LETTERS TO THE EDITOR

Waihi Daily Telegraph, Volume XXXVII, Issue 9210, 21 April 1938, Page 2

LETTERS TO THE EDITOR

DOUGLAS SOCIAL CREDIT. Sir, —Until "L.F." is able to differentiate between money and credit he will be unable to understand the actual facts connected with modern financial transactions. Money is a token either of goods or services. It is only a tally counter. When a bank client draws a cheque, it is he that issues money, i.e., cheque money. The amount of money necessary to carry on the peoples' business varies frequently and greatly, owing to the variation in exchanges taking place. The banks keep supplies of coin, etc., on hand to give cash to those who require it in exchange for the cheque drawn by (A) against his own security. The bank does not often draw cheques but by being a clearing house for credit it has, as I previously stated, very little difficulty in finding the small amount of cash or money to fill its guarantee, for which it charges interest. I take it that what Mr. McKenna means in his statement quoted by "L.F." that "money issued varies with bank action in increasing or decreasing deposits." This must be evident when it is realised that the banks work on a definite ratio of advances to deposits. They do not want deposits if they cannot, owing to business circumstances, make favourable advances. I deny that every loan creates a deposit. It may create an advance. Now we come to some generalised statements by "L.F." "Financial interests alone dominate and control money and credit,"—yes. that is what we go to the races for, play two-up or take a ticket in "Tats" and lend money, i.e., credit. Then we are told that "industry toI day is becoming more and more hope- . J lessly in debt to the money power." Well, some folks do meet the market and then have spare capital. They are a part of industry, but this should not be confused with that division of labour that makes one man a speculator and the other fellow a manual toiler. "L.F." proceeds to say that as long as we allow money to be created for the purpose of destroying life through armaments and war—the result can only be disaster. Well war, and preparations for war is one method of getting rid of surplus production, the alternative would be rationised employment. Also at present the credit of the country (British Empire) is being controlled by the nation in interests and welfare of the people as a whole, at least the leaders think so. The statement that the velocity of exchange adds nothing to the amount in circulation, is quite correct. The velocity increases or disincreases by the number of exchanges or business going on. I think this disposes of the statement that money to pay bank interest can only be paid by banks creating the money to pay it with. Only a portion of the commodities produced get frost-bitten and require thawing at the bank firs. In conclusion, I am told that I "condemn debt free money." Not all—l will take any quantity, but unless it has the backing of the goods and services of the people or' a satisfactory one of them. I have no use for valueless cheques or dead money. I am afraid, sir, that I am trespassing upon your space. I would prefer to keep this discussion to Major Douglas' proposals. The issuer of an order— |

please pay to" etc., whether it be

legal tender or cheque money, must of necessity have some right or base on which to operate. If it is a loan, the lender, whether the State, or a private individual, runs the risk of

non-return or lost value and interest covers some of this risk. I would

:lraw "L.F.'s" attention to the published returns of mortgages discharged and new ones entered into—these 'or some time past have nearly bal-

anced —so the catastrophe debacle seems to hang lire somehow. Any way, how would "L.F." issue one or ten hundred thousand pounds in money without affecting price levels, whether it be debt free or interestbearing money.—l am, etc., "E.N.D."