat of living will not be appreciably reduced. The scandalous neglect of history in our New Zealand educational eastern, which has resulted in a generation ot citizens, including politicians, having but a scant knowledge of past events, may bo to some extent responsible. t ,In the early years of last century, during and after tho groat Napoleonic wars events financial followed almost tho same course. In 1810 the price of gold rose from .£3 17s lOd to approximately JCi 10s, and the palter currency created on account of the war depreciated. Tho liritish Parliament set up a Bullions committee, which recommended tho resumption of payments in cash. Tile Bank of England, however, argued that the crisis was due to tho appreciation of gold, not to the depreciation oi notes. This fallacy the committee easily disposed of. However, the House - of Commons did not adopt the committee’s recommendations. There was a farther issue of paper in ISI3. With what results? Hold reached .£5 10s. In 1819 a committee of both Houses vindicated tho report of the Bullion committee. It was then enacted that cash (coin) payments should be gradually resumed. As paper came into tho .banks its reissue was prohibited, thus automatically and without sudden distuirbalnco (reducing Hie paper in circulation.

In the light of past actual experience Ibis would scorn to he the best way to reduce the .£7,000,000 of bank paper now circulating in New Zealand. Of course the banks will object.—the Bank of lingla ml did a century ago. But tho bank was wrong—paper had depreciated as it has in New Zealand to-day. Wo have more money, but it is worth leas, and in course of time it is quite possible that it might become of no more value than tho paper on which it is printed. But long ere that common sense and public opinion must demand a check on tho paper currency. ACCOUNTANT. 10/6/20.