REPLY TO MR PARKINSON

Hauraki Plains Gazette, Volume 52, Issue 3268, 26 May 1943, Page 7

REPLY TO MR PARKINSON

(To the Editor.)

Sir,—ln answer to Mr W. Parkinson’s letter please allow me to quote the following:—H. D. McLeod in his text book, “The Theory and 1 Practice of Banking,” stated: “The essential and distinctive feature of a bank and and a banker, is to create and issue credit payable on demand. A bank is a manufactory of credit.” Mr R. G, Hawtrey, of the British Treasury, says “When a bank lends it creates money out of nothing.”

Bank of England Prospectus: “The bank shall have benefit of interest on all moneys which it creates out of nothing.”

After an exhaustive inquiry, the Australian Banking Commission recorded the fact that: “The Commonwealth Bank can make money available to Governments and to others free of any charge.

Macmillan Committee Report: “By granting loans, allowing money to be drawn on overdrafts, or purchasing securities, a bank creates a credit, in its books which is the equivalent of a deposit.”

Bank of N.S.W. Circular, April 12, 1937, says: “The Australian private trading banks owed depositors £289,-

000,000 and held coin, bullion and notes amounting to £31,000,000.” Professor Hytten (Economic advisor to Bank of N.S.W.), being asked if all depositors tried to draw out their money at once what would happen, he said, “I think they would go west then.” , Well, sir, I hope this answers W. Parkinson’s letter. I would be pleased to pursue the matter further or he and anyone else may apply to Democracy Publishing Co., Auckland, for detailed information. —I am, etc., A. DONOVAN. Whenuakite, 17:5:43.

Further Coromandel news will be found, on page 6