THE ATTACK ON THE BANKS [To the Editor of THE
SPECTATOR.] SIR,—Professor Jones, in enumerating the criticisms of present-day banking, omitted the most important, which is the obstruction offered to suggestions for supplementing the present methods of creating and issuing money by others which afford some prospect of a greater degree of solvency and prosperity.
The principal defects of the present system may be briefly summarized as follows : (1) Insistence that when the State, at a time of national crisis, must have more money than it can obtain from taxation or borrow from its citizens, it must borrow it from the banking system instead of creating it, thus imposing an impossible and perpetual burden • upon taxpayers who have to find the interest. (2) Insistence that all new money not created for buying gold or securities for banks must also be borrowed and start as debt, i.e., as a bank loan. (3) Failure to provide any adequate fund out of
which the interest as well as principal of bank loans is to be paid. (4) Failure to provide any non-debt money to
bridge the gap between prices and purchasing power in
consumers' pockets ; also to enable men displaced from labour by machinery to buy their share of the output of the machines that displace them without being a financial burden
on their fellows. (5) Failure to provide money for starting new industries. When these have to be financed out of the
profits of existing ones, a shortage of purchasing power is created either for the goods of the new industry or for those of the industry whose profits financed the new one.—Youra
very truly, TAVISTOCK: 76 St. James' Court, S.W.I.
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