Thoughts on Public Borrowing and Banking.

Huntly Press and District Gazette, Volume 3, 25 December 1914, Page 3

Thoughts on Public Borrowing and Banking.

[by C. P. W. Longdill.] Author of “ Model Rules am Regulations for a pefect Co operative People’s Bank, or Statt Peoples Bank.” “ A Perfect Sys .tern of Banking,” etc. Should the funds necessary fot the construction of all public works be raised by direct taxation or by loans, is a matter that should receive the serious consideration of every statesman. And if by loans, how and when these loans should be repaid, are also questions requiring the true stateman’s earnest consideration. For it is obvious that, sooner or later, all monies borrowed must be repaid, so that fresh loans can be negotiated, and also, it should be self-evident that where a country borrows within itself, the money must largely be repaid by those from whom it is borrowed, for surely it would be most unjust to borrow from the rich, and tax the poor to repay those loans with interest. This indeed would be a very unjust system which no democratic country would knowingly tolerate. though it is what the money-lending classes aim at. But on the other hand, if all money borrowed for public works is borrowed from the rich, and the rich are the persons mainly taxed for the repayment of those loans, together with all interest, dues thereon, is it not self-evi-dent, that this process would be exactly similar to a person borrowing from himself and charging himself interest thereon and taxing himself to repay that loan with interest, and thus it would come to just the same thing if the rich —or all persons in proportion to property owned —were directly taxed to provide the money for all public works. Thus we see that no country which borrows within itself, the money for public works, could possibly go bankrupt from this cause, for before this could happen the very people to whom the money was due could be taxed to such an extent, that it would really he they who repaid the money they had lent. In other words it would have come to exactly the same thing if the country had in the first place taxed them directly for the

money which it professed to have borroyred. Thus we see that there is nothing whatever gained by raising the money for public works by tion, unless it is the intention to tux the poorer members of the community and compel them to repay with interest what the rich have lent. But such an unjust system of financing as this, results in the rich getting richer, while the working classes are never permitted to get beyond the boundaries of a bare existence. And this in a democratic country cannot be regarded as a desirable state of affairs. And thus it is evident that the only fair and just method of raising revenue for public works is by means of taxation. But the great and all important question which arises in connection with this matter of direct taxation, is : Where is the actual money to come from wherewith to pay the taxes, for there are thousands of people in the country who, while they may possess a title to a considerable area of land or houses, or have some business, seem nevertheless always short of sufficient ready cash, and hence the necessity of borrowing from somewhere to provide this ready cash Now I contend that it would be quite easy and safe —if reasonable precautions were used — to supply this demand for ready cash, through the medium of a system of co-operative banking sucl) as proposed in my “ Model Rules and Regulations for a cooperative People’s Bank ; or State Guaranteed People’s Bank.’ If this sytem of banking was established everyone vvitli the necessary property to make him liable for direct taxation, would be able to obtain, if required, a sufficient advance from his branch of the bank to pay his share of taxation upon demand, on which he would of course be charged interest until repaid. As fast as the Government became possessed of this revenue it would he expended in public works, roads, etc., and thus it would soon filter back into the hands of shop keepers, manufacturers, and farmers whence it came, and as the money thus circulated each would make his profit on what he sold and be enabled to repay bank advances, when he could again obtain further advances as required. In this way all public works construerbd would be paid for as fast as constructed, and thus the country be free of debt, and millions saved in interest. At the saxe time there would be plenty of money in circulation to keep everyone employed in one way or another, and the people at the same time would be taught to understand and manage their l own banking system. I C. P. W LONGDILL. Huntly, Dec. 1914.