OTHER PEOPLE’S IDEAS

Wairarapa Times-Age, 4 November 1939, Page 3

OTHER PEOPLE’S IDEAS

MONETARY DEPRECIATION (To the Editor.) Sir.—A few days ago a correspondent to the public Press told a story of a man who tried to cash New Zealand currency with the Chinese shopkeepers in Singapore and Shanghai, till he was ashamed to pull his notes out of his pocket. “New Zealand no I good" was the brief comment these men made. And he adds: “For this the Socialist Government is responsible." Well, is not the present British Government one of the most Conservative of governments? Then why is sterling down to about 50 per cent of its face value? What can be the cause? It cannot be the Socialistic Government there, can it? The cause is exactly the same as in the case of New Zealand. Sterling is an inconvertible paper currency and therefore it can not be exchanged for gold. What difference does that make? This, that no bank note can pass at its face va,lue unless it is an order for money and nothing but money (not even i goods) will be its equivalent. The Bank of England and the Exchange Equalisation Account were reported to hold upwards of 100 million ounces of gold. But what is the use of that, when the public can not get a single ounce in exchange for its bank notes? Let me add that there is probably not a single civilised country where New Zealand currency can not be exchanged in the banks—not in the shops —but it is at such a ruinous price that the less paper is changed the better. When we buy goods in a foreign country we have to pay in the currency of that country. The cost of the exchange. added to the price of the goods, makes all imports far dearer than they would be if we were on the gold standard, in which case we could get gold instead of paper in exchange. Many years ago I cashed a draft on the Bank of New Zealand in Bergen in Norway and received golden English sovereigns in exchange. I had no difficulty about passing the sovereigns. They were all ready to take them. That is a thing of the past now. The-only way in which the . pound can be restored to its face va-

lue is to make it what it was 30 years ago—convertible for gold. And if we have not got the gold, then it will have to be borrowed, that is all. Or are we to wait till our currency becomes as valueless., as the German mark became? When the Reparation Commission had taken all the gold out of the German banks —about £92 millions worth—the mark became inconvertible and fell, till a shilling would buy a million marks. That cancelled all internal debts. Millions of people were reduced to famine, because of the high prices of food, and hundreds of thousands of the poor died of hunger. Are we to wait till New Zealand gets into the same state before we come to our senses and put our currency in order? The mark was restored to its former value by means of a gold loan. Why cannot we do the same, instead of going on losing millions, both on exports and imports? People grumble at the control of imports. Restore the pound to its face value. That would reduce the price of imports to less than half of their present cost, and what need would there then be for control of imports? —Yours, etc., HANS C. THOMSEN. Masterton, November 3.