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Salient: Victoria University Students' Newspaper. Vol. 24, No. 7. 1961.

A Nation in Pawn

A Nation in Pawn

The Nation's money in use has Increased by £280,900,000 in the lost 23 years. In order to keep our nation expanding, the banking system in New Zealand Creates new money, and this keeps the money supply increasing. The Banks lend most of this money, but it Incurs debt in the process—debt to the Bank. The banks gain control of real credit (or real wealth) by creating financial credit. The real wealth is the factories, farms, railway!, offices, etc.

In a rural district, for example, men have taken a piece of virgin land and divided it into farms. They clear the land, grub out the stumps, plough and put the land under cultivation. They build homes, barns, cowsheds, plant trees and so on. This takes years. Men endanger their health, toil for long hours and take many risks.

When the farmer comes to the end of his resources, he will want more capital for stocking and clearing. So he applies to the bank for an overdraft. The bank, after checking on securities, issues, the overdraft. How do they do this? Simply by Creating a deposit to the amount of the overdraft. (This creating is not done with fixed deposits, as each bank issues credit amounting to five or six times the fixed deposits). Thus the bank has created financial credit and takes control of the real credit.

The banker has contributed nothing to the development of the farm—he has created money by a costless and effortless process—and yet by the stroke of a pen he can acquire virtual possession of the farm under mortgage. The people do all the work and run all the risks; the bank does nothing and runs no risk with the credit it lends. Today, in Australia, the banks have acquired one quarter of the National Assets. The situation in New Zealand is similarly dangerous.

(Complied from facts released by the Australian Monetary Research, Sydney).

R. J. Bromby.