RESULTS APPARENT
OUR monetary experiment POLICY THAT SHOULD BE REVERSED. VIEWS OF PROFESSOR TOCKER. (By Telegraph—Press Association.) WELLINGTON. This Day. Addressing the Accountants’ convention on "The monetary experiment in New Zealand," Professor A. H. Tocker declared that a definite change of policy was required to restore sound monetary conditions within the Dominion and to promote an increase of overseas funds to safer levels. No monetary manipulation could enable us to escape the fact that wc must live within our income and limit consumption to the value of production. An essential preliminary step was a substantial increase in the liquidity of the Reserve Bank assets. At present an unduly large proportion of these were frozen in Government advances. It was essential in all business that assets should possess a sufficient degree of liquidity. The trading banks, which held the most essential liquid essets of customers, must necessarily be in a position to meet their demand liabilities and must therefore keep their assets liquid. With the central Reserve Bank, which held the essential reserve of the trading banks, liquidity was even more important. For the Reserve Bank lo discharge its most essential function it should always have available ample liquid reserves to meet all the liabilities it was called upon to meet.
The most practical way out of the present difficulty was to decrease both its frozen assets and its liabilities without impairing its liquid assets. "The results of our experiment in monetary management and use of the Reserve Bank credit should now, after 18 months of operation be clear,” said Professor Tocker. “Over the past two years we have consumed more than we have produced and spent more than we have earned, and in the process have used up reserves without which normal production and trade cannot be carried on. We must now reverse the process and in order to restore those reserves must consume less than we produce and spend less than we earn."
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Wairarapa Times-Age, 28 February 1940, Page 6
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324RESULTS APPARENT Wairarapa Times-Age, 28 February 1940, Page 6
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