POINTS FROM LETTERS.

Auckland Star, Volume LXVII, Issue 64, 16 March 1936, Page 11

POINTS FROM LETTERS.

THE BURDEN OF INTEREST,

"Another Barrister," in defending tlie banking system, lias failed to answer the case against it that the burden of interest is due principally, if not entirely, to the creation of money by the banks without minting or printing, but through the mechanism of cheques. ■ To maintain the system the banker must himself pay interest to "fixed" depositors to prevent their depleting his insufficient stock of legal tender money, but the banker collects interest from the community at a higher rate than he pays to depositors of his own promisemoney, and the burden of interest has to be borne by the workers purely and simply to enable the banker to operate his cheque money with only a fractional use of legal tender. There is therefore a- great resemblance between cheque money and counterfeit money, since both dispense with the use of State money; but counterfeit money imposes no burden of interest on the community, as does, the banker's permission to write cheques. ■ Corroboration of the case against the banks has recently been given by the Australian bankers themselves, .who openly, admit that it is necessary for them to offer higher interest on "fixed" deposits. This, properly interpreted, means that the trading banks have "advanced" so much promise-money that they must get it in their own keeping, i.e., they must pay interest to keep it out of circulation, and therefore inoperative to expose the weakness of their legal tender resources. The neglect of the State to provide all money is the banker's opportunity to lend his promise-money at interest, but tlie community receives a money service only on terms that interest shall be paid at the rate determined by the banker, who, compelled to restrict the use of his promise-money, controls the distribution and prices of all the real wealth produced by the workers of the community. The responsibility for maldistribution of the goods provided by the wealth-producing people must therefore lie largely at the door of the banker, whose system denies the functioning of any money except on terms of usury. BARRISTER.