Bankers Pyramid Scam Is No New Thing For New Zealand Or the World.
John Bell Condliffe is one of the most
decorated economists this New Zealand has ever produced. Below I
have included his Biography and some very telling statements in
regards to the detrimental impact of foreign credit upon our internal
economy.
John Bell Condliffe was born in
Melbourne in 1891 and came to New Zealand at the age of thirteen.
He took his M.A. with First Class Honours in Economics at Canterbury
University College, worked for a time in the Customs Department
and the Government Statistician's Office and was appointed
Lecturer in Economics at Canterbury University College in 1916. He
enlisted the same year, went to France and after the armistice
was a research student at Gonville and Caius College, Cambridge
where he was awarded the Sir Thomas Gresham Studentship. During
his absence on military service his position was filled by Sir
Douglas Copland, who rose to distinction as Professor of
Economics at Melbourne University.
Condliffe became the first Professor of
Economics at Canterbury University College in 1921, succeeding
Sir James Hight who held the Chair of History and Economics until the
Chairs were separated in September 1919. In 1927 he resigned the
Chair to become the first Research Secretary of the Institute of
Pacific Relations in Honolulu. In 1931 he joined the secretariat
of the League of Nations and wrote the first six issues of the
League's World Economic Survey. After two years as Professor of
Commerce in the London School of Economics he became professor of
Economics at the University of California from 1940-1958. On his
retirement he served for two years as Adviser to the National Council
of Applied Economic Research in New Delhi and then joined the
Stanford Research Institute until 1970.
He wrote several books on New Zealand,
the most important being New Zealand in the Making (1930), The
Welfare State in New Zealand (1960), and te Rangi Hiroa:
The Life of Sir Peter Buck (1972). In 1939 he was awarded the Howland
Prize by Yale University, and in 1960 the American Political
Science Association awarded him the Wendell L. Wilkie Prize for The Commerce of Nations. Condliffe returned to
Christchurch in 1973 to participate in the centennial celebrations.
As an Erskine Visiting Fellow he delivered four lectures at the
University of Canterbury which were to be subsequently published
under the title Defunct Economists (1974).
Excerpts from New Zealand In The
Making, A Survey of Economic and Social Development, by Professor JB
Condliffe 1930
Chapter 4 Borrowing For Development;
Page 291;
It is not possible to estimate to what
extent this decline is traceable to inflation of values due to
excessive borrowing. So many factors are at work in the economic
structure of the Dominion that the mere coincidence of heavier
borrowing and falling productivity is not necessarily proof that the
one causes the other. Both may be due, or partly due, to a
common cause, such as the rising price level reaching a point about
1910 where speculation was encouraged to an unprofitable point. The
fact that a similar check to productivity appears to have taken place
in Australia under somewhat different conditions should call for
caution in attributing the New Zealand phenomenon to purely local
causes.
The whole problem affords an
interesting example of what Stamp has called "economic
stimulus". The fact that productivity declined heavily in
the only similar period of heavy borrowing and active
speculation in New Zealand's history, the period of the Vogel
boom from 1879 to 1880, leads one to suspect that there is a point
beyond which an undue amount of stimulant decreases instead of
increasing productivity. Economists in Australia and New Zealand
have developed the theory of an "absorption point" beyond
which immigration causes a disturbance of economic equilibrium. It
is fairly obvious that there is a similar absorption point at which
the importation of borrowed capital sets in motion forces of
speculation and unsettlement which more than counteract the extra
productivity to be expected from improved equipment. New Zealand has
ignored that absorption point with unfortunate results in her two
periods of boom, the years following 1870 and the years following
1910.
Chapter 10 - Economic Functions Of
Government
Pages 326-27;
To many readers (and apparently the
majority of people in New Zealand) this system by which currency
and credits movements are regulated in accordance with economic
necessity by skilled bankers, will appear more sensible than any
proposals for political control or semi-political control through
a state bank. It is at any rate perfectly clear that successive New
Zealand Governments for more than thirty years have been, and
still are, in a position to dictate the policy of the largest bank in
the country, but have not taken any steps to do so. The public
finances might have been relieved, the bank might have been
given a monopoly of credit and note issues, the margin
between borrowing and the lending rate itself might have been
manipulated for political purposes, the margin between buying and selling rates
of exchange might have been narrowed, and those rates might have
been manipulated also. If the Bank of New Zealand had taken action
along any of these lines the competing banks most have
followed suit or lost business.
In practice the Government nominees on
the board of directors have acted with fullest freedom along
lines that are ultra-orthodox and conservative. Banking in New
Zealand therefore, has been as unfettered as if the Government had
not owned an important interest in the largest bank. It is in fact
less fettered than in most countries. The various Acts and Charters
carefully limit the right of note issue in accordance with the
tradition of the mid-nineteenth century, when the unregulated issue
of bank notes was chief cause of banking failures. There is no
statutory recognition of the enormous change that has taken place in
the development of credit issues and the relatively minor importance
of bank-notes in a modern credit system. In the issuance of credit
the bankers of New Zealand are regulated only by their own good sense
and banking tradition.
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