Banks and Gold

Dominion, Volume 26, Issue 68, 13 December 1932, Page 11

Banks and Gold

Sir, —Referring to the trading banks selling the gold deposited with, them w the Central Reserve Bank, Mr. J. Begg says: "Its legality, if it (i.e., the selling), be legal, does not alter the nature of the transaction.” In their actions and views the bankers are right.' The banking system works according to the laws of the nation, and agrees with the constitution. The bankers det according to the banking system, and are therefore legally right. When their . actions for the system are successful, the whole community does not benefit, but only a portion of the community—the shareholders in the banks. For example: When tbe moratorium was declared in 1914, in exchange for one sovereign, which possesses intrinsic value, that is to say, energy (man and machine), aud materials were used in producing it, and it can be used for scientific and denial purposes, a note was issued. A nets which takes much less energy and materials to produce it than does _ the gold sovereign has a much less intrinsic value than the -sovereign, and indeed is practically valueless. By this perfectly legitimate and lawful process, the banks came to possess—according to our banking authority—gold in exchange for pieces of paper. As a result the banks, that is to say, tbe shareholders, benefited to the detriment of tbe rest of tbe community. . , , Would it not be better, indeed wouia not a true banking system be one m which each and- every individual member of the community could obtain economic security under all conditions and circumstances'? Such a banking system appeals to our sense of justice, and. to our sense of reason, appears to be tbe right one. To sum up as far as we have ? !, n p . the present banking system is legally right in that it is a part of the Constuution, but is not a true one in that it- is so constructed as to benefit one section of the community at the expense of the other section —that is to say. the shareholders against the non-shareholders—-the rest ol the upper, working, and middle classes. The Wellington authority forms his conception of what is right from the point of view of the banking system. . Mr. Begg form® his from the point of view of the individual dependent upon the system. They are both arguing from different premises. and I believe the "confusion of thought” is due to this fact. In criticising the views of the banking authority, indeed those of the banking system, and those of Mr. Begg, we must keep stcadiiv in view the difference between "legally right” aud “true. Me shall then be able to judge each according to his own merits. 'Co keep steadily m view the difference between these_ two conceptions, is indeed the only attitude which is going to help us to solve the present economic discontents. Each individual must decide for himsel, whether certain actions are true or merely legally right ones—that is to say, whether or no, these actions which are at present upheul and supported by the constitution are o. benefit to each and every individual tor whom the constitution is theoretically supposed to be drawn up. . . . If these actions arc not in tbe interest of each and every individual, then each must do all in his power to change the legally right system which supports such actions to a true one. After all, man was not born to be dominated and mastered by a system; he was born to so dominate and master all systems that he may use them to perfect himself and the community.—l am. etc., Wellington, December 8.