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A letter in your issue of August . 8 signed Walter S. Otto, contained these statements: "The primary contention of both Mr. Kelliher and myself was that during the war years the New Zealand trading s banks created colossal sums of new i money at practically no cost to i themselves, the great bulk of this , money being invested in interestbearing 'Government securities. In s doing so the banks defeated the f Government's intention and purpose 1 to reduce the volume of money in ; circulation as well as the Stabilisa--2 tion Committee's price fixation. That ■ in purchasing Government securities J the trading banks put money back into circulation as fast as the Gov- > eminent took it out." Here are the t facts. Government securities held 1 by the banks commencing with the ) beginning of the war (round figures • only): 25/9/39, £10,000,000: 30/9/40. : £17,000,000; 29/9/41, £23,000,000: t 28/9/42, £30,000,000; 27/9/43, £36,000- ! 000; 25/9/44, £36.000,000; 2S/6/45, ! £29,000,000 (the latest figures avail- • able). The Government repaid Treasury Bills £7,115.000 since 25/9/44. The banks presumably subscribed between six and seven millions to each of the first four loans, but have not subscribed since 1943. During the same period, pri-vately-owned fixed and free deposits held by the trading banks increased from £67,600,000 on 25/9/39 to £128,000,000 on 28/6/45, and these figures do not include the huge increase in the note circulation during that period. Therefore it will be seen that though the deposits with the trading banks have increased over 60 millions, the banks' holding of Government securities increased by under 19 millions. Wherein then have the trading banks defeated the Government policy? Perhaps Messrs. Otto and Kelliher will think -up another one. W. H. ROBERTSHAW.

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MONEY DANGERS, Auckland Star, Volume LXXVI, Issue 190, 13 August 1945

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MONEY DANGERS Auckland Star, Volume LXXVI, Issue 190, 13 August 1945

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