WAR LOAN

Wairarapa Times-Age, 12 May 1943, Page 4

WAR LOAN

FORMATION OF NATIONAL COMMITTEE TO SET FACTS BEFORE PUBLIC BORROWING ESSENTIAL. IN ORDER TO AVERT INFLATION. (By Telegraph—Press Association.) WELLINGTON, This Day. A National War Loan Committee has been formed to deal with the next New Zealand Government Wai’ Loan. The committee consists of the ActingGovernor of the Reserve Bank, Mr W. F. L. Ward (chairman); the Secretary to the Treasury, Mr B. C. Ashwin; the chairman of the National Savings Committee, Mr T. N. Smallwood; the president of the Federation of Labour, Mr A. McLagan; the Under-Secretary to the Prime Minister, Mr J. Thorn, M.P.; the General Manager of the Bank of New Zealand, Mr H. R. H. Chalmers; the chairman of the Associated Banks, Mr P. R. M. Hanna; the Director-Gen-eral of the Post Office, Mr J. G. Young; the president of the Associated Chambers of Commerce, Mr N. B. Spencer (Auckland); the Mayor of Masterton and president of the Municipal Association, Mr T. Jordan; the chairman of the Counties’ Association, Mr W. Morrison; the chairman of the Life Offices’ Association, Mr W. T. Ikin; the chairman of the Fire and Accident Underwriters’ Association, Mr H. G. Wiley; the chairman of the Newspaper Proprietors’ Association, Mr C. W. Earle; the chairman of the Stock Exchange Association of New Zealand, Mr A. Hamilton; the vice-president of the Associated Chambers of Commerce, Mr S. Paterson, and the president of the New Zealand Farmers’ Union, Mr W. W. Mulholland. The Deputy-Governor of the Reserve Bank, Mr Fussell, at the first meeting of the committee, stressed the need for raising money from the public and not from credit expansion. The success or failure of the loan, he said, would depend on the decision of the people and the public were entitled to a plain and frank explanation of the reasons. Their decisions would be guided by their knowing the real truth about their country’s need of their help. “There is now much more than enough spendable money in circulation to enable the people of this country to purchase the goods and services becoming available from day to day,” Mr Fussell stated. “According to the banks’ calculations, the supply of spendable money (not counting deposits in the Post Office Savings Bank) has increased from 54 millions at the outbreak of war to over 120 millions now.” Mr Fussell said this was more than a hundred per cent increase and it would be idle to suggest that the volume of civil goods and services in the country had also more than doubled. On the contrary the volume of civil goods and services had been very heavily reduced That was just what we had to expect to happen in war time, because so much of the country’s productive capacity, and our imports too, had to a very great extent been switched over to another kind of goods and services—not for civil consumption or for enemy consumption. Doing this used up a large share of our energies and thoughts, a large share of materials and a large share of our spending power. “To raise all the money from the taxation of income would be unjust, Mr Fussell observed, “because incomes alone do not measure ability to help. The income of some people is large in relation to their available cash. The cash holdings of some people are large in relation to their incomes. Loans from the public provide a means of tapping that voluntary source of available funds which is not reached by income taxation. The taking of deliberate steps to make large artificial additions to the already teeming money supply would only harm the people of New Zealand. Money that is already in existence is competing strongly for a restricted supply of goods. To issue new credit for war purposes as a substitute for publicly-subscribed _ war loans would set the Price Stabilisation organisation an impossible task. It would simply lead to a reduced purchasing power of wages and of all family incomes and cut down the real value of hard-won savings. And if, as has already happened in some countries, the pressure of prices becomes too great, the dam bursts and uncontrollable deluge follows.” Mr Fussell added that if there was not enough money in circulation to do the job required of it, there was a case for issuing more cash, but not otherwise. Inflation represented the result of trying to get something for nothing on a large scale. “As the dangers of an overflow of money are known,” he said, “it is intended to do all that is humanly possible to protect the people of New Zealand from its consequences. If all support the loan according to their ability to do so, their contributions will, in the aggregate, carry the loan to victory, and at the same time help to build a rampart of stability against inflation.” i