COSTLESS CREDIT

Nelson Evening Mail, Volume 79, 21 July 1944, Page 3

COSTLESS CREDIT

I To the Editui I * Sir. “Just, Amused” asks the question, how can costless credit be returned to the bank? Firstly, assume that the bank is controlled by the people or the State. A work is required by the people; it may be the hydro works at Takaka. The work is necessary and when finished will be an acquisition. Labour and materials are the essentials. Science will be brought to bear on the construction of the works, so machines and material plus the men’s labour will form the primary things to be paid for. Now the Government can issue currency against the new wealth to be created (the hydro works). It does not matter much what form of credit is issued; it may be in the form of bonds. The amount of new money issued would depend on the nation’s internal economy. The men who work give us their services and we give them something in exchange so think of things in terms of barter. The men have to live and be paid in any case, even if doing useless work. In this case, we, as a nation, say here is an essential work and we issue costless credit in the form of bonds, remembering that bonds and cheques are only paper, costing little to produce but backed by the faith and credit of the people. In other words, it. is a guarantee by the State that the men shall be clothed and fed during the construction of the works just as the rest of us are clothed and fed during the same period. Now, when a private bank issues credit it issues costless paper for tangible goods, whereas under the barter system fiicn exchange goods for goods. One could not imagine Jones bartering a suit of clothes with Smith for a bag of sugar, and demanding an extra part bag for the next 20 years or vice versa. Even if Smith was born with an uncontrollable desire for physical exertion the deal wouldn't be tolerated by his friends because it would be obviously unfair. If it were discovered that only the waistcoast belonged to Jones when the deal was made it would make the deal a little more dishonest, but it may make it a little less embarrassing to Jones's friends because it would be a little more complicated. When the new wealth is (Treated and finally operating, the credit can be paid back from the earnings of the plant to the bank. The fact that it isn’t interestbearing doesn’t make it any more complicated, only to the “Sound Finance” complex. The amount paid back each year could be equal to the amount that would be paid under the existing debt system, but wc should not hand on a legacy of debt to future generations. It is well to remember under our present cheque system operating in the banks to-day, inflation and deflation can be brought about regardless of the country’s real wealth. It is done so smoothly that we feel that the master minds behind “Sound P’inance” know well how to oil the wheels of industry during war when it is a ease of survival, but when men have spilt their blood for that survival the screw is again applied by the men who have no nationality and no patriotism. If the international finance committee now sitting in the U.S.A. decide to eliminate private control of international finance, ot?r national control of credit will be made easier. Ours is a national problem demanding the support of every one in this country as without it. reconstruction, rehabilitation and a lasting peace arc impossible. —I am, etc., , MONETARY REFORM. Nelson. 20th July.