SOCIALIST PROPOSALS.

Evening Star, Issue 21621, 17 January 1934, Page 2

SOCIALIST PROPOSALS.

TO TUB EDITOR.

Sir, —We cannot understand Dr M’Alillan’s assertion that we asked in a. very superior manner “would you have the banks bring financial collapse by lending to uou-credit-worthy borrowers?” We asked no such question. Havitig lathered us with this question he proceeds to reply, and in doing so "continues Ins old assumption that any reference to credit and borrowing must apply solely to the banks, and that tfiose institutions have (so he says) " the control of purchasing power.”

Facts do not sujiport his contention, and this is apparently the reason why he ignores them. In discussing credit, etc., we have frequently pointed out that the banks in New Zealand are responsible for rather less than one-third of the credits granted in New Zealand; here is a tact which stultifies Mr MMillan’s argument. He says “ Y r ou can only augment the volume ol purchasing power by borrowing Imm the banks,’- and his remedy is to “ remove ‘the control'of the creation of purchasing power from the hankers.” ’1 he reply to this is that of every £IUO borrowed in New Zealand to augment the purchasing--power, less than £33 is borrowed from the banks and over £66 from institutions or persons outside the banks'. Thus you cannot remove a control ol creating purchasing power from the banks, because they do not possess that control.

In using such expressions as “ this banking monopoly of the creation of purchasing power,” Dr MMillan is basing his case, on a fallacy, because tiie hanks'have no such monopoly.

We do not deny that onr financial system is open to criticism and reform in several directions, but no sound reform can be evolved by basing it upon general accusations which are not according to fact. If more Government control is to be imposed on bankers lending, as Dr MMillan suggests, it. ivould only affect one-third of the transactions. Does he argue that similar control should he set up over the other two-thirds, for which persons outside the banks arc responsible ?—We are, etc., - ■ N;Z. Welfare League. Wellington; ' January 15.