The Monetary System

Dominion, Volume 28, Issue 111, 4 February 1935, Page 11

The Monetary System

Sir, —In view of the extremely important legislation shortly to be effected by Parliament, it is advisable that taxpayers take a further look into our present money system to study some of its chief defects.

Perhaps some of your correspondents could state wherein the following ideas of new economists err. or ■what would lie the'best means of altering our present system, as altered it must be if we are to avoid a complete collapse. (1) Modern money being a form of internal debt enforceable against the individuals of the community and . not against those who issue it, why does a democratic Government allow private concerns to appropriate the proceeds of the issue of money? (2) As money is based on the wealth of a nation, why should there be a private money system? (3) If in the past Governments have paid interest on loans to endeavour to save upsetting the money market, instead of issuing their own loans, why should they allow private institutions to issue money or credit against such holdings when they are paying the interest t<? avoid such being done? (4) Does not the cheque system. allow banks to issue money (which Parliament would not issue openly) without it being npnrent to the people? (5) If the banks were compelled . to keep £1 for £1 of national money against their liabilities to current-account holders-, such to be borrowed from the State, would not this make them more secure against any possible financial panic, and as present loans matured these could be paid back to the Stale and reintroduced into the money stream by buying up national securities? Would not such a system make all bank Joans, genuine loans and not manufactured credit?

(6) The legitimate business of banking is lending money and not creating it. Would not such a system put the nation and banking in their proper perspective? (7) 'Would it not help considerably to reduce taxation and finally wipe out the national debt? —I am. etc.. EQUITY. Wellington. January 31.