THE ECONOMISTS' REPORT.

Press, Volume LXVIII, Issue 20489, 7 March 1932, Page 11

THE ECONOMISTS' REPORT.

TO THH EDITOR OF TH3 PRESS. Sir, —The Economists' Report discloses the guiding hand of the banks in almost every line. The whole report is really an elaboration of Professor Copland's pamphlet, "New Zealand in the Crisis." It is interesting to follow the bankers' line of action. First, the help and co-operation of the moneyea people to secure wage cuts. When this breaks down the rentier is thrown to. one sid,e with a 20 per cent, cut in interest and rents, and we see the banker as the primary producers' best friend. Anything and everything may f;o except the one thing that really matters —the control of credit. The report states: "The main responsibility for supplying credit rests with the banks. That credit, has been made available by the banks is clear from the following table." A £able showing ad-

vjinces and deposits since 1928 follows, with the following figures for 1SM1: Deposits slm, Advances slm. Splendid But unfortunately the Macmillan Committee has alreadj' exposed the^ falsity of this reasoning on page 24 or its report. Mr Smith secures a credit or overdraft of £IOO from the bank. This is, of course, as the Macmillan report explains, bank-created money t,;iew money). Smith pays Brown, who pays it into the bank, and we nave, Advances £IOO, Deposits £IOO. The suggestion for financing Government deficits by overdrafts and Treasury notes is made with the customary coolness that is characteristic of bank procedure. The banks ara to advance or<*dit to the Government to meet the deficit. The Government may then be allowed to repay with Treasury notes. The credit, of course, is the credit jpf the country;.it will be issued* as always, at the public expense and will not cost the banks anything, and they will receive our Treasury notes in return The farmer, business man and worker pays the interest on the banks' bonds through taxation, and the majority of, the bonds didn't cost the banks anything- This, of course, is "sound finance," and you will doubtless remember that both Mr Forbes and Mr Coates explained what it all meant at the last elections. —Yours, etc., D. C. DAVIE. March sth, 1932.