A POWERFUL FICTION.

Oxford Observer, Issue V, 2 June 1894, Page 2

A POWERFUL FICTION.-

A reply to J. WT '" X*~* J XGreat is truth and wiil prevail,- but . great also.ars . lies and . ..humbug^and, they require a great deal of killing. " Thc power of gold is very great, but after all it is really, only t l ie power of wealth. A man .owning a million soverigns is no more powerful than a man owning land to the value of a million, sovereigns. A sovereigns worth of silver is equal to a pound, , and a . sovereign's worth of labour is equal to a sovereign. Again a hundered sovereigns are of no more.yalue than a N. _. debenture at par ; ojc than a solvent bank-receipt for that amount. The holder of the debenture is simply a creditor of the State ; aad the holder of tbe bank receipt is only a creditor of the bank.— Both have proved that they prefer paper to gold, The one has shown his faith m State credit and the other his confidence m the credit of a private bank. They hare exchanged their gold for State paper ■or private bank paper because by so doing they increase their wealth or" power. In short a bundle of debentures ; a cash account at a solvent bank ; or a good cheque ; are far more convenient forms of wealth than so much solid gold. ' What is more, the gold held or kept yields no profit ; while interest grows upon debentures and deposits. . And the farmer who owns a thousand pounds wortli of wheat is as rich as the farmer who has just taken so much money for his wheat. There is a great deal of nonsence written about the appreciation of gold, but the relative valne of things must be left to the laws of supply and demand, except m so far as they may be regulated by custom's duties. The aim of the Bimetallists is to get an artificial price for their silver. They would like to make four shilling dollars out of ./ half- crown's worth of silver — pay them into the banks — and withdraw the nominal value m sovereigns. This will not suit New Zealand. We have plenty of silver coin and if the banks want- silver bullion let them store it up at its real value instead of at such a price as might suit some people m America and India. It is however quite possible that such a system might Ibe no worse than the one by which New Zealand has permitted foreign banks to exchanged away the 45 millions of gold produced here for over " appreciated " foreign bank paper ""' money. Instead of being over appreciated, gold is really ( except m times of panic ) very much under appreciated It is private bank paper money which is over appreciated ! Why should such paper money be difficult to get upon good securities and why should the rates of interest be so high ? I venture to reply that the reason why the money, is difficult tp get is because m case of panic! the amount might be demanded to be paid m gold.- -And that the interest is high owing to the transparent hut powerful fiction that the money lent is gold or that gold to the amount named can be paid at any - time. The true way to prevent any over appreciation of gold or any other' money, is for the State ta use its own credit as money instead of pledging its oredit not for gold ! but for private - credit and paying interest upon that credit. The way for a' State to reduce a great part of its people to miserable poverty, is to pledge the people's oredit to the wealthy and to tax the people to pay interest for their oredit and to re- - pay the credit given m hard cash a___S worse than all, to aliowff^ign^raSj^ lending companies ihe profits of cojml

■«■______- * venti-% ou^private credits and securities Into banking capital and charging ft*what interest they please. This may toily be/called " State slavery"' because it is caipbd by the State not performing its. fiSties as an issuer of money. The !&£_» has no more right to allow a few individuals ( or companies of individuals) to monopolise the prof ts of issuing money, (bank credits are the money ofthe day) thanithasto sell or lease gov- ' "-ernmejit lands m enormous blocks to a few individuals. A State Bank would I hope he the death of this kind of m- \ dividualism whereby a few individuals are permitted by the State to make enormous yearly profits (as much as the revenue ) under the fiction that they are lending or can lend any quantity of money. It is to be observed that some of the banks m their quarterly returns add together their coin and cash-balances whereby the amount of coin which they hold is hidden. A Cash-balance at the Bank of England is very different from coin. \ The Bank of England has not enough coin to cash all her own notes. Yet the Bank of England is the bank of banks and many banks doubtless proceed upon the fiction that a Bank of ! England Cash Balance is the same as coiu. It is really simply a debt ofthe Batik of England. Again the Bank of England reserves are given m notes and coin, after amounting to over 20 millions, whereas the total amount of gold m that Bank is usually only from 10 to 15 millions. It is quite easy for a New Zealand State Bank to hold a larger proportion of gold to liabilities than the Bank of England does.