SURPLUS MONEY

Wairarapa Times-Age, 25 October 1940, Page 2

SURPLUS MONEY

AS MENACE TO ECONOMIC STABILITY VIEWS OF FARMERS’ UNION PRESIDENT. THE STABILISATION REPORT. (By Telegraph—Press Association.) CHRISTCHURCH, October 21. “Several outstanding features of the economic situation of New Zealand forced themselves on our attention, but most of them could be summed up in the one word ‘instability,’ ” said Mr. W. W. Mulholland, Dominion president of the New Zealand Farmers’ Union, in a report to the North Canterbury executive of the union on the Economic Conference. The country must realise, said Mr. Mulholland, that there was no substitute for work, and that there would have to be savings not only of money, but savings through doing without things. It was essential that money should be taken out of the hands of the public so that it should not be a danger to stability. The executive of the Farmer’s Union had a series of very frank talks with members of the Government on the effects on farming of the grant of an increase in award wages. There were some fairly lively exchanges with the Ministers, but in the end the Prime Minister asked whether the Farmers’ Union would take part in a conference to discuss stabilisation. The point that the union made was that in spite of many administrative actions prices were rising, and wages had been increased, and the working of the order asking for an Arbitration Court investigation into the wage level showed that rising wages were likely to be a continuous process.

MONEY AND GOODS, Huge sums of money were lying idle in New Zealand. For these millions in the hands of the people there was no corresponding accumulatoin of goods. In other words, the purchasing power of the country was far in excess of the goods and services that were available for purchase. In addition, there was great difficulty in getting from overseas many of the materials necessary in the production of goods in New Zealand. The Government was using very largely the issue of credit from the Reserve Bank for many of its projects, and that was one of the obvious and fundamental causes of instability. There was no possibility of finding sufficient sterling exchanges from exports to finance the purchases that people had money to buy in New Zealand. “The report of the conference might be described as being almost an attack on, at any rate a rebuttal, of the idea ffhat money can replace goods or that it can replace work in the production of goods,” said Mr. Mulholland. “The theme that runs through the report is that nothing but work, and hard work, will produce those things that we need to live and to make war. And juggling with accounts or that thing called the Reserve Bank has nothing to do with the position, but it might produce a situation that could be calamitous. It is time that we understood that we can’t obtain things by making an entry in a ledger, but only by real, genuine work." The report indicated strongly the necessity for savings—not necessarily financial savings, but savings by doing without material things that we would like to have, Mr. Mulholland said. To meet the situation that existed today, and to give anything like our full effort in the war, it was necessary to do without some things and to buy less of others. It was important that surplus money should not remain in the hands of the people to become a menace to stability. The report recommended to the Government that it should obtain this money by borrowing to assist the war effort, and to remove it from a position in which it might become a danger to stability. "As the report indicated. Government economy is an urgent necessity;’ said Mr. Mulholland, "but the last Budget was simply an extended peace Budget with war-time expenditure imposed on it. It is impossible to finance such a Budget by sound methods. Government expenditure has got to be heavily curtailed, as it has been in every other country that is at war."