IN BONDAGE TO THE BANKS.

King Country Chronicle, Volume XXVI, Issue 3449, 24 November 1932, Page 5

IN BONDAGE TO THE BANKS.

(To the Editor.) Sir, —What meaning can we attach to "a free and democratic country" when its people are content to remain under the domination of the banking interests? Yesterday a deputation composed of members of Parliament went to the Associated banks asking for a higher exchange rate to save the primary producer. The representatives of the banks told them that it would be much better for Parliament to borrow £5,000,000 (presumably from the banks) wherewith to pay bonuses to the farmer. Now let us consider what that means. Originally the Crown possessed the sole right of issuing money by medium of the Royal Mint. Later when paper money became necessary, the right to print it was, for convenience sake, delegated to the banks under certain strict regulations and restrictions. So far satisfactory. About seventy years ago the cheque system grew up. The banks learnt to issue credits—or overdrafts —the recipient of which may write cheques which are a form of currency. Now the banks may issue these credits if not ad lib, at least free from the legal restrictions, which successive Governments found it necessary to place on the note issue, and to-day the great volume of business is done by cheque and credit. It costs the banks nothing to issue the credits or overdrafts. In other words, they lend money that does not exist; they create money and they destroy it by calling in the credits. "Ninetyseven per cent, of the money owned by individuals of the nation is privately issued (the banks, remember, are private institutions) and the greater part of it has no "tangible existence." If you doubt this hear what Reginald McKen'na, chairman of the Midland Bank, London, says: "I am afraid the ordinary citizen will not like to be told that the banks can (and do) create and destroy money. The amount of money in existence varies only with the action of the banks in increasing or decreasing deposits. Every loan creates a deposit and every repayment of a loan destroys a deposit." So the Associated bankers would like now to make one of these loans of money that does not exist to the Government and to charge 5 per cent, for it. This certainly would seem to pay them better than raising the exchange. The Crown (the Government) having delegated to the banks the privilege of issuing money, must now go, cap in hand, to the banks and borrow it at interest. Rather absurd surely. What is the matter with the Government resuming its right to issue currency thereby not only saving interest but shaking itself free from the domination of the money lending interests. Reginald McKenna continuing that same speech said: "They who control the credit of nations direct the policy of Governments and hold in the hollow of their hands the destiny of the people."—l am, etc., PIO PIO.