THE ECONOMIC POSITION.

Taranaki Daily News, 22 October 1921, Page 2

THE ECONOMIC POSITION.

(To. the Editor.) Sir,—Re my previous letter oh unemployment and how to finance New Zealand. You say It is a beautiful dream, but only a dream. Well here is my answer; buy up the gold mined in New Zealand. All that would be required is to pass an Act of Parliament ti:at all gold mined In New Zealand shall be sold to the Government at tlie rajte paid for gold in London minus freight and royalties. The miners would be paid by State notes, while the shareholders would be paid their profits in gold sovereigns minted by the State, which will bear the same face value to theBritish sovereign. There could be no exception taken to this. Of course shareholders in New Zealand would receive their share of profits in State notes, which would be legal tender. By this method wd“ could build up a gold reserve. There is no dream about this. It could be worked and with success. You say also that we would have to find the equivalent wealth. Well, all I have got to say is that the wealth is here already. Why would millionairies be willing to lend us, say the last £5,000,000 recently borrowed by Mr. Massey, if we haven’t got the backing, and where is the equivalent wealth to come from to pay the £25,000 under-writing fees of the brokers on the Stock Exchange? You say to issue State notes would depreciate the value of currency. I say that to issue State notes would be to employ the thousands of able-bodied men and women to increase production. Instead of walking tte streets doing nothing, which is the cause of hardship, bitter thoughts, and revenge. Why can’t you keep these people employed if your old fashioned economic laws arc correct? Is it econopiy to see these men and ’ women who are able to produce something, walking about looking for work and can’t get it, and wanting the necessities of life, but have no money to buy them? Is it all a dream—all this poverty? What is your so-called economic system? It is in one word a gamble, and Uris one word is the true depredator of currency. Can you tell me how many millions of gold sovereigns are held by financiers in England and elsewhere that are not in circulation and which are held solely to gain as high a rate of interest as possible? You cannot, but it is there all the saune. It is not inflation which, is the direci cause of the ills from which the nations are suffering. It is the cornering by big financiers of the money circulation, so as to create high rates of interest for their own particular ends. You say that the point is that unless goods or produce are created to the value of the bank notes or paper Issued, the currency suffers proportionately. Well, supposing you take 50 unemployed men or women, and set them to work, we will say to build houses; you pay them in State bank notes, you surely have the value of their work in the building, and more than the equivalent in value in the counpleted building, also, I may state, the advantage of having to pay no interest on the State notes. What more practical answer can you desire than this?

You say that Bolshevik Russia did not believe in old fashioned econovnics. "Weil, personally I know nothing about Russia, but I should say that while riot, plunder, and bloodshed are rampant In any country, economics iu any form must miserably fail, so that no example can be taken from a country in turmoil such as Russia. Russia’s present state. In my mind, is the result of hundreds of years of oppression, and they must work out tbeir own destiny. We have nothing in common with Russia. Our troubles are our own, and we must find our own mistakes. It is not by following the mistakes of others that we are going to do it. Our Government is, or ii supposed to be, representative of the people. Therefore a State bank would be backed by the people of this Dominion as a whole, and what is sufficient security for a millionaire to lend us money to carry out public .works, is sufficient security for our own Government to issue State notes, for which our Government will not be asked to pay interest, and thereby refrain from making rich men in the Old Land richer than they already are. —I am, etc., PROFIT.

[lf our correspondent’s beliefs had any foundation, how is it that the purely Labor Governments in Queensland and New South Wales seek loans from tte financiers of New York and London? If the solution were as simple as our friend thinks, they would manufacture credits in the way he proposes. The fact is that these Labor Governments realise the fundamental fact that there is* no artificial way of creating wealth, and that if it is attempted the country’s currency and credit suffer accordingly. The economic laws are as immutable as the physical laws, and if you interfere with thorn you are punished in- some form or other, as the whole world is finding to its cost to-day. England to-day is faced with the gieatest economic crisis it has experienced for a hundred years. It is not seeking relief by turning out more bank notes or taking any other fortuitous course, because it knows that it it did the last stage would be worse than the first. We favor the establishment of a State development bank in New Zealand, but on safe lines, first finding tte necessary capital, but we recognise the present is no time to launch an enterprise of the kind, for we will need all our resources and the co-operation of all sections to weather the storm. To examine and discuss the various points raised by our correspondent would take more space than we can devote at present, but for the most part they are based on fallacies. The broad fact should be apparent that the world to-day is now feeling the effects of the wasting of its material resources by war and ths subsequent period of riotous and extravagant living, and It will take time to renew tte wealth and reinstate credits, and only then, by all sections putting their backs into their work An individual cannot dissipate his wealth and regain It by the simple process of issuing cheques. They would only be honored when he had re-established his credit, and that is possible only by industry and thrift. As with' an individual, so with a nation. There is no other way by which this or any other country can retrieve its position. To attempt anything on the lines suggested by our well meaning but totally misguided correspondent, would be but to delay the process o£ financial and economic rehabilitation.—Ed.]