LAND AND WATER 
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and doulcTs — is unsuitable to the producing classes. 
The farmer who needs money to buy liis seeds and 
fertilisers and agricultural machinery, cannot undertake 
to repay the loan imlil he has sold his crops. A period of 
months and even years must sometimes intervene. What 
use is it to offer him a sum of money if there is the re- 
motest prospect of the loan bein;^ called in a few weeks 
or months later ? This would simply mean ruin to him. 
Tile banker would liave to sell the farm iu order to realise 
the amoimt of the loan. 
A Well-known Financial Game. 
1 his practice is, however, a well-know n financial 
game which is frequently played by unscrupulous money- 
lenders and even by many who pose as capitalists. How 
many inventors, manufacturers and merchants have 
been swindled out of their life's earnings by financial 
vampires who have advanced money on debentures, 
mortgages or promissory notes, and then swooped down 
on their luckless victims at a time when they knew that 
these were rmable to repay the money ! Legal Tender 
Acts may possibly have been intended by their framers to 
facilitate trade and to ensure equitable dealings between 
man and man. But they have often been used as instru- 
ments of the grossest frauds and the cruellest oppression, 
enabling the financially strong to rob and terrorise over 
the financially weak. 
The history of finance is strewn with the wreckage of 
myriads who have been broken by these merciless laws, 
which prescribe the particular instruments with which 
debts must be settled, without having made an adequate 
provision for a sufficient supply of these instruments. 
The Governments responsible for these Legal Tender 
Acts, do not appear to have given nmch consideration to 
this phase of the subject. Our currency legislators seem 
to have been haimted with the fear of making money 
cheap. So they made the conditions for its creation as 
difiicult as possible, and chose as the money-metal one 
of the rarest and most expensive, leaving the public to 
the tender mercies of the few privileged persons who 
]iai)pened to control its supply. 
For the development of a nation's industries, deposit 
banking is insufficient. Long-time loans, so essential to 
those engaged in starting and building up their enterprises, 
are unsuited to those entrusted with money returnable 
on call. Further, the rigidity of the system under which 
legal tender could be created prior to the war, made 
long-time loans a somewhat dangerous enterprise for the 
banker. Any increase in the volume of legal tender 
notes beyond the normal amount, had to be accom- 
panied bv a corresponding increase in the gold reserves — 
often a difficult and always an expensive proceeding. 
Germany's More Elastic System, 
It is in this jxxrticular respect that the German 
svstem has proved itself far more elastic and suitable for 
industrial growth than the F^nglish .system. Notes is'.ued 
])y the German Reichsbank required only one-third of 
their nominal value in gold and two thirds in bills, the 
result being that, as the necessities of trade expanded, 
the means for suj)plying those necessities grew with them, 
since the security for the notes was furnished by the in- 
dustries in the form of bills of exchange. The increase of 
the volume of uncovered notes is also permitted on 
payment to the Imperial Government of 5 per cent, on all 
such excess amounts. The result is, the Cierman bankers 
have always had at their command sufficient credit to 
back German trade and commerce to the fullest extent 
without running into very great danger. An industry 
that could earn more than 5 per cent, on any additional 
capital rcepiired could, other things being satisfactory, 
readilv secure fmancial support. 
With a million marks of gold reserves, the German 
Reichsbank could issue three million of legal tender notes, 
In answer to numerous in qinrie^, tlie I'lnancuil writings o( .Mr. 
Arthur Kitson include " The .Money Problem," (j3. 6d.). 0:1 sale 
at C. W. Daniel, Ltd., Graham Buildings, Tudor .Street, London. 
" An Open Letter to the lit. Hon. D. Lloyd George, Chancellor 
of the E.NChcquer (tgii)" on the "Causes of Strikes and Bank Failures." 
