BANKS AND CREDIT.

Evening Star, Issue 22195, 25 November 1935, Page 13

BANKS AND CREDIT.

TO THE EDITOR. Sir, —In your footnote you state that Mr Downie Stewart did not recognise the answer attributed to him by me in my last letter. Please read the following and judge for yourself. I said to Mr Stewart: “ I have been paying premiums on an insurance policy for a long number of years, and 1 now find that the money due to me has a much less purchasing power than the money I have paid in. Is that true?” Mr Stewart replied that it was true. I therefore consider I have been cheated of a large percentage of my insurance policy, and. without any doubt, thousands of otner policy-holders find themselves in the same position. They will be paid the number of pounds they contracted for, but they null find that these pounds have not the same purchasing power as the pounds they have paid in Those small investors in the various banks and savings bank will find themselves in the same position. Now, if Mr Downie Stewart and the banks are so anxious about the small investors, why do they countenance the despicable monetary policy adopted by our financial controllers, which has the effect of cheating the small investors without their realising it? With reference to 1 the examples of German food prices, you do not seem to realise that you are really supporting my argument that deflation, the disease from which we are now suffering, is a million times worse than inflation. A deflation of only 43 per cent, in America caused poverty equal to the inflation of millions per cent, in Germany. so that it is obvious that deflation is far, far worse than inflation. Some of your correspondents mention the British inflation during the war, but Dr Shaw, editor of the ‘ Calendar of Treasury Records ’ at H.M. Public Records Office, proved conclusively that the inflation was not caused by the over-issue of Treasury notes, and that, in fact, it- was the rise in prices which necessitated the increase in the currency. It was the policy of monetary deflation advised, and carried out obstinately 'by the bankers which has caused all the horrible suffering and dislocation of business in the world to-day, and it is indeed refreshing and hopeful when no less a person than Irving Fisher, America’' foremost economist, writes in his book ‘ Inflation ? ’: As to that form of reflation which is upward and is therefore demanded as the answer to the present deflation, Reginald M‘Kenna, chairman of the largest bank in the world, the Midland Bank, said recently at the annual meeting of his, bank: “il confess that the thought of inflation, so long as it is controlled, does not. alarm me. In these days, the word is no longer a term of reproach.” This is the considered opinion of one of the world’s leading hankers, and it is in support of our contention that controlled inflation is necessary before we can get out of the hold in which our orthodox bankers have landed us. Lord D’Abernon, another prominent banker, has also described the present crisis as a “ money ’ crisis,” and he adds, “it is the stupidest and most gratuitous in history,” while Sir Edward Holden, the founder of the Midland Bank, declared in an address to the Liverpool Bankers’ Institute that trade and commerce are ever at the mercy of the manipulators of gold. We have therefore plenty of evidence from eminent bankers that the present crisis is due to a wrong and disastrous monetary policy, but it would seem hopeless to expect such an admission from either the Associated bankers or Mr Downie Stewart.—l am, etc., ' D. Copland, Jun. November 23. TO THE EDITOR. Sir, that the Labour Party will by some supernatural power (not at present in its possession) stop economic laws from acting is one on which I would like to comment. According to this statement “ Accountant ” must believe that economic laws are outside money control, and that before wo can alter them we must have a supernatural power at our disposal to deal with them. I challenge “ Accountant ” to prove this contention, and if he cannot I hope he is honest enough to admit that so-called economic laws are not outside our control if it is necessary (and who will deny tin necessity in the face of the results we see about us each day!'). The financial masters of the present day are intent upon having us believe that we have to contend with something in the nature of -inexorable economic laws (a much-lovcd phrase in banking propaganda) when dealing with money. The real truth of the matter is that credit (or money) as now operated is nothing more or less than a convention, and like all conventions it can, and should lie, altered when its operation is not considered to the peace and prosperity and happiness of mankind. Whatever the defect or remedy.

it is undeniable that the money convention is not working well, and so it should be adjusted so as to give results in accordance with the physical facts around us.—l am, etc., Luxoe. November ,25.