BANKS AND THE CREDIT SYSTEM.

Press, Volume LXIX, Issue 20916, 25 July 1933, Page 16

BANKS AND THE CREDIT SYSTEM.

TO THZ EDITOH OT Til C I>RZS3. Sir, —In "The Press" this morninj appears an article under the headin; of "Credit System. 111-informed Criti rism. Functions of Banks." Thi article indicates what fine fellows th< banks have been, and how they hav< helped us in this present depression. I also states that there is nothing wronr with tho present financial system, anc that if we leave the banks alone al will be well. This is their side of th< question; now for the other side. What did we find the banks operating in New Zealand doing when thi: depression became acute? Although this report states that banks trade ir money on credit in the same way a: the butcher and grocer, and in facl every other form of commercial enterprise, etc., yet the first thing that the banks did was to stop selling monej or 4 heir goods, put up their shutters and say: "We will only accept monev on fixed deposit until things get better." Their second step was to cal; up their overdrafts, putting hundreds of good men in New Zealand out oi business, if they could not satisfy them. The banks have done more to heir: this depression to last than any other business section in the world, and now that they find many business men sidestepping them by bringing in a form of barter for the goods thev sell, and doing away with the banks, they arc beginning to sit up and take notice. The present financial system is hall the cause of this depression, and while our Government sits still and sleeps we cannot look to it to improve things. Most countries in the world to-day have a central bank, and if such a bank had been started here by the present Government two year' ago we would now be out of most of nur money troubles. But what did it do? It put the exchange up 25 per cent., which, while it helped a few, ruined others, and is now acting like a boomerang. Mr Forbes still has two vears of Dffice. Why cannot he do something off his own bat and bring down the Bank Bill, turn the Bank of New Zealand, which the Government runs, into the central bank, force the Dther banks to put their gold in, and issue the full limit of notes against the gold. Then we would have cheap <nd a plentiful supply of monev, unemployment would gradually dismconfidence would return, building would go ahead again, and we should be able to still call New Zealand God's own country. Another point which has been missed by the World Conference is the -•ubject of statistics. These are taken 3n near.y every industry in the world, 3Ut no statistics have been taken on abour-saving devices or machinery as the world progresses and more md more of this machinery is put into jse and invented for the good of mankind, we find the unemployment igures increasing. So it now looks as f President Roosevelt is on tho right ines when he talks about reducing ?. hours of labour but still payincr i living wage.—Yours, etc. July 24, 19.33. CENTRAI - BA "*-