THE PUBLIC CREDIT

New Zealand Herald, Volume LXXIII, Issue 22493, 10 August 1936, Page 12

THE PUBLIC CREDIT

Sir, —Tn his first letter, Mr. Loo claimed that if the Government created additional money, and used that money as wages for road making, the road would be what ho called a costless credit. He now appears to suggest that the road should bo made first and the money created afterwards. Can ho tell us how, with that method, the navvies would be paid? No doubt false coiners aim at getting something for nothing. Do not many of our reformers aim at the same result? The point, of course, is that additional money circulated by false coiners and forgers has precisely the same effect on purchasing power as additional money circulated by any other party. If money is so wonderful a commodity, why put men in gaol for making it? Mr. Lee is wrong in regard to our note circulation. It reached its peak in 1920, when it amounted to £7,890,000. At the present time it is £7,221.000 —a quite trifling difference. During the same period trading bank deposits increased by more than £7,000,000. It is notorious that money is now abundant throughout the world, and it could be enormously increased without any change in banking policy. Cheques are drawn on free deposits and overdraft facilities, and these amount to £52,000.000. With use of these credits we draw cheques of the value of over £800,000,000 a year. If we chose to use all our deposits as free ones are used, the cheque circulation would bo increased by £600.000.000. while if wo, in addition, chose to change our savings bank deposits into free ones in our trading banks, the cheque circulation could be increased by a further £900.000.000. These vast increases in the credits on which cheques can be drawn would, of course, add not one atom to the wealth of our community and not the least fraction to our purchasing power. Mankind is not enriched by cheques, but by industry and thrift. The belief free money would be a boon to mankind is a silly delusion. All our money is, to all intents and purposes, already free, and its abundance does not a fleet the usefulness of our output in the least degree. A coin is used so vast a number of times that its cost for our use is simply nothing; our notes are printed for the State and are practically costless; the millions of cheques we draw in a year cost the public not one brass farthing. Bank borrowers pay, not for the cheques they draw, but for the goods they buy, and only by fraud could they evade paying what they now pay. J. Johnstone, Manurewa.;