THE BANKS AND SOCIAL CREDIT

Otago Daily Times, Issue 22709, 23 October 1935, Page 6

THE BANKS AND SOCIAL CREDIT

TO THE EDITOR. Sir, —In defence of the banking system it is said that banks are merely an intermediary for the borrower and the lender —a sort of conduit pipe through which the credit of the depositors is conveyed to those credit-worthy clients who receive financial accommodation from the banks. This is true, but is not the whole truth, and merely serves to obscure the facts.. What is loosely spoken of as "credit" is only a permit from the bank authorising a client to claim from other people goods and services up to a specified monetary value. Real credit is the belief—virtually the certainty in normal conditions —that the community will co-operate to supply goods and services in satisfaction of these monetary claims. It is evident, therefore, that credit is the property of no individual nor institution, but is resident in, and inseparable from, society in co-operation;—hence social credit. In every co-operative society such as ours there is a reserve of social credit, consisting of the full capacity of the community to produce goods for consumption, after allowing for what has actually been consumed by the community; and it is quite true to say that a network of conduit pipes, in the shape of the banking system, is required to convey this credit to those who need it. The vital question is: Who is to control the outlet? Is the control to remain in the hands of a private monopoly with power to supply or withhold the necessaries of life, to dispossess the rich and pinch or starve the poor, to keep the nation for ever wasting its strength upon the hopeless task of Sisyphus, and to frustrate our efforts to enter upon the abundance and economic security which scientific progress has provided for us? Or shall that control be vested in the representatives of the people, with a mandate to use the social credit for the betterment of society and to set the people free from private finance? —I am, etc., S.