Ucnt and Sons, London. (6d.) 
antl on this the bank (ould issue twelve million marks 
of Bank Credit, whereas under our system only one million 
of legal tender notes could be issued against one million of 
gold reserves. And with an issue of four million of bank 
credit the position of our banks would be no safer than the 
German bank with its issue of twelve millions ! F'or the 
real basis of credit, in times of crises particularly, is legal 
tender based on the national credit, and the public is 
satisfied with paper money pro\'ided they know it is 
legal tender for all debts public and private. 
Consider the present position of the small producer 
who is anxious to develo]) liis business. He has no gilt- 
edged security to offer his banker, and therefore cannot get 
the accfijnmodation he requires. His only alternative is 
the private moneylender or promoter, to whom as security 
he must deliver up practically his soul. Tlie money- 
lender points out the great risk he is running and makes 
his interest charges correspondingly high. After a 
few months or perhaps years, of struggle, during which 
the producer has been handicapped by the burdensome 
interest charges, the lender falls on him and cleans him 
out of all he possesses. If it be the promoter who helps 
him, it generally ends the same way — i.e., in the pro- 
moter possessing himself of the business. 
Now it is this class of producer, one of the moi.t 
useful in the country, for whom no financial provision 
has yet been made. Our laws have placed him between 
the devil and the deep sea ! The German Government, 
quicla'r and more intelligent in industrial and commercial 
matters than the British Government (and although 
autocratic, far more in touch witii the wants of the pro- 
ducing classes than ours) has made j)rovision for theirs, 
and (lermany has been reaping a rich harvest almost 
entirely through such financial prevision. 
As I said in a previous article, the main cause of the 
inadequacy of our banking system for commercial and 
industrial needs, is our stupid Bank Charter Act, which 
should be repealed. It has placed our banking system in 
a straight-jacket, and it can only expand in one direction — 
namely, by increasing the volume of bank credit, without 
necessarily increasing the base upon which it rests. 
[In his next article Mr. Arthur Kitson proposes to 
point out how this inadcjuacy of the British Banking 
System may in his opinion bs best remedied.^ 
The war has produced a fine crop of amateur journalisin, 
both in the trenches and at home. For a witty spirit and 
irresponsiljle merriment Wilh the Wounded is hard to beat. 
It is the "official organ of Brondesbury Park Military Hos- 
pital" but surely never before has any " official organ " 
produced livelier tunes. The Editorial in No. 5 is delightful, 
but not quite so good as the one in No. 4 — an interview 
witii a bright girl of 18, who wanted to be a nurse— which 
was in its way a ni:isterpi('ce. 
The Red trobs Bur'^c, by Mrs. Belloc Lowndes (Smith, 
Elder and Co., 3s. bd. net) is a simple little story of a h'rench 
Red Cross nurse who had the ill-lortime to fall into German 
hands at the time of the enemy advance through hrance, and 
also the story of a puzzled South German doctor who tried 
hard to make German war practices scpiarc with the ethics of 
civilisation. Incidentally, the German doctor fell in love with 
the French nurse, and — but the rest of the story should be 
I'ead. The atmosphere of war is well conveyed, and from such 
a book one may gain an idea of the sufferings imposed on 
simpla country folk by invasion. The plot of this book is 
extremely simple, but the manner of the telling is fine art. 
The difference in the upbringing of two sisters, and the 
influence of their separate trainings, forms the theme of Love's 
Ili^lrciay (Cass;ll and Co., 6s.), the last book from the pen of 
Mr. Justus Miles Forman, who was one of the victims of the 
Liisilania outrage. That freedom of thought and action, a^ 
allowed to the modern girl launched into society, may develop 
l^readth of vision, and clarity of mind is made abundantly 
clear in the person of Diana, as honest and healthy-minded 
a girl as could be found, despite her cult of the tango and 
turkey-trot. Her twin sister, on the otlicr hand, suffered 
from early Victorian methods of upbringing, antl the meeting 
of the two sisters when fully K'own, together with the per- 
plexity and complications arising from a variety of lovers, " 
makes material for as good a story as any that Mr. Forman 
has written. Vivid characterisation and plenty of incident 
render this a book to be unreservedly recommended. 
