INFLATION.

Evening Star, Issue 21285, 14 December 1932, Page 3

INFLATION.

TO THE EDITOR.

Sir, —Mr Silverstono’s reply to my letter which was published on December 5 contains no reply to my statement that the £40,000,000 of new notes is taken to the bankers, who would issue credit for several times .the cover they carry in their vaults. While thinking oyer Mr Silverstone’s propositions (which should not be relegated to the limbo of forgotten things), 1 am not at all satisfied that the main part of his scheme, “notes and stocks,” would cancel out each other as he leads us to believe. I wonder if your correspondent has ever tried to find out how much of the war loan stock is in private hands and how much the banks hold. lam quite willing to believe that the banks hold 75 per cent., if not more. As. we are suffering from over-production, there is very little risk of prices rising by expansion of credit until the consumer has been [laid the necessary money.as wages to consume the surplus goods glutting our markets. Mr Forbes in his Budget speech said: “ There is ample credit available,” and as'l believe the banks hold 75 per cent, of war loan stock, and supposing the banks exchange so much of their war loan stock (assuming’ they are patriotic enough) for £30,000,000 of new notes, how is that going to influence the business, man in an increase in prices, give the wage and salary earner an increase in their pay envelope, or the unemployed a job: I would have liked to see Mr Silverstone’s proposition more widely discussed by much abler pons than mine. —I am, etc. Fionn. December 13.