THINGS FINANCIAL

Waikato Times, Volume 122, Issue 20421, 11 February 1938, Page 9

THINGS FINANCIAL

(To the Editor) Sir, —Our good friend "Gold Digger” does not want to let a 50hour week stop him from joining the reactionary forces in defence of our weird and wonderful money system. Many of us have to work considerably more than a 50-hour week. "Brumagem” misrepresents me In saying that I dislike bankers. The bankers I come into contact with are quite good fellows, but the system they operate is dynamite. The writer Is not In the least surprised at the quotations from a recent speech by Mr Reginald McKenna, of the Midland Bank. Doubtless Mr McKenna and his friends will he ardent supporters of cheap money as a means of retaining their stranglehold on democracy. The civilised world is smothered in debt that cannot he repaid, and public opinion is gradually waking up to the nature of the fraud. A slump is already on the way in Britain, confirmed daily by reports from the Stock Exchange as to the stagnant state of the market, etc. Hence the feverish search for increased armaments and capital works to stave off the evil day as long as possible. Personally I do not place much importance on Mr McKenna’s views, one way or the other. In reply to Mr Fairlie, I have first of all to thank him for the interesting quotation from a British Fabian. The quotation is in my opinion definitely misleading in parts. Thus: "Its advances are the most profitable part of a bank's business, and as much of its money as can prudently be lent in this manner will be so lent.” This postulates that banks part with something. This is definitely untrue, as the banks monetise the assets of their clients by writing figures in certain ledgers. Mr Fairlie will doubtless agree that scientific achievement in the present decade has made it physically possible for the British people to enjoy a far higher standard of living than in 1929, yet the volume of money in Britain has not reached the 1929 level, and the tide is already turning to deflation or slump. Now for a word concerning the "liquid holdings.” probably mainly overdrafts to industry. These liquid holdings are not as liquid as bankers fondly imagine, for a concerted move to call in overdrafts would result inevitably in an immediate slump, for the reason that all debtors would be selling securities to meet their bank commitments on a falling market, due to a contracting volume of money. Mr Fairlie will, upon reflection, realise that his analogy between banks and business firms Is rather unfortunate. It is generally realised that a successful business must cater for the public demands or end in the Bankruptcy Court. A bank, like a business, is an institution to serve the public—-that is the only justification for its existence.—l am, etc., R. G. YOUNG. Gordonton, February 8.