RESERVE BANK CREDITS

Ashburton Guardian, Volume 70, Issue 101, 11 February 1950, Page 4

RESERVE BANK CREDITS

Sir,—ln a recent leading article you condemned as disastrous the creation of credit by the Reserve Bank. This statement is not supported by any evidence as to how or where these disasters have occurred. There is plenty of concrete evidence, however, that the creation of credit by the Reserve Bank has been a boom to the Borough of Ashburton. I have only to mention the'.lrrigation schemes and the State houses, and my meaning should be clear. In a few days the Ashburton Licensing Trust will be constituted, and will have to have money or credit, which ever term you prefer to start up the business. At present there are no tangible assets belonging to the Trust, but 1 have no doubt that no difficulty will be experienced in obtaining the necessary credit. The credit will be advanced against potential assets, and anticipated revenue, which, to be quite candid, depend upon the ability of the people to consume beer. As a contrast, Sir, Reserve Bank credit has been issued to create assets and increase production (that is anticipated revenue) which in this case depend upon the ability of the people to bring about that increase. From a financial point of view, there can ,be nothing disastrous in the methods. With the results there will be some difference of opinion. G.G.