BANKING METHODS.

Auckland Star, Volume LXV, Issue 56, 7 March 1934, Page 10

BANKING METHODS.

Mr. Winthrop says that the bank had nothing which the miner wanted for his gold. But it had; it had the medium of exchange, which enables the miner to get practically anything whatsoever he desires, up to the value of his product. Just when did Mr. Coates say "the gold belonged to the people and not to the bajiks'!" And if he did make this statement why did he arrange that the Reserve Bank should buy it at nearly £4 an ounce? Your correspondent asserts that banks never lend their own capital and that advances far cxceed deposits. He refers me to bank balaneeshects, but I think he would be well employed studying them himself. On the liabilities side lie will lind the main items arc deposits and bank capital; 011 the assets side, advances and discounts. Both sides balance to a penny. Will he reconcile this fact with his assertion? If mining companies part with all their gold to the banks "for nothing," will he explain, clearly and in detail, just how it comes about that mining companies, when they strike plentiful and payable gold invariably become exceedingly rich —rich in everything that is, materially speaking, of real value —land, buildings, plant, - machinery; credit accounts at

banks and other investments; pay dividends which enable their shareholders to buy houses, furniture, automobiles, pleasure yachts, go for world tours, staying at palatial hotels, etc. etc. All this, while "giving away" to bankers the only tiling they have to trade—gold! He may say the banks do not "stock" any of the tilings 1 have enumerated; true, but they borrow all of (lien) (or titles to theni). and this proves that they lend what they borrow. C.11.K.