The independent., 1903-05-28


private parties could extort high rates
of interest.
For the same reasons that the de-
mand should be fully supplied no
money should be issued except the
loans are at the fixed rate of interest.
for as loans at liked rate of inter-
est would maintain tie Equilibrium
between supply and, demand; any 9TH
er issues would destroy their equality.
Probably the greatest reform yet
adopted in New Zealand is its loans
to settlers. 1t is step in the right
direction; but only step. 1t has
brought down the rate of interest, and
made it harder for the money-lender5
to control the currency.
By issuing notes it could retain as
revenue the interest it receives, in
stead of simply acting as agent and
collector for the money-lenders; and
by supplying the demand at a fixed
rate it would completely break the
power of the money-lenders to extort
high rates of interest.
They are trying to pass a bill to
limit the rate of interest. Such bills
have been passed in other countries
and failed to produce the desired eff
fect-the laws are either evaded or
less money is lent than borrowers de-
mand. If the rate of interest depends
upon supply and demand, and it is de-
sirable to limit the rate to five per
cent, the way to do it is to supply the
demand at per cent. II three or four
per cent is considered more desirable,
let them supply the demand at one of
those rates; but the rate once fixed
should remain unchanged.
If the government issued notes in
unlimited quantities and loaned them
at, say, four per cent, it is evident
there could never be scarcity Of mon
ey. Every person who possessed the
required security could obtain money
at that rate, and nobody would pay
rates to money-lenders.
Private parties could get four per cent
as long as there was not too much in
When less money was re-
quired in business there would be idle
money which would be offered on bet
ter terms than the government loans,
and less government loans would be
called for; competition amongst pri-
vate parties would prevent imitation,
and the government loans would pre-
vent contraction. Expansion could
also be prevented by the government
borrowing from the people at the
same rate that it received, but don't
think it would be necessarily
The greatest objection to a paper
currency has been that the material
being unlimited, and no natural way
CT limiting it's issue being known, it
has often been issued in excessive
quantities.
With the plan I propose, the bor-
rowers would really be the issuers Of
the money, and it's redemption would
be insured by their property pledged
as security, borrowers would receive
MT ney on better terms than before.
and the whole people would be ben
eiitted by the government receiving
a revenue that it had earned.
Government loans to the people
government and at the same time
tighten the burdens of the people. 1t
would compel no one to borrow mon
ey; but those who desired to do so,
could borrow on better terms than they
otherwise could. They would get
money at exactly what it was worth,
and the government would render
them a service worth all they paid for
it. 1t would not be special privilege
i'll any sense.
Why does progress always accom-
pany an expanding currency, and stag
nation and ruin always accompany
contraction?
One answer to the question is. That
when the currency is being inflated
nr,ces rise owing to the depreciation
of money, and although people have
mere money than formerly, their in
crease in real wealth has not been in
proportion to their increase in money;
also, when the currency is contracting
it is appreciating in value, and al
though people have less money, they
may still have as much real wealth
Although this answer is quite true.
it is not the whole truth. Real prog
ress cannot accompany depreciating
currency, and it must always be ac-
ctmpanied by an expanding currency,
Money is said to be to commerce
what blood is to the human system
it. is the circulating medium that car