BANKING PRINCIPLES.

Waipa Post, Volume 42, Issue 3303, 30 May 1931, Page 4

BANKING PRINCIPLES.

Sir, —We hear from influential men and others who should know better that banks and bankers act designedly against clients in times of stress just when most needed. Lately, too, we hear much of a gold short-N age, but I notice that some countries, with huge accumulations, also have many millions of unemployed. The true facts are that the world is not so short of gold as it is short of that river of flowing money which passes through the banks in norma ti.'nes, the result of constant exchanges of properties and stocks of all kinds. Out of this river the bank treats the public with a liberal hand with confidence. But in times of a world deflation we have ninety per cent of our wealth locked up in unsaleable stocks, which ceases to recur in this moving river, drying it up to a mere stream, which shows danger signals all along of giving out. So the rate is raised to steady things, and no matter how good your assets may be the banks become conservative, as they are always limited to the state of this riverflow. There is also a belief that deflation is instigated by the banks, but their behaviour is compelled by the disturbing element of deflation. Inflation is brought about bv cute people voting for that man who will promise to spend the most money in the most foolish way, smilingly assisted, too, by an over-liberal bank. Deflation starts when an over'-indulgent peo- 3 overdraw upon the reserves of the commercial industrial system, smashing down the very thing set up for their dependence.—l am, etc., W. SISSON.