BANKS AND CREDIT.

Evening Star, Issue 22194, 23 November 1935, Page 12

BANKS AND CREDIT.

TO THE EDITOR. Sir, —“ Labourer ” may bo convinced if he realises that bank credit exists only in the books of the banks, and that it is issued solely at the bankers’ discretion, and, farther, that the banks lend the same money to approximately 10 different people at the same time, so collecting interest for the use of money which they do not possess. ‘ A banker is not concerned with the volume of production; his chief concern is to lend out as many as possible of his worthless “promises to pay” without the public waking up to the_ fact that ho cannot honour his obligations. The only cost to the banker in issuing this credit out of thin air is the cost of pens, ink, paper, and clerks’ wages; but if “ Labourer ” still cannot believe that banks create credit out of nothing, there are several organisations which would be only too pleased to give him the facilities to hear both sides of the question and allow him to draw his own conclusions. A pamphlet of Mr Downie Stewart’s reached me which said that our savings are in jeopardy, and that inflation has .proved disastrous wherever it has been tried. This is strange in view of the fact that Mr Stewart admitted to me the other night that I, along with thousands of others, have been cheated out of a large percentage of the value of my insurance policies by the monetary policy inflicted on us by our financial controllers. The Associated Banks, Mr Downie Stewart, and the Welfare League assure us that our savings and insurance policies are in peril, yet I find that thousands of people in New Zealand have already, without their realising it, been cheated of a large'part of the value of these. The above-mentioned parties also conveniently forget to state that inflation was deliberately adopted in Germany, with the result that Germany is at present the most up-to-date and best-equipped nation in the world for the production of manufactured goods. They also forget to state that the German inflation of millions per. cent, had almost the same result as the American deflation of only 43 per cent. We thus see that deflation, the disease from which we are at present suffering, and which was inflicted on us by the hanks’ policy, is far, far worse than inflation, ljut our financiers never mention these things.—l am, etc., D. Copland, Jun. November 21. [A passage in reply to advertising is omitted. Mr Stewart does not recognise the answer attributed to him in our correspondent’s report of it. We give these prices, ruling in Berlin in December, 1923, as the result of inflation in Germany : One egg cost four milliard marks, 11b butter cost 60 to 70 milliard marks, one loaf of bread cost 25 milliard marks, one dollar was worth a billion marks. —Ed., E.S.]