The Financial System

Dominion, Volume 26, Issue 96, 17 January 1933, Page 11

The Financial System

Sir, —Mr. Anderson states that everything is in a state of evolution. This is quite true; for instance, look how the bankißg system has grown into a highlv-efficient organisation that stands out safe'and solid amid the chaos of- financial wreckage. Evolution can only take place when free and untrammelled, it cannot operate under the hidebound conditions of bureaucracy. Regarding the sole right of issuing bank notes, this is a very doubtful benefit for banks under present conditions. First the bank must put up an adequate “fidelity bond" to make it safe for the public. Then they pay for printing and issuing, stand the risk of forgery, and after all this is done, the Government coolly demands 4J per cent, interest on all notes from date of issue till the date they are cancelled. If they are not returned owing to fire, etc., the banks continue paying the 4% per cent, or pay the Government the value of the notes. No wonder banks cancel the notes the moment they are not required. In all the combined banks pay something like a million in taxation. Re the central bank. Mr. zlnderson holds up his hands in horror at the prospect of this bank being managed by bank exnerts with private capital. zYpparentir he advocates that the issue of currency should be a political football, sometimes at the mercy of farmers, other times at the direction of labour unions who, I understand. issue cut and dried instructions t 1 their Parliamentary representatives. It is but natural that those people who have gambled and lost should desire to secure further credit, but it is extremely doubtful if they would receive any furtht r assistance from political bosses, as the money would be well tied up. long before the critical times were experienced.—l am, etc..

SMALL INVESTOR Khandallah, January 14.