Bankers create credit

"In the higher realism of banking, however, there is no doubt that most of the V.I.P.'s know the facts (that bankers create credit). This was admitted by Mr. H. W. Whyte, Chairman of the Associated Banks of New Zealand, in his evidence before the New Zealand Royal Commission in 1955. He admitted, quite frankly, that banks create credit when making loans and advances, and he added:

"They have been doing it for a long time, but they didn't quite realize it, and they did not admit it. Very few did. You will find it in all sorts of documents financial text́ books, etc. But in the intervening years, and we must all be perfectly frank about these things, there has been a development of thought, until 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. But twenty, thirty, forty, fifty years ago you would not have found many people who would have said that. They didn't quite appreciate they did that..."

C. BARCLAY-SMITH, It's Time They Knew, p. 57

"The business of a modern and effective financial system is to issue credit to the consumer, up to the limit of the productive capacity of the producer, so that either the consumer's real demand is satiated, or the producers capacity is exhausted, whichever happens first".

C.H. Douglas, Credit, Power and Democracy....,... Chapter 10:

A