THE BANKS AND SOCIAL CREDIT

Otago Daily Times, Issue 22710, 24 October 1935, Page 19

THE BANKS AND SOCIAL CREDIT

TO THE EDITOR. Sir—ln this morning's issue a correspondent, who subscribes himself b., tries to come to close quarters with the above important subject, and only succeeds in establishing what he admits to be part of the truth, when he compares bank credit ramifications with a conduit system. The important question, as he truly says, is: Who should control the outlets? I submit that the first point that needs clarifying is the meaning ot "Social Credit." Bank credit may be anti-social, and often is. So is all credit that is abused. Bank managers have to contend with credit that is abused or may have been foolishly granted without a redeemable measure of value in support of it. How is a bank manager going to value the output of a farm or a gold mine if he has no measure of value apart from a scrap of paper signed by a farming optimist or a mining visionary, each of whom is very often without practical experience? These are the people who establish fictitious prices for land, making it impossible for a working farmer to obtain a fair return for his labour. So long as the banker controls the farm or the mine he can corner it and fix prices at his own sweet will, granting credits for the production of the necessaries of life and fixing the prices of them by fixing the price of gold when we have a gold standard currency. It is a fallacy to say that the price of land is determined by the prices of its Tiroducts. It is the price of gold when we have a gold standard'currency that fixes the prices of the products of the land and consequently of all other labour products. The important point, therefore, is: Who is going to control the price of the gold standard measure of value? That, 1 submit, is vital, and the control should be exercised by the State. If that were done the issue of credits could be safely left to banking experts. Unfortunately, since we have gone off the standard gold measure of value, banking experts have had a free hand to " boom " or " bust" any industrial enterprise as circumstances suggested.—l am, etc., October 23. Measure of Value.