Image TileImage TileImage TileImage TileImage TileImage TileImage TileImage TileImage TileImage TileImage TileImage TileImage TileImage TileImage TileImage TileImage TileImage TileImage TileImage Tile
Image size: 6144x7680 Scale: 35% - PanoJS3
Page overview thumbnail

Article text

! TO THE EDITOR OF THE AGE.
; Sir. — A short time since Mr. O Sulhvnii
; asked some of your correspondents to say
"what the banks are supposed to do lo
! alleviate present-day conditions." My
'answer lo this, in a letter published in
"The Age" of 20th August, was to tho
effect that the general principle of bank-
ling policy had been laid down by the
iRt. Hon. Reg. MeKenna. namely, that till
volume of current account deposits should
be regulated in accordance with the de-
mand for money, as shown by the price- 1
level index. I nsked Mr. O'Sullivnn to
give us his opinion on the views of Mr.
MeKenna, and on 30t!i August lie replied
that "to discuss it in the columns of
'The Age' would widen the issue and get
away from the point at which we started,
nanieiy. nationalisation of banking." I
am afraid that it a politician gave such
an answer lie would be charged with
evading the point, particularly after he
had asked for constructive criticism on
"what the banks are supposed to do."
Mr. O'Sullivan again quotes banking
figures to show there was no deflation
from 1D2D onwards. But all bank de
posits are not money. Hear what Mr.
MeKenna has to say on this point: — "1
understand by 'money' ail currency in
| circulation, together with banks' deposits
drnwable by cheque, which on tlie aggre
gate represent tlie purchasing power of
tho public. . . . Apart from Hie action
of a bank, the public in practice Is power
less to increase or diminish permanently
the total of money except by destroying
their notes or sending them out of the
country." In March, 1929, the total of
current account deposits in the Austra
lian trading banks was 115 millions.
Eighteen months later it was 81 mil
lions.
In a previous letter Mr. O'Sullivan,
referring tn these figures, said that
"Mr. Baguley v.ats in trulh looking at
the barometer and blaming it for tlie
adverse weather." Will lie kindly ex-
nlain tho disappearance of 31 millions
Df current account deposits in the first
eighteen months of tho depression ?—
Yours. Arc. (V. BAGULEY.
Clayton South, 30th August. j
$