NEW ZEALAND INTERNAL LOAN

Press, Volume LXXIV, Issue 22597, 30 December 1938, Page 5

NEW ZEALAND INTERNAL LOAN

TO THE EDITOR Of THE PRESS Sir, —Your correspondent, “W.G.M.,” says it is a sheer impossibility for the banks to lend something which they have not- got. Apparently, then, “W.G.M.” is one of those who still believe that banks only lend money which they own, or relend what has previously been lent to or deposited with them. A bank is not an office for lending money; it is a manufactory of credit. Banks never lend money at all, but by expansion of credit they create deposits, and this is accomplished simply by the stroke of a pen. Banks therefore create money out of nothing that they own unless it is asSW they y own tf. public cr.dU Mnnpv to the value, of the creau ex tended plus interest will, be to the banks, and this os made pos-

sible only by the creation of fresh debt through Government borrowing. The result is that taxation demands to meet an ever-increasing amount of Government debt charges continually diverts money away from the consumption of goods. No Machiavellian scheme for the enslavement of the people and for sabotaging industry could be better devised. The Rev. F. H. Drinkwater pointed out that from 1920 to 1933 Britain paid £ 8,300,000,000 for interest and debt payments, and yet at the end of 1933 the debt was £300,000,000 more than it was when she started to pay it off! He went on to say;—“lt is all a huge swindle. There is nothing wrong with this poor old country except that it has foolishly let go its power over its own money, and is now completely in the hands of the money lenders.” The proposed Government loan of £14.000,000 will impose further debu burdens upon the backs of the people. This money can be cheated debt tree and interest free to the Government by the Reserve Bank. The Government, however and especially the Finance Minister, Mr Nash appear to be wedded to the orthodox system of debt finance, and it would seem that they fudge the credit of .N ew Ze to be the gullibility of the public.—Yom s. etc " ECONOMIC DEMOCRACY.

December 29, 1938. mubiect to the right of reply of Y. T. Shand this correspondence is now closed.—Ed., “The Press. 1