THE ‘'GOLD-DIGGER'S” PROBLEM.

Waikato Times, Volume 113, Issue 18927, 22 April 1933, Page 7

THE ‘'GOLD-DIGGER'S” PROBLEM.

(To the Editor.)

SilV —i wish to thank Messrs Snjnsbtiry, Magner ami "Mine Metal" for their answers to my problem. I reyret, that Messrs Hansen and Yaile did not offer a solution, but perhaps they cl ill not see my original letter. I do not . agree wills any of the answers, and 1 sussed to -Mr Magner

that the local Douglas credit-ite circle l might discuss it. 1 Mr Magner’s lino of thought Is 1 fairly clear, but I think quite unsound. He says, “The nation gained nothing, tho speculators gained nothing, the people were upset and Hie banks gained a tenfold increase in their credit-creating power.” Mr Sainslmry goes all round the problem, and 1 suggest that because of this lie missed the real point, in barograph 5 be puts a new one over i me when lie says: “The bank could I of course have paid for the gold by giving Hie mine-owners the grocers’ 1.0.U.’5.” I extract from his leller 1 hat Ids answer is, “Nobody lias gained anything and the nation as a whole has not benefited.” “Blue Metal” says, "The only gain > is made by the bank,” and then be- | j comes worried about Inc same hole m , ! Iho ground that Mr Sainslmry men- j * tionod. I 1 referred (lie problem lo ray friend "Solly,” who never fails me where money and interest are concerned. '“Solly”/says: "That, at some j prior dale Hie ten speculators had j accumulated £IOO,OOO lo their credit. The bank therefore actually owed them that amouiil, and they withdrew Iho money and spent, Hie whole of it in I lie mining venture. The £ KlO.Odd in Hie I'man of noles. silver and copper ] circulated through the whole of tin’ j community. They sold the gold lor | £ 100,000 to the bank. -Ilist picture | Iho bank giving them fun,duo 91 notes for Hie gold and they 1 lion paying in these notes to their cred.l I The speculators arc in Hie same j position as before the venture: they | have gained nothing and lost nothing, i

1 ixceptlng that their speculation of I heir money earned them no interest; ind at this point “So(ly’s" eyes showed signs ol’ tears. “The hank has £IOO,OOO worth ot gold which it did not have before, uid that gold is circulating in flic community in the- form of notes, silver and bronze to Hie extent of £IOO,OOO. The bank lias gained n»l,|ling (in fact, they will have to. pay Government tax on the notes issued, but that it beside Hie point). But the nation lias benefited to Hie extent of £100,000.” "Solly’s” eyes glislened when lie added that; lie wished i they had got £100,000,000 worth of -old and that the hole in the ground I i,ail been as big as tiie whole of To Kovvhai. He says it would have been good for business. With reference to Mr Magner’s problem, “What would have been Hie position if the bank had advanced Hie money by way of overdraft lo work the mine?" ''Solly” says Hie bank would have required seeurily from the speculators. (Do you notice how business-like “Solly” is?) 'Allowing that |lie advance was made and lliat £100.0(10 worth of gold was secured. H 1 (. nalimi would slill have benefited by £IOO.OOO and Hie speculators would hi I of pocket lo Ihe extent of tiie interest charged by Hie bank on Hie advance. I have hail slill another gold pro.tPmi pn! io me, which if your eorrespundenis are sn llieien Ily in I eresl ed I will submit at a later dale.—l am, e 1 e., GOLD-DIGGER. Hamilton, April 2U. IPii.'t.