BANK DEPOSITS

Otago Daily Times, Issue 22068, 26 September 1933, Page 10

BANK DEPOSITS

TO THE EDITOR. Sir,—May I suggest to "Without Prejudice " that, although hitherto he has taken his,reading matter on the subject of banking and finance almost entirely from newspapers, it is never too late to mend. If he is disinclined or too busy to attend any meeting where he could get enlightenment, or to pay a visit to the Public Library where he might consult the Encyclopaedia Britannica or other work of reference, he could on his way home purchase for the modest sum. of 9d or Is a pamphlet that will take no more time to read than his evening paper and give him most of the information he needs. • In the' meantime he might note that the Douglas principles are not in any way involved in the art and practice of banking. Therefore, it is indicative of confusion of thought to ask what "on Douglas principles is the use - to banks of deposits on a large proportion cf which interest has to be paid." In the Middle Ages money was frankly and tangibly a commodity, and money-lenders traded in that commodity. The goldsmiths, the ancestors of ■ the bankers, were entrusted with the safekeeping of this commodity, and became moneylenders on a large scale. Had they not invented the art of substituting for the gold arid silver paper money and later credit they would have continued to' be really agents for the lending of their depositors'tangible money —gold or silver. To-day, however, the banker, although he still in many cases has not realised the tremendous change that has taken place, is not a lender of anything tangible—nor does the depositor part with any portion of the credit entered to his name in the banker s books, when the latter makes a so-called loan. Money has become intangible credit, manipulated by book entry, and created by the banks as and when they see fit It is evident that, from being bona fide lenders of tangible money, the banks have become in MacLeod's phrase " manufactories of credit" which they treat as if it were a tangible commodity belonging to themselves. The reality of the transaction to-day is entirely different from the hypothesis on which it is worked. The reason or reasons why the banks still pay interest on deposits may be that they simply continue to do what they have been accustomed to do —what is n traditional part of their system; and. further, if they did not pay interest they would have no excuse for charging it. The idea behind the invention of money is that of a token or symbol—a ticket. To use a supposedly valuable commodity as money is a clumsy and, as history has shown, a vicious perversion of this idea. When as to-day, the abuses latent in this perversion are extended and perpetuated in a system of paper and book entries the result is simply that by cunning manipulation of these the banking system controls the world—and the system it perpetuates effectually prevents the world from getting access to'the plenty that modern industry can provide. The system is not expensive to the banks; it is very expensive to the people.—l am, etc.,