THOSE MILLIONS.

Auckland Star, Volume LXIX, Issue 137, 13 June 1938, Page 6

THOSE MILLIONS.

\ In my last letter on this subject I quoted j'''Hansard'- to show that in 1034 the Governjinent sold its sterling exchange to the Reserve | Bank for £22,000.000 and the bank had paid I for it by grant in-? an overdraft, thus creating J the credit. Mr. Johnstons says I am entirely J wronger when I assumod. as I appeared to do, that the Government gained some £22.000.000 bv the sale of its sterling funds to the Reserve j Bank. As I didn t assume, or appear to do. any such .thing, we can leave it at that. He then asks What has become of the millions the Government received for the dairy produce it sold which was purchased with Reserve Bank [credit. It has gone the same wav as the j £22.000.000. The. sterling exchange is sold to [importers for New Zealand money (Reserve' 'Bank credit or overdraft*?), and the*latter cancelled. i Ins is ordinary banking practice minus interest payments. Many people think interest. is harmless, overlooking the fact that civilisation is being crushed under a load of interest. The Government was saved over i. 1.000.000 a year in interest through borrowing from the reserve instead of the private banks on one transaction. Would Mr. JohnI stone suggest it would be better for the Government to borrow £.1.000.000 for the jOnckaka iron and steel works from private I sources and pay £2.10.000 a vear interest 1 1-atber than create the money' through the Reserve Bank and have it interest free? Orthodox finance has hroiiTht chaos to everv conntrv that has tried it, and that is all of'them. C. R. MeDONWLD.