CURRENCY QUESTIONS

Waikato Times, Volume 118, Issue 19765, 21 December 1935, Page 9

CURRENCY QUESTIONS

(To the Editor.)

Sir, —Your correspondent “Lowbrow” evidently belongs to that rapidly diminishing band of thinkers who still believe that money exists only as bank notes and coin, and probably that each note for £1 Is backed by £1 worth of gold in the vaults of the bank. He still believes in the velocity theory of money and that our prosperity depends upon the speed at which money circulates. , The farmers receive (and spend) their cheques as the same regular intervals as they did in 1029, the only difference being in the amount. Tile workers In the cities still draw and spend their pay, such as it is, at the same regular intervals as prior to the depression. Where then is the difference In velocity? Over 97 per cent, of our money is bank credit—cheque money. A cheque Is 'made out to a person or firm, presented, Cleared and cancelled. It has no circulation, and therefore no velocity whatever. I anl sorry yoilr correspondent docs not believe ln the existence of cheque currency, but for information on that point lie only needs to inquire at his nearest hank.—l am, etc., G. HUNTER. Horsham Downs, December 19.