THE FINANCIAL DEPRESSION.

Taranaki Daily News, 22 June 1921, Page 5

THE FINANCIAL DEPRESSION.

■SOME FALLACIES EXPOSED. In dealing with the world-wide financial depression, the Arbitration Court made an interesting statement at Palmerston North on Thursday. It said: “The war has not, as has been thought by some, increased capital. It has certainly effected transfers of ownership of capital, but the plain fact is that the war has destroyed an immense amount of capital. It is estimated that onesixth of the total capital of Great Britain was lost during the war. The scarcity of capital, and the restriction of credits are now hampering the development of industry. During and since the war, in order to meet their financial needs, the nations increased their total currencies sevenfold by the creation of paper money an various forms, and credits were extended to an abnormal degree. There was a semblance of wealth and prosperity, but it was only a semblance. Real wealth arises from production for use, not from production for destruction. Wealth is not money, but is, as Bastiat said, ’the abundance of things.’ Sooner or later the inflation of credit and currency had to be checked, and a contraction had to come if the world was to regain a degree of economic wealth. The high prjees current during and since the war have been due partly to diminished production and consequent scarcity, and partly to the creation of a quantity of paper money far in excess of trade requirements.”