NEW ZEALAND INTERNAL LOAN

Press, Volume LXXIV, Issue 22594, 27 December 1938, Page 14

NEW ZEALAND INTERNAL LOAN

TO THB EDITOR OT THB PRESS. Sir,—When “W.G.M.” says that liquid deposits, which he describes as something “subject to transfer by cheque,” are not money in New Zealand, he is getting offside with depositors. They certainly believe that they have money, and behave accordingly. Money is as money does. It procures goods and services as required by the owner. “W.G.M.” emphasises legal tender money, bank notes and coin; but as these are payable to bearer, most people prefer to keep their money in the form of bank “balances,” and make their payments by “not negotiable cheques, which are merely orders to deliver money, delivery being accomplished by entries in the banks books. Sellers are only too pleased to receive cheques, and, strange to say, legal tender money is demanded when a seller hopes to get out of a deal by sticking to the letter of the law. The larger the sum paid in. legal tender the quicker the receiver turns it over to the bank to swell- his balance. “W G M.” questions the oft-repeated statement that banks create money out of nothing, and yet he tells us that the Reserve Bank is legally entitled to issue money. If the bank does not create how can it issue? Words do have meanings in practice. Bankers are working a counting system which, through a device known as money, brings all goods and services into common relationship through prices. Prices are to money as width is to yards of material. Money is not goods, but merely an order to deliver goods. Though the substance in which the order is recorded is tangible, the money is intangible. All Nature can exist' without money, but Man, who prides himself on his mastery over Nature, is mesmerised by this counting device. . The core of the problem is the question of what is a reasonable, charge for a bank’s services in keeping the accounts between the producing* and consuming systems. It is .most certainly not a question of paying a third party a periodical percentage of the orders issued as well as eventually returning all the orders themselves, clearly an impossibility, as is proved toy the existence of mountains of tin* payable debt everywhere. There are many people, and they are not Labourites, who believe that Labour has accomplished something fundamental in acquiring the ownership of • the Reserve Bank. The bank is still issuing money as debt, thus maintaining the debt system that with every • increase in our capacity to produce, reduces our capacity to consume. As ' it is, the bank is simply another means i of taxation, which Labour said, wher > in Opposition, was already overdone. There is always the possibility tha the Government may make a death-bee • repentance, and cancel the debt in tin ’ bank for public works expenditure. I ,’ the Government makes any attempt t( Y float a loan to fund this debt or t n carry out any further works it wil place itself in the power of the cqn [. trollers of the issue of money to- bnn r - about such devastating conditions tha 1‘ Labour will be utterly discredited, is no answer to criticism of the puoli - works programme to point to the nug - pile of debt incurred by past Govern ments. The only way to turn th " point of criticism is to give the critic ” the chance to prove that anybody is q loser when the debt is cancelled.Yours, etc., w . B. BRAY. December 26, 1938. cs "

TO THI «DITO» Ot TH* PBIS3. Sir, Horace E. Herring writes in your paper of December 22, that interest is “condemned as frequently as is murder in the Christian Bible. And I think a similar statement has been previously made in your paper. As a matter of fact the word interest is not used in any part of the Holy Bible. Indeed, coined money only came into existence about B.C. 700, so there could not have been any “money paid for the use of money during the previous 3300 years. Probably; it is the word “usury” that has misled; [your correspondents. The principal reference is of course in the Sacred Law. “Unto a stranger thou mayest-lend upon usury; but unto thy brother thou shalt not lend upon usury.” (Deut. 23.20.) It seems mostly goods and services that are lent. The first bank appears to have been , established by Joseph of Canaan about B.C. 1700. I. am unable to discover the kind of money used though it was probably bullion. Those who claim to hate bankers, as well as the recipients of the high wages of to-day, would be wise to read and act upon the excellent lesson in thrift taught in Genesis. The word “usury” does not appear very frequently in the Bible. Its practice is allowed: sometimes - forbidden. Thrift is encouraged, so a reward

which may be called interest is permitted.—Yours, etc., I.R.M. December 23, 1938.