THE BANKING SYSTEM

Otago Daily Times, Issue 23334, 28 October 1937, Page 17

THE BANKING SYSTEM

TO THE EDITOR

Sir,—One wonders what the reactions of the members of the National Building Society were the other night, to their president's eulogy of the banking system. No one contends that the banks do not manage their system efficiently. Their administration is a marvel of efficiency—and it would need to be to camouflage so completely the "basic fraud on which the system is built. But when the worthy gentleman went on to sa: that monetary troubles were the effects, not the cause, of the depression and to resurrect the ancient fable of confidence, did no one murmur " Rip van Winkle" or words to that effect?

It must be plain to the most formal capacity not absolutely impervious to facts that the recent and present difficulties of the world are not due to economic scarcity. Has Mr Fairbairn not heard of a " crisis of glut? " Has no parting sigh reached him from the cattle, wheat, coffee, cotton, rubber or herrings slaughtered, burned, drowned or restored to the deep in the interests of "the market" and to uphold tottering prices?—all by the way. in vain. It is not a problem of supply but a problem of distribution we have to face—and the problem is insoluble as long as we adhere like morons to the rules of an out-dated money system. According to the head statistician of a leading New York bank, allthe crises of the last century have been financial, not economic. In the face of facts, Mr Fairbairn has a poor choice of conclusions. The money system being our. mechanism of distribution, it has most obviously failed. Production is sabotaged because it is not distributed. He can believe with Mr Hawtrey that the banks are responsible—either from mismanagement or the carrying out of an anti-social policy—or he can agree with Major Douglas that the system itself is unworkable and the responsibility rests with the banks of perpetuating it, though personally I think gentlemen of the description of Mr Fairbairn must share that responsibility.— I am, etc., Truth. Dunedin, October 27-