OTHER PEOPLE’S IDEAS

Wairarapa Times-Age, 15 October 1943, Page 3

OTHER PEOPLE’S IDEAS

MONETARY POLICY (To the Editor) Sir,—The concluding sentence in Mr Crawford’s letter of September 5 makes interesting reading. He says: “ . . . what is wanted is a monetary system which will give more justice for all.” What makes the statement particularly interesting is the fact that despite all his efforts, Mr Crawford has failed to show how “justice for all” can be secured under a policy of State interference in the field of private investment. Throughout this controversy my contention has been, and is, (a) that cheap money for private industry is unnecessary (letter of September 24, last paragraph); and (b) that such a policy would cause injustice to the large number of private investors unless full compensation were guaranteed (Sept. 13, first and third paragraphs; Sept. 24, third paragraph). In other words, as the Government took over the mortgages, in order’ to earn the same amount of interest the investor’s capital would need to be subsidised in the ratio of about 3 to 1.

Mr Crawford suggested I did not know whether I was coming or going; I suggest my friend has been both coming and going, all over the place, in his efforts to advance one sound method by which such compensation could be effected. He has mentioned (a) an automatic lowering of taxation and rates; (b) an increase in consumer goods. Can he show by sound reasoning how the above would compensate an investor for the loss of three-quart-ers of his income? If not, will he admit that the Democratic Labour Party offered this policy with no real thought for the investing public, knowing they didn’t really matter because they weren’t very many, and were very naughty people anyway? There is a growing conviction among those who have studied the problem, that the real crux of the problem is, not that we cannot produce enough because of high interest rates, but that we cannot consume what we do produce because of a chronic lack of purchasing power. The money distributed as wages, etc., will never, under our obsolete system, equate with prices. I would therefore say: (1) Restore the balance by an all-round reduction in prices, and subsidise the retailer by an issue of interest and debt-free money from the Reserve Bank. (2) Make it illegal for any private trading bank to create advances on their own behalf unless they put up pound for pound. (3) Authorise the trading banks to act as agents for the Reserve Bank in the financing of private enterprise, but not so as to compete unfairly with the private investor. Thus the trading banks would still operate, but in the people’s interest, not their own. (4) Finance national and local body undertakings by Reserve Bank credit, debt and interest-free. —I am, etc., MAURICE M. WHIMP. Greytown, October 12. Subject to any unexhausted right of reply, this correspondence is closed. — Ed.