THE MONEY CIRCLE.

Evening Star, Issue 22271, 24 February 1936, Page 10

THE MONEY CIRCLE.

TO THE EDITOR. Sir,—l am afraid that Mr Harrison is not very eager to get to real grips with the problem confronting ns. He sought ,to brush aside the clear statements of the leading banking authorities of the world with an insinuation that we who use such statements mav, or have, twisted their meaning. The explanation of his charge does not remove the stigma which' must attach to those who make unjustified and semipersonal accusations. However, there is no need to linger over that, and it will profit us all if we keen to realities. 1 cannot follow Mr Harrison into the paths of error ■which disclose themselves in his statement of what he nnderstands Social Credit to be, and will confine myself to that which must, if thrashed out. settle the matter once and for all. I refer to those statements of the banking authorities which state that banks do create out of pen and ink the money they lend to carry on production, and that the mone.v so advanced does not consist of savings or deposits in the hanks. If this is true then the major defect in the financial 1 system is at once apparent, and I invite anvone to show that these banking authorities are wrong in their clear and definite statements. As your correspondents have failed to-upset these statements of the hanking authorities I would he justified in passing on to other defects of the system, hut would like either an admission from my friendly opponents that they are unable to unset the banks’ own admissions or proof that thev are wrong. The matter is not, as Mr Harrison seems to think, a question of differing angles. It is purely a question of fact. If the statements referred to are correct, as I believe them to be. then wo have established the fact that _ the whole world is in pawn to one private monopoly with absolutely no prospect of ever getting out of debt._ If, on the other hand, the contention of some that our money is inseparably allied to gold is valid, then there is nothing more to be said, since it shuts the door to the hope held out to mankind by any reform of opr system, Socialism included. As long as the banking mechanism holds that grip which the gold alliance gives it, no form of government can call itself the real governing body of the land. We simply must, whether as individuals or as governments, start' with the financial mechanism. There is another defect in our system, as at present operated, one in the industrial costing department, which I am eager to get on to, hut I cannot leave this point regarding the costlessness and creation of money until the bankers’ statements are admitted to be true. My friends are intent on giving their opinion of what they thing is the matter as though the banking statements did not upset all such theory. I did not advance Social Credit statements, and confined myself to the orthodox men who could hardly.be called in question. Mr Harrison inclines to the_ opinion that we have deliberately twisted such statements, or that it is a matter of point of view and angle. I can assure him that it is purely a question of fact, and to reasonable people the hanking admissions should settle the matter once and for all. We cannot ” dig deeper ’’ than the financial system simply because is to-day the fundamental proposition. No money, no production; no wages, no employment—chaos. Tliat must come first.— I am, etc., A. February 21. [As neither “A ” nor his opponents are likely to be in a position to supply the contexts (essential to elucidation) of those detached statements attributed to bankers which have been used as main, buttresses of the Social Credit case, we think that this part of the argument—if not the whole argument—should be dropped.—Ed. E.S.] TO THE EDITOR. Sir,— Reading the various letters dealing with this matter it seems to me that both sides eventually arrive at the same place. The school of thought which bolsters up the present banking system says that gold is the only feasible basis'of credit, while the Douglas Credit school of thought says that we can issue credit to the amount of our national assets. In the last analysis gold is our only imperishable asset. Coal, iron, wool, butter, etc., either go into use or consumption and fade away, but gold as used'to-day is imperishable. The thing that most people - object to is that the banker and not the people should have the sole right to the tremendous profits accruing from overissuing of credit. I understand that at orm period in recent history Australian banks were issuing credit of hundreds of millions while there was only about five millions of gold held in all Australia. This is the thing that has made the people ask why should the banker receive the tremendous profit which really should be the property of th* State. The fundamental source of the trouble started in the war period. There was not enough currency to carry on the war, and the banks, being in an entrenched position, practically dictated their terms, with the results we have to-day. To-day the banker say«: “ We will go back to the gold standard if you like, but it will mean stagnation and misery to all the people.” The alternative is to produce gold in'ever increasing quantities till the gold holding shows some approximate balance with our credit issue. I feel sure that no system will be safe until this is done. Will it be done or can it be done? It is being done in Russia and South Africa, but it will not be done in New Zealand unless the State gives adequate support to small parties, and it is for the rightthinking class of people to press the powers that be to attain this objective. The production of gold put Otago on the map and it can do it again if the Chamber of Commerce and other similar institutions will it so.—l am, etc., Waiting. February 24.