THE CAUSES AND CURE OF THE PRESENT CRISIS.

Rotorua Morning Post, Volume 2, Issue 344, 4 October 1932, Page 6

THE CAUSES AND CURE OF THE PRESENT CRISIS.

(To the Editor).. / ' Sir, — Much printers' ink and midnight oil have been used on this present question. Still the question is not solved but on the contrary getting more vexing. All th.e different unemployment boards and relief committees are clamouring for more funds, funds, and still more funds, thus taxation has increased to dangerously near the breaking point but still the daughters of the horse leech, they cry "Give, give — it is not enough." Clearly things cannot go on like this either a remedy must be found or a revolution will result. Before attempting a cure, we must find the cause; it is folly attempting to treat symptoms — but fruitful results will be obtained by finding and , correctly treating the cause. So investigation here is necessary. Enquiries reveal that there is about thirty-four millions sterling on fixed deposit in New Zealand; now if this were put into circulation and kept circulating it would remedy all this because money to the country is like blood to the body. Now impair the circulation of the blood and the person becomes ill even if he has plenty of blood, hence stagnate the money in the banks and the country becomes ill though there is plenty of money there. This establishes the good results of circulation and the evil results of stagnation.

Turning now to the circulation of £:s:d; suppose we have a group of ten men. Let mari No. 1 owe man No. 2 £15, man No. 2 owes man No. 3 £15, and son on till man No. 9 owes man No. 10 £15 and man No. 10 owes man No. 1 £15. Here is a group of 10 men owing £150 and not one penny to pay — the result ten families in debt and poverty. By reason of these debts, their credit at the stores is stopped and they become dependent on charity. Suppose man No. 1 gets the loan of £5 and pays it to man No. 2 on account. Man No. 2 pays it to man No. 3 on account and so on till man No. 10 gets it and pays it to man No. 1 on account. Now man No. 1 pays it to man No. 2 on further account and round the fiver goes till man No. 10 again pays it to man No. 1. Man No. 1 pays it to man No. 2 as a final settlement of the £15 debt and again the fiver goes to man No. 10 who pays it to man No. 1 in final settlement. Man No. 1 returns the fiver to where he borrowed it and all is square but this fiver circulating round this group three times has put the 10 men all out of debt, distress and danger, and incidentally paid debts totalling £150; and the more people it circulated amongst the more it would pay off also the oftener it circulated the more it would pay off. Now if £5 circulating amongst 10 men for three times round pays £150 how much would thirty-four million sterling pay off circulating amongst one million people. It is quite obvious that if this thirty-four million sterling were circulated and kept circulating there would be no debts, no want, no unemployment and plenty for everybody, but the more money is locked up in the bank the worse the situation is for everybody. Instance, the United States of America with the largest gold reserves in the world and it has the largest percentage of unemployed. This eonelusively proves that depression, unemployment and want are in direct ratio and wholly caused by locked-up capital and consequent money stagnation. The present depression is a greater evil than the last "War. Then the Goverpment saw fit to conscript men at 5/- per day when these same men were getting 15/- per day. Thus the Government in a lesser erisis than the present one conscripted for about one third of its ruling rates. So now in a greater crisis it should conscript wealth at one third of the present ruling interest rates and then liberate and circulate this thiry-four million sterling. This done we could use all our unemployed- men on productive schemes at good wages instead of as at present of non-productive schemes at pittance rates. Two examples will suffice to illustrate this. (1) The Waitaki Hydro-Electric Scheme had to cease for want of money, men were dismissed and came to Timaru where they were put on to some No. 5 nonproductive town work at Govei-n-i$ent expense. The Government had no money for the econonjic development of the hydro-elecfcric works, but found money to keep these men fooling around Timaru. (2) The Ngakuru Land Development Scheme near Rotorua; this proved by results to be the best scheme the Government had ever had to increase production and get men on the land. It was stopped for want of money and the men thereon came to Rotorua and got on to No. 5 utterly non-productive work in town at Government expense. Here again the Government had no money for a proven economic get-on-the-land policy but had funds enough to get men to drift into town and on to non-pro-ductive work. Now the remedy is to get a Government that will conscript wealth as labour was conscripted during a lesser crisis than the present one. Circulate the wealth on economic development schemes. at fair wages and the workers will keep the cash circulating, farms and farmers will increase, prosperity return, unemployment cease and a more favourable export-import trade balance will result. I am etc., Pro Bono Publieo. Rotorua, September 30,