READERS’ OPINIONS

Gisborne Times, Volume LXXXII, Issue 12535, 23 April 1935, Page 3

READERS’ OPINIONS

THE BANKING SYSTEM. (To the Editor.) Sir.—Mr. Daniel’s reply ,to us in your issue of the 12th gave au incorrect summary of our letter. Mr. Daniel originally said: “The Reserve Bank purchased £4,000,000 gold, issued £9,000,000 notes and obtained £26,000,000 sterling exchange with a capital of £500,000 plus -a Government guarantee of .£1.000,000.” He now -says that our reply only said “it was an ordinary business transaction on a large scale.” Mr. Daniel: You. are not fair! May we repeat what we did say: (1) By law, the banks had to transfer their gold in New Zealand to the Reserve Bank and in return were credited in the Reserve Bank for that amount at a stated amount per oz. (Thus Mr, Daniel is wrong when he says the gold was purchased.) (2) The Government had £26,000,000 sterling credit in London. They wished to use it hero, so they handed this credit to the Reserve Bank and asked them to make part- of it available in New Zealand. If the Government has not paid the amount to the credit of the Reserve Bank in London, the latter could not have handled it.

“If Air. Daniel” (we said) “had £SOOO in London and paid it into the Bank -of New Zealand there for transfer to New-Zealand, it would bo exactly tlio same transaction though on a small scale. This is a cold fact, not a disputable theory. We should bo glad if Mr. Daniel would tell ns where we can find in the McMillan Report that money or credit is created “out of the blue.” He says that report made this statement, but we cannot find it. He also seems to assume that tho Reserve Bank can do what it likes with the sterling credit in London, whereas the bank is under a liability to produce the equivalent of sterling in London on demand. The Reserve Bank’s cheque for £22,000,000 was issued against sterling assets lodged with it by the Government and held in London, i.e., the Reserve Bank accepted a- liability in New Zealand in exchange for an equivalentasset in London. There is nothing mysterious about it, nor anything criminal.

Mr. Daniel is in error when he says tho League is defending the banks; it is only venturing to correct. a distorted version of what has occurred.—We are, yours, etc.,

N.Z. WELFARE LEAGUE Wellington, April 17.

MR. NATUSGH REPLIES TO WELFARE LEAGUE.

(To the Editor.) Sir, —Absence’from town and lining very busy has delayed rny reply to the N.Z. Welfare League’s letter published by you on the lltli inst. The N.Z. Welfare League stated that the greatest brains of the world are investigating tho need of reform in the monetary system. But can that League deny that neither they themselves nor any of the supporters of the present system have evolved any scheme whatever to improve upon the present system? Can the N.Z. Welfare League deny that Major Douglas and many others have not only published . books showing up the weaknesses of the present monetary system, but have also given the outline of a great scheme to enable everyone to purchase and enjoy all the necessities and even luxuries of the productions of this Machine Age? Can,the N.Z. Welfare League deny that the details of the present monetary system wore not thought out many generations ago, but have been evolved,only from time to time? Can the N.Z. Welfare League deny that the principles of the Douglas Social Credit system have already been published and lectured upon and that further details of. its working will naturally follow when the system is put into force? Can the N.Z. Welfare League deny that supporters of the present, monetary system have been challenged t-o meet the great brains of the leaders of the Douglas Social Credit System in public debate and that they shirk it ? Can the N.Z. Welfare League deny that, under the present monetary system, N.Z.’s public debt has grown to about £3OO millions? Can the N.Z. Welfare League deny that it is impossible for N.Z. to borrow itself out of debt? Can the N.Z. Welfare League deny that the only credit-worthy clients the hanks can now lend credit t-o are, first, the Government, because it has the right to levy taxes, and second, the local bodies because they have the right to levy rates? Can the N.Z. Welfare League deny that, under the present monetary system, the banks and financial institutions Have in their hands, or under their control, all the best securities in New Zealand except those of the few sensible owners who have not borrowed to speculate? Finally, can the N.Z. Welfare League deny that the present taxation of one kind and another is so great that the public—-the electors—are learning that the present monetary system has outgrown its usefulness, is out-of-date and must be maerially improved upon on substituted by drastic reform.—l am, yours, etc., .C TILLEARD NATUSOII.