Your correspondents, Messrs Lucas and Johnstone, have introl duced so many side issues into this controversy that the main theme has been practically lost sight of, as wit ness Mr. Johnstone's references tn an implied distinction between inter est on costless money and interest on advances—the terms are patently synonymous. The primary cont.m tion of both Mr. Kelliher and mvself was that during the war years the New Zealand trading banks created colossal sums of new money at practically no cost to themselves the great bulk of this money betas invested in interest-bearing Govern ment securities. The main objection to ■ such a policy is that in purchasine Government securities the tradinf banks put money back into circulation as fast as the Government took it out by borrowing the people's savings. In doing so the banks defeated the Government's intention and purpose to reduce the volume of money in circulation, as well as the Stabilisation Committee's price fixation efforts. It is further contended that if this additional money was actually required for war purposes it should have been created by the Reserve Bank interest free thus saving New Zealand taxpayers something approaching a million pounds a year in interest. Surely we are all concerned in bringing about a sound and adequate money system so why cloud a clear-cut issue and introduce an irrelevant matter that can only make confusion worse confounded? I challenge your correspondents to a debate in which I am prepared to take the affirmative that the proposals for reform of the banking system as advocated by Mr. Kelliher and supported by myself are sound, practical and beneficial to the people as a whole, and should be given effect. I would stipulate also that the loser of the debate make a donation of £25 to some charity mutually agreed upon. If this challenge is accepted I would suggest that a University professor, versed" in banking and monetary economics, be asked to adjudicate. WALTER S. OTTO.
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MONEY DANGERS, Auckland Star, Volume LXXVI, Issue 186, 8 August 1945
MONEY DANGERS Auckland Star, Volume LXXVI, Issue 186, 8 August 1945
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