FARMERS’ CHEQUES

Bay of Plenty Times, Volume LXV, Issue 12391, 31 July 1937, Page 3

FARMERS’ CHEQUES

Sir, —I am very much interested in the letter re above by “Radix.” The £IOO he quotes is handy, being about the gross return of a sizeable herd for one month and thoroughly represents goods and services, the £IOO sterling meaning apparently gold in the abstract. He then quotes our Central Bank (I take it) as creating £125 on the sterling. Does this mean then that the £25 is a present to the farmer, or is it a loan to the country generally, and is interest bearing and an addition to our national debt? If so, what is the procedure, the printing press or just book entry? In the event of our imports exceeding our exports what happens to sterling? In regard to genuine money which the central bank lends to New Zealand, of what does it consist, and what exactly is the contract the bank performs? It is conceivable that if the bank has the charter of issuing a debt currency of one-fifth of all money coming from England a huge national debt must result. It seems very simple for the bank to create the money i to lend to New Zealand. In fact it seems to resemble the phoney money your correspondent is so worried about, while New Zealand will be required to repay same with the result of goods and services. In short it does look like inextinguishable debts and interminable credits. Can ‘Radix” tell me how the Central Bank, with a capital of about £4,000,000 bought up £24,000,000 sterling in London, I , r .hall be glad to see “Radix’s” explanation of the above. H. C. BARKER.