The Daily News. MONDAY, JUNE 7, 1920. THE FINANCIAL POSITION.

Taranaki Daily News, 7 June 1920, Page 4

The Daily News. MONDAY, JUNE 7, 1920. THE FINANCIAL POSITION.

We offer no apology for again referring to the serious nature of the financial position, and the urgent need for a .concentrated effort to cope with the situation on sound lines. Everyone is more or less ,affected by the high cost of living, according to their several circumstances, but it is not only the. cost of living which matters. It is the possibility of a period of depression, following on the inflated currency that has to be feared and guarded against. We are living in a time of fictitious values which have .a tendency towards disaster unless rectified in the only effective way possible. The vast, amount of paper currency has the effect of burning the financial candle at both ends. It increases the cost of commodities and reduces the purchasing power of the sovereign. There has been less production, and an inflated paper currency. The obvious remedies are, therefore, greater production and the reduction of paper money to normal. In this connection Mr. Massey recently stated that there had been too much paper issued, and that there would be no more while he was in office, but, he added: "If I withdrew the paper, we would have a crisis here. We must wait until it is withdrawn in England. It must be done gradually.'' The Argentine solved this problem by reconverting paper money at the exchange rate of the day—44 cents gold to the paper dollar, but it would be out of the question for Britain to adopt that method-. The only practical and effective way in which the value of the sovereign cau be brought back to normal is by the exports exceeding the imports, and that means largely increased production, the cutting out of luxuries, getting as little a» possible from abroad, and the geueral adoption of rigorous economy —national as well as individual. In short, we must get down to bed rock, live simply, and unitedly put forth our best efforts to cope with the position determinedly and effectually. Prices have already started to decline, and though the effect will probably not be felt in the Dominion for some time to come, it would be foolish not ti> reeognise the downward movement, which, however slow it may be at the start, may gather momomentum as time goes on. The prudent course is to give heed to the warnings uttered by men whose business it is to watch closely all matters affecting economies, though it would be unwise to re gard them' as alarmists. It lias been recalled by a contemporary that it took Britain twenty years to redeem all the paper money put in circulation in 1797, and the United States fourteen years in redeeming green-backs. A century and a quarter has nearly elapsed since then, and a vast change in methods has taken place, especially in the direction of speedy movement. Money was talked of in thousands then, but it is thousands of millions that have to be faced to-day. One jf the effects of the war was, so far as governments are concerned, to take no heed of expenditure. .It, was a case of spending the last man and the last shilling to ensure victory. Like an ill weed, this ruinous principle took root readily and clung to a soil favorable for its development. _ As a result, even in the Dominion, the large rise in departmental expenditure has become a scandal, the ' eradication of which might be

one of the first matters on whicn members of Parliament should de ■ vote their energies. The burden of taxation threatens to weigh down the people; the inflated values of land presage a day of reckoning when the boom bursts, because things are not valued for what they will produce, but on account of the demand exceeding the supply. Is it reasonable to expect the Government to act resolutely in stamping out profiteering-, when its own Customs' Department sets such a flagrant example in its assessments? [f the surplus from the last financial year had been obtained by economy in expenditure, the Government could justly point to a triumph that could not fail to have a beneficial effect on the people, but it was obtained almost entirely from increased customs and death duties. It is to be hoped that in the coming session of Parliament a well directed effort will be made to lower the customs tariff, and thu3 help to reduce the cost of living; also to take a heavy toll on speculations in land by means of an up-to-date valuation. The people are in need of a square deal. They made all the requisite sacrifices during the war, and the least the Government can do in return is to use the pruning knife freely in cutting down departmental expenditure, and in materially decreasing indirect taxation. Just as it was imperative to take no account of expense during the war, so w it now equally imperative to ease the war burdens by drastic economy in order to restore the financial equilibrium.