SOCIALIST PROPOSALS.

Evening Star, Issue 21638, 6 February 1934, Page 12

SOCIALIST PROPOSALS.

TO THE EDITO*. Sir, —The New Zealand Welfare League, in reply to “ Interested,” 1 states that my assertions are not axiomatic. That may be the league’s opinion, but my candid opinion is that they are self-evident truths. Anyone can arrange a loan, says the league* without any reference to a bank. That is quite true, as it is done every day, but those people that make loans—say,savings banks, friendly societies, lawyers, moneylenders etc. —-have got to have the money to lend. The money, has to pass over the table, no hankypanky about the business; but does the money pass over the bank counter? No, the bank is in the happy position' of being able to lend credit, which is a different thing from spot cash. As for it being impossible to create credit without a corresponding obligation, whether by a bank or anyone else, we are discussing banks. The anyone else part of the business is irrelevant, and we don’t want to confuse the issue, as all money belongs to the banking system. The bank has no objection, the borrower has all the obligation to collect the amount of the credit issued iu money from the community, and unless he can show to the satisfaction of the bank that he can acquire this money from the community he would not get what is termed accommodation. The banks want something for nothing at' the community’s expense. The Now Zealand Welfare League wants to know if bank credit is created without any _ reference to the baulks capital*--reserves or deposits; why does a bank' which makes unsound advances fail.Banks fail immediately the public lacks confidence in them, and all the depositors ask for their money, at the same time. Then the banks close their doors—nothing doing. Banks fail, as in America, when adverse conditions are brought about by the banking monopoly. Bankers hold the key to power. Instead of having better homes for the heroes between 1913 and 1920, British banking deposits increased by over 1,000 million pounds. That may, have been created by the State or by the Bank of England, but the greater part was created _by_ the joint stock banks out of their inkpots- or out of the void. Instead of the nation creating the money which it needed it allows the banks to do so, leaving as'tthai State’s share nothing but debt. —I am,etc. Interested. February 6.