DOUGLAS SOCIAL CREDIT

Waihi Daily Telegraph, Volume XXXVII, Issue 9204, 2 April 1938, Page 2

DOUGLAS SOCIAL CREDIT

Sir, —In answer to my last letter "E.N.D." takes for his text, "Trouble arose through confusing theory with actual facts that would bear a different meaning." I submit that "E.N.D." is confusing his theory of the present banking system with what actually takes place as a matter of hard concrete fact under present banking practice. He doubts my statement "that the whole world is staggering under a load of unpayable debt." His idea is that the banks lend only the deposits of their clients and receive interest for so doing and protect themselves by demanding escurity against the money they lend to borrowers. That banks do not lend "dud" money, or money that has not behind it a backing of goods. He says he can support that statement, and because I don't, agree I am either from Mars or at best have a very crude idea of the banking system. Sir Reginald McKenn.., chairman of directors of the largest trading bank in England, has said in effect, that which "E.N.D." claims as tne banking system, is sheer humbug and nonsense. Sir Reginald says: ' For every pound deposited in the banks by iiepositers. the banks lend up to £3 0. or nine times more than their deposits." The banks there-

lore create and it-nd money out of nothing BJicT is Money that has no backing of goods. This "dud" money is lent to the banks' clients if they offer sufficient security, but if the "dud" money is not repaid, plus interest, the hanks become the owners of their clients' securities. England is paying over a million pounds in interest every day, on "dud" money borrowed fr:mi the banks for war purposes, and the people of England are (axed by the Government to pay it. Money that cost the banks nothing but paper and ink and the cost of writing the figures into the books of the banks. But dud and all as the creation of this "dud" debt money is, it is not the whole story, because, for every ,rjoo the banks lend they demand back £lO6 or whatever the rate of interest may be. Now, seeing that the banks are the only issuers of money, let me once more ask "E.N.D." where does the money come from to pay bank interest? Could he also (ell us what the banks pay for gold, and how the New Zealand Reserve Bank bought and paid the purchase price of the exchange J funds and the gold held by the private banks? Whether the money was | "dud" money or money with a backing of goods. It would seem that if "10.N.n." knows no more about the Douglas theory than he appears to know about the banking- system his warning is worthless.—l am, etc