WORLD'S TROUBLES

Rotorua Morning Post, Volume 1, Issue 170, 11 March 1932, Page 6

WORLD'S TROUBLES

("Post" Special Comlmissioner.)

MR. CLINKARD'S VIEWS CURRENCY DIFFICULTIES RESPON SIBLE FOR DEPRESSION. ADDITIONAL NOTE ISSUE.

WELLINGTON, Thursday. The assertion that the mal-distribu-tion of gold was the basic cause of the world-wide depression was made by Mr. C .H. Clinkard (Govt., Rotorua) in the course of his speech on the Address-in-Reply. Mr. Cinkard said that the Government was not the author of the depression, which was world wide and which effeeted industry, commerce and finance. Prior to the war, commerce functioned smoothly, and the exehanges were stable. After the war, commerce was destroyed. There was repudiation of debts by Russia, the collapse of the mark in Germany and an almost similar eollapse of the franc in France. These happenings, with other causes, brought about a condition of affairs when it became almost impossible for merchants to do business with one another, and now they were tallcing about speeially raising the rate of exchange between New Zealand and Great Britain, thus complicating more the already complicated position. Gold Distribution. The speaker maintained that the distribution of gold had largely brought about the want of confidence. Commodity values, as measured hy gold, had fallen materially all over the world. His study of economics had shown that when gold was plentiful prices were high; it required an annual increase of 2 per cent. in the gold supply to keep the world's prices at a normal level, and to-day two nations of the world, United States and France. had over half the world's gold supply in their coffers. The result was that this gold was not available for commerce. As pointed out by the Irish Free State Commission on banking, there were dangers in a currency controlled hy a Government. The commission had definitely recommended that the legal tender note issue should he in the hands of a nonpolitical body. The curreney question was not one with which New Zealand could deal. It was a question that would have to be solved by international agreement, and it was the big probable of the world to-day. Empire Curreney. "It might begin, I think," said Mr. Clinkard, "throughout the British Empire, by an association of the component parts of the Empire under which we could issue a common curreney with a joint and several backing, a curreney which would be as good in New Zealand as in South Africa or Great Britain. It would he a curreney which would facilitate trade between the various parts of the Empire." Mr. Clinkard said it was unquestionable that the purchasing power of money in New Zealand had increased materially, and he was confident that he could do as much business today with £75 as he could two years ago with £100. I Mr. W. E. Barnard (Labour, Napier): "Let the hon. member try it." Mr. Clinkard: "I am prepared to try it. As a matter of fact I have tried it in a number of directions. He said that contracts had been made some years ago, when money value was quite different from what it was to-day, and-he was satisfied that those contracts would have to be reviewed. He maintained that there should be a i reduetion in everything, whether it j was labour, interest, rates or anyth'ng j else, of 20 per cent., with the provision ] that interest should not go below 5 i per cent, If this were done he was satisfied that the country would do a ' tremendous amount of business that was not possible at the present time. They would never have a prosperous country merely by making wages high, but they would throw men out of work. It was not a question of what one would like to pay. If the amount the primary producer was receiving could he increased, it might be reasonable and justifiable to contimie the payment to the other classes. But in the circumstanees was it reasonable to expect the primary producer fco continue to pay for services rendered at the rate of 50 per cent. more than he would have paid at the former price level ? Reasonable Borrowing. "If the Prime Minister or the ! Minister of Finance can arrange for a reasonable borrowing policy it should be adopted," said Mr. Clinkard. It would be unfortunate to cut off borrowing altogether. I have always opposed extensive borrowing, and have held the view that we have borrowed for too much year to year, but 'I think it should be tapered off instead of being suddenly stopped. The latter step would aggravate our difficulties. A fiduciary note issue would be a dangerous proposition, which would result in the creation of conditions not only here but at the other end of the world, which would militate seriously against us." At the present time New Zealand banks, because of their gold backing, could issue another £6,000,000 worth of notes, and if they did this, the credit of the country would not be damaged in any way. There would he no question of inflation involved, because they could have done it-at anv time during the last few years. He thought.it would certainly he beneficial to the country if notes to the extent of a further £2,000,000 were circulated.