The Tax on Bank Notes.

Observer, Volume X, Issue 622, 29 November 1890, Page 12

The Tax on Bank Notes.

(To the Editor, Observer.)

Siß, — Doeß Mr Harvie wish to bring us back to a system of barter, where a member of the community would bring his potatoes to market and wander around until he finds a man wanting to buy potatoes and wishing to sell the article required by the holder of the potatoes P I fancy that we are too far advanced to g<y back to such means of doing trade. If all men were honest, we could do without metal as a medium of exchange ; but as we are not honest, we are sure to prefer something possessing a world-wide value, such as gold. Mr Harvie says the barter system is a simple matter and easily understood. But lam afraid it would: be found impracticable. In fact, I believe it would cause more expenditure of physical force on the part of man than it does to produce all the wealth paid to the people drawing interest. Mr Harvie must remember that the money-lender does not consume the money, but he consumes the wealth that the interest he reoeives will purchase. Money, to the money-lender is merely his tool. A man must first get ' value ' before he can get money or coin. A man holding * value ' can convey it to personswishing to borrow • value,' and it may never assume the form of money. A borrower does not reap any benefit from borrowed coin until he has put it in some other form. If he buys a machine, he has in reality borrowed the machine. If he spends it in producing a crop of potatoes he has in reality borrowed the labour, or whatever herequired to produce the potatoes. The lender merely takes a stated sum in place of going in as a partner to produce potatoes. As for a tax on bank notes making money dear, we may as well say that a land tax will make land dear. Tn case I may be misunderstood, I may as well say that we cannot tax land. We can tax thevalues known as rent, land value, or unearned increment. All those values are merely a tax on labour, beoause the holders of those values use the proceeds to purchase the fruits of labour, and consume it— the fruit they have never produoed. Under our present social system it would be a blessing to the workers if interest could remain at a high rate, as the worker would then soon accumulate a value that would allow him to retire from work and live on the interest. If a labourer accumulates iSIOO worth of ' value ' where interest is 20 per cent., it is equal to .£BOO worth of accumulated value where interest is 2£ per cent. It ia this simple fact that brings the rich into the same boat with the poor. We struggle to accumulate ' vaJues,' and find that we must still goon accumulating more in order to maintain our purchasing power or standard of living. Mr Harvie's system would be very simple, but impracticable, while over two-thirds of the ' values ' in the world is the exchangeable value of the right to rob others. I have no doubt but that we shall soon develop a system that will be as simple as the bartering of Mr Harvie, and much easier put into prac* tice. As for a State Bank of Issue, the whole transaction would simply mean that the community a3 a whole guaranteed and paid the producer of a crop for producing it. If the State issues paper money to be ' exchanged ' for the labour expended in producing wealth, it will be necessary for the State to take charge of the whol? system. Wouldn't the Ministers lend to their friends ? The B.N.Z. favouritism would be nothing to it. I think it a waste of time and paper to discuss the question, as there is a better system evolving out of this worn-out system, and nothing we can do will stop it. We may assist to bring it about quicker if we try to banish all, hatred and ill-feeling from our evil hearts toward those whose interests are not identical with our own. — I am &0., Robinson Caxraos Nov. 16th.