Page 3570 - Week 12 - Thursday, 20 September 1990
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There is no more unprofitable subject under the sun (than) to argue any banking or credit points, since there are enough substantial quotations in existence to prove to the initiated that banks do create credit without restraint.
In fact, the only restraint on bankers is what they term "sound banking practice", and this means "as much as we, the banks, can safely loan, in our estimation".
John Maynard Keynes, the architect of the deficit budgeting system used by our governments today, was the wartime Governor of the Bank of England. He stated:
There can be no doubt that deposits are created by the banks.
Governor Eccles, one-time head of the Federal Reserve Bank Board of the United States, said in giving evidence before a congressional inquiry:
The banks can create and destroy money. Bank credit is money. It's the money we do most of our business with, not the currency which we usually think of as money.
Indeed, Mr H.W. Whyte, Chairman of the Associated Banks of New Zealand, gave evidence before the New Zealand Royal Commission into Banking in 1955. He said:
Banks create credit when making loans and advances, and they have been doing it for a long time ... Today, I doubt very much whether you would get many prominent bankers to attempt to deny that banks create credit. I have told you that they do; Mr Ashwin (Secretary to the Treasury) has told you that they do; Mr Fussell (Governor of the Reserve Bank) has told you that they do.
Mr Graham Towers, Governor of the Central Bank of Canada, made these statements to the Canadian Government's Commission on Banking and Commerce during the 1939 session. He was asked the question:
Will you tell me why a government with power to create money should give that power away to a private monopoly and then borrow that which parliament can create itself, back at interest, to the point of national bankruptcy?
Mr Towers replied:
If the parliament wants to change the form of operating the banking system, then certainly it is within the power of the parliament.
He was asked the following question:
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