THE COST OF THE BANKS' GOLD

Press, Volume LXX, Issue 21090, 15 February 1934, Page 7

THE COST OF THE BANKS' GOLD

' I'll -iriK KJUTOR OF TIIK I'UKSS. Sir,—Replying to "Enquirer's" letter in "The Press" yesterday, "Enquirer" is consciously or unconsciously confusing the issue. For instance he states that I will not deny that the bank notes in question have purchasing power. Of course they have: otherwise the mining company in question, and the public generally, would not accept them, but that has nothin" to do with the subject under discussion, which is "the cost of the banks' gold." It dees not make tne slightest difference to the huge profit made by the banks in buying and selling goJcl, whether the gold is finally shipped to France in payment for motor-cars, or shipped to England in payment of interest on loans, because in cither case the banks receive the full market value of the gold. As a matter of fact gold is very rarely used in making such payments. The payment lor French cars would be made through London, and would probably be «implv a "set of"' against money owing b 1 " a French firm to some other firm, for which London is the clearing house. . , "inquirer" asks what gives notes their value, and suggests that it is the credit of the banks; but the real basis of credit is the capacity to produce (he goods and services required by the people, and as these are produced by the community as a whole, it necessarily follows that the "credit" rightfully belongs to the wnole of the people and not to a small section of non-producers who have usurped control thereof. Does "Enquirer" seriously suggest that the requirements of trade arc the paramount consideration of those who control banking policy? If so, will he attempt to justify the policy of deflation pursued by the banks during the last 10 or 12 years, and explain in what way it was in the

interests of trade to reduce the amount of money in circulation to such an extent as to put many millions out of work all over the world, thereby reducing purchasing power and causing world trade to shrink to less than half the volume of a few years ago? The world's capacity to produce has increased enormously during the last 20 years, and the only way to utilise this bountiful increase is to raise the standard of living of the masses; but the consummation of this desirable objection is still frustrated by an absolete financial system which makes no attempt to equate purchasing power with the capacity to produce goods and services up to the limit of our ability to utilise them. We boast of democracy—government of the people by the peoplebut though we control our post and telegraph services and our railways, we allow a few multi-millionaires on the other side of the world to usurp the control of that which controls all our other activities, viz:—the community's credit. This gives them the power to reduce our incomes and depreciate the value of our property of every description whenever it suits their private interests to reduce the amount of money in circulation below the amount necessary to finance the people's requirements.—Yours, etc., * G. W. ATMORE. February 13. 1934.