SAVING AND LENDING

New Zealand Herald, Volume LXXIII, Issue 22579, 18 November 1936, Page 17

SAVING AND LENDING

Sir, —-Whatever Mr. Savage may have since said, in his original statement, made to the Standard, lie pn«tniscd to "make an entire substitution of the use of the ])til)lie credit for borrowing." In regard to saving he said:— "This scratching, scraping, starvation system of individual saving strangles the economic freedom and well-being of a nation. We have got to stop that Thus we are led to consider what purposes are served by saving and lending. Production is largely seasonal, and so crops, in large part, must bo saved from immediate consumption and stored for future use. Seed must also bo saved, and since men and women are liable to disablement from sickness, accident, and old age, they must make provision for such disablement or become charges on others. But civilised men and women, unlike any other creatures, do not live by merely gathering and storing what is provided by nature. They produce before they gather, and to aid them in their production, and to satisfy their desires, they have produced, and stored up. a vast accumulation of property and equipment —clothing, houses, furniture, roads, railways, vehicles, ships, tools and machinery—all that distinguishes the way of living of modern man from the way of living of the brute. This accumulation, vital to civilised life, has come into being because all through the ages men and women each year produced more than they consumed and so added to our common foatune Kvery part of this vast fortune, cneated and bequeathed to us by the labour and sacrifice of those who lived before us, is constantly wearing out of usefulness, and just as saving brought it into existence, so saving is constantly necessary to repair and replace it. Thus, in place of saving being rendered unnecessary by progress, it is by progress—by the increase in the amount of our equipment—made every year a more vital part of our duty. Money does not. enter into this question. A large part of our labour must be devoted to tho production and repair of the things that constitute our material civilisation, and money can neither repair nor produce. But groat masses of men and women are in no position to either produce or use the things that contribute to the building up of civilisation. To enable such persons to help they must lend, and it is here that banks serve, and serve vitally. Tho entries made in the books of banks are no more a substitute for saving than the books kept by a farmer are a substitute for the crops he grows. It is, so far as banks are concerned, entirely a matter of transferring portions of our incomes—portions that would otherwise be used for immediate consumption —to those who can use the purchasing power so transferred for productive work. Cash deposited in any bank is immediately available for rclcnding, but cash serves for only a small fraction of our lending. Banks advance perhaps ten times what their cash would enable them to advance and they are enabled to do so simplv and solely by the fact that savers, all over tho country, are able and willing to deposit their cheques, just as they deposit their cash All deposits are savings, and thus banking, as it always was, is a matter of gathering in tho savings of the people and making them available to borrowers and saving, as it always was. is a matter of earning more than wo consume, and so, bv our labour and our sacrifice, contributing to the building up of civilisation. J- Johnstone. Man urc wa.