BORROWING

New Zealand Herald, Volume LXXIII, Issue 22539, 2 October 1936, Page 15

BORROWING

Sir, —Rhetoric will not help us to understand business transactions. What we have to decide is whether, when a borrower returns his loan, with interest added, he has received value for the payment he makes. Docs he get a fair deal? Every borrower is given by the lender the power to buy goods of the full value of his loan; goods that are chosen by himself, and which are a clear addition to those he can obtain by all the other means that are available to him —apart from robbing. Concerning this there can be no dispute. Neither Mr. Gatenby nor any one else has shown, or can show, that "impoverishment and degradation" are involved in the return of those goods or their equivalent. Similarly with interest. The possession of borrowed capital gives to the borrower the power to purchase, from all the stores of the world, the particular equipment that suits him best. No currency reformer can deny that modern equipment aids labour. When the borrower, having used this equipment, pays interest on its cost he merely pays for what ho has received, and he cannot be impoverished or tiegraded by doing so. Degraded he certainly will be, if, having received this advantage from another, he fails to pay the value of it. Douglas Creditors have no moral ground beneath their feet when they teach that State banking would make free goods available to all of ns and so make borrowing unnecessary. Science and invention make labour more productive: They never make it less necessary. It is as true now as at any other time that all wealth is the result of human toil. It is as true now as at any other time that the man who consumes wealth without producing it is robbing others of the fruits of their labour. The man who desires poods beyond those of bis own production must either borrow or rob, and robbery is no substitute for borrowing. J. Johnstone. Manurcwa.