ECONOMIC SITUATION

Rotorua Morning Post, Volume 3, Issue 688, 14 November 1933, Page 6

ECONOMIC SITUATION

ADDRESS TO ROTARY MR. H. ATMORE, M.P., EXPRESSES HIS VIEWS ON CURRENCY QUESTIONS THE PROBLEM OF MONEY An eloquewt address on the present economic situation- of world afi'airs was given yesterday at the weekly luncheon of the Rotorua Rotary Club by Mr. H. Atmore, M.P., who made it clear at the start that the views he would express were in no way connected with party politics, but would be his own as an independent xxxember of Parliament, supported by economic authorities. The questions on which he would touch, said Mr. Atmore, were those which were exercising the minds of -every civilised country in the world to-day The idea of economics in years goixe by had been the science of scarcity, but to-day it was a science of plenty. Despite increased production throughout the world of almost every requirement of humanity, a large propox*tion of the people to-day were in extreme distress and could not purchase their requirem-ents for the maintenance of a reasonable standard of living. When one looked into the question it would be found that the world was over-stocked by production and he quoted figur^s to show that between 1928 and 1932 production of wheat, despite wholesale destruotion, increased by over 7,000,000 tons, with sugar showing an increased production of 500 per cen't. In 1929 the world's coffee stocks were 1,856,000 tons but despite the destruotion of 10,000,000 bags of first class gx-ade the production continued to rise to more than twice the 1929 stocks. All this went te show that it was not the effeet of over-produc-tion sq much as the absolute failure ■of the world's monetary situation which was responsible for the present problems. The reason was that while mass production was being airned at throughout the world, the purchasing power of the people had in like manner been decreased, resulting in an expansion of the gap between the two inter-related questions. Increased production must necessarily be equalled by increased consumption which could only be achieved by taking steps for the equalisation of purchasing power with that of any increase in production. Lord Bledisloe's Support This last contention, said the speaker, had been well set out in a recent statement by New Zealand s grcate t authority on the- su„j.ct, Lord Bledisloe, who was probably i-M-e •- pabie of advising his adviser than they were to advise him. His r.y r'l had sei'i "How few of th peop'o speak of money, whether as the xvward cf service or the price • f ieali-e that it has no intrini- va--c itself, but is mereiy a token of exchange in the hands of th ■ country 's eonsumex-s, that it originally came into service as a convenient substitute for the barter of goods an I services for other goods and serviees and that if, and when it fails to fulfil its useful fur.ction owing to msufficiency, hoarding or any other cause, its justification as an instrument of commercial equity ceases. The v'rtue o* money is, in fact, to be in it.- pmcnasirg value and if this is touad, r.ot so much in its amount as to be maintaintd on an equitable basis, tbe volume in actual circulation a. any time >hould be equivalent to the value of the goods on the market."

Purchasing Power "Every unit of production must have a unit of purchasing power," said Mr. Atmore, "but the policy of the New Zealand Government and others throughout the world has been increased production and decreas d purchasing power instead of having an equation between the two." Mr. Atmore then proceeded to quot j -other important authorities on economics and a resolution of the Bank Officers' Guild of Great Britain at a •general conference last year in London which expressed the -opinion that the present system of currency and •f-redit control was unsuited to faodern r«quirenmnts. The resolution i'urther -uggested that if drastic re-organisa-tion of the system was not undertakcn voluntar.i„\ by the banks such a course would be forced upcn them by public opinion and presrure. It was contended that modern production, if properly organised, was capabie of giving the people a higb standard of eomfort and that the present monetary system was an obstacle in the pathway of a bet;er systom of commodity distri'bution. S-imi-lar v ews had been expre ised by chambers of commerce wbo h xld tbat no other measurcs but monetary reform would be beneficial to -he preser;v problems. When Mr. Montagu N >rman took control of the Bank of ' .ngiand 1 which was a 1 rivatelycontrolled bank), bis policy of deflali;n had caused a two-ysar depression in New Zealand as a result of • loss in purchasing power. Ilowever. banks had increased dividendi and reserves despite enormous 1 sses alleged in industry. This led c.ie to the conclusion that wa had a banlcers world — banks in England paying betwecn 12 and 16 psr cent. elividends, and even n New Zealand 11 per cent. ■n the midst of want and real . distress. The People's Credit The contention that the retention of the eight-hour day was impossible in face of the advance of maehin-e-t-v methf ds was also advanced hy Mr. Atmore. New Zealand had r-e-cently beateh its previous record ir. butter production, and was aiming ai putting still more men on the land while at the same time opposing quhtas. Referring to credit, the speakei said ' that this was at all time' based on the productive capacity of the people. He instanced the app a" made by the English banks to the Government when the Great "Wlar hfoke out, which issued "bradbury" niotes baclced by the productive capacity of the people and assumed liability for the obligations which. ihe banks could not meet on behalf of the people. The result was that after closing the banks were enabled to reopen their doors. A similar case had.

occurred in New Zealand in 1894 and this proved beyond doubt that the credit of the nation was greater than the credit of the banks, and could be 'ujsied effectively towards regainling prosperity for the coun'ti-y under the control of the National Currency Board. This was the aim of the Douglas Credit System, with every country in the world having a national currency. He contended that although machinery was displacing purchasing power the gap could be bridged by such a system. Thanks Th© speaker was thanked for his address by Mr. E. Earle Yaile who s's.id that Avhile he, personally, did not agree with the views of Mr. Atmore, they had, nevertheless, been delivered in a commanding manner.