CURRENCY REFORM.

Dominion, Volume 3, Issue 622, 27 September 1909, Page 8

CURRENCY REFORM.

. Sir,—Mr. J. B. Hobart, in'his letter which appeared in your issue of September 23, accuses .me of confusion of ideas, but it seems to me that it is Mr. Hobart who is suffering from that' malady, for he practically argues-..that if more notes were printed and available for circulation'the banks would be able.to give more'advances than they are giving at present, which is tantamount 'to arguing that the banks aVe.not advancing now, as freely as they were some, time babk, because they have' an insufficiency of banknotes. : But nothing could be':more absurd .than such a' ; contention.as this.. The reason why the banks.cannot now:lend as freely:as: they were doing'6ome .time 1 back is plain enough to;me. ";' ; ;.t\;y. S' ■:- •'■ Mr. G. §. Littljohn, in,'a epeech, delivered before the Sydney Chamber ''of. Commerce bh-July 26 last,, stated that "during the year'l9oß the advances of the 'banks'-.'of; the' Commonwealth increased'. by' - over: and, above the increase in - deposits, The , Review* gives the increase in the advances as .£5,853,000. and in the deposits £998,000, ..which; goes to show, gentlemen, that the; banks have been satisfied '■ that business , was ','• on.' sound '-.'■ lines j, that there was no rash undue, speculation, and that it was the right thing for them to assist' - ! tra'de a and commerce! bK'attvancjng.'funds."' :■'■ 'If it;is true that'all'.these advances'nave been' made to, assist trade - and , commerce,' and proper j. arrangements: have .been' made for, repayment 'as'6oon as fresh.wealth has been:produced ;thfough, ; the medium of those advances', then'it may be taken for granted that Australian bankers have, a better grasp of the''print' ciples : 'of sound-.banking than we appear to .have in New Zealand. But I would like to ask Mr. Hobart if ho'really: thinks this increase in advances has necessitated the print-, ing of a corresponding increase in notes. ' >If he does not think so,- why does he'lay so much stress upon the necessity of the State issuing more notes? :Of course, more notes may be.roquired as population increases, because there are more people requiring'ready cash to carry in'- their pookots, but. this' is- the -chief use of notes and wins. I think I am right in (saying the only. , use. • Millions 0f,.-pounds' .worth of wealth aTO created : and exchanged entirely by; means. of oh,eqnes. and similar instruments or 'exchange, notes being, chiefly used for-the payment\ of wages, and; even, for the payment of wages .cheques are largely used, So that notes and coin are chiefly' used for wages; and. collected' by the retail - trade'.' But the' sara'o notes and coin can' be used again and again as fast as'they come back to . the ■ banks.•■-.-•■' .Mr.: Hobart lays great stress' upon': the fact', •that he has had a wide practical experience in braking, and : while I recognise the value; of practical knowledge, ■ still' I: would draw 'Mr; Hobart's attention to the fact that those who control our banking'• affairs, at the : present time have probably.all had a wider experience of the practice of banking!than he has, but they have failed to evolve a perfeot system of banking conducted upon .Ecientifio'principles and probably never will of N their own initiative. It will be loft for the born reformer to do that, as in-the case .'of all great reforms. ■'■■'' , As to the- system of banking, T have worked out, being somewhat.isimilaf • to. that which was adoptedrby the, Venetians, it may be so, for I must acknowledge! have never'studied their system, of banking.''However, it must be remembered that the Edison lamp,, for ex-' ample, was so like certain other '.amps; and had in its construction the' best points''of various other lamps, that Edison had the greatest difficulty in obtaining a patent for it at all. Nevertheless, it is s,till: considered to be. the first and best light in. the ; world.—l am> etc.; '■' : '-'; .'.•■ ,'■■■ -'/-,-., ■ C.K.W. LONGDItI,. ■ ,|This correspondence is tiow'closed.]' '-. ':