Money can buy things or services, be placed in a savings account for storage, or for starting or continuing a business. When you borrow money the lender charges interest and gets it back through amortization.

Farmers in ancient Babylon could raise another type of loan: a right to buy what they needed, with no cash involved. There was no interest to pay, since nobody had lent them their cash. For “amortization” the farmer sold some of his produce for “giro-orders” or “transfer-orders” until the debt was paid. This credit system, used in addition to our cash loan system, helped create and draw into our economy beneficial and useful enterprises. The cash banking system favors long established businesses that can easily meet yearly payments. The continued life of any community requires new inventive enterprises, needing longer time for maturing. The services rendered by the Giro-office are paid for by a charge of 1 or ½% on each check, initially. When office expenses are met and reserve funds set aside, the rest is distributed among customers.

Identical or similar systems were used by Christian churches during the Middle Ages and by Moslem communities that do not allow time interest on loans. A recent example is Banque Bonnard, operating in Marseilles in France from 1849, with branches in Paris and Lyon. Presently this bank is called Comptoir Central De Credit. A professional study of this bank indicates that it did not take away business from other banks but drew into the economy new and beneficial enterprises. Finland’ s ambassador to Fance, Erik Ehrstrom, interested in this bank, brought the system to Scandinavia in 1936. The “Norsk Girokredit-foreninigen” established that same year, sponsored by the Oslo Merchant Association, grew by leaps and bounds — until the invading Nazis stopped it. They could not risk having their financial shenanigans publicized in “transferorders.”

In the USA Giro-credits are used in small communities today, among farmers to finance workshops or equipment, among businesses to lessen the tax burden, and one state is contemplating a state bank on the Giro principle.

A person who wants to take part in Giro-credit applies for a credit just as he does in a bank. The difference is that the Giro-bank is not lending its cash and it doesn’t need yearly time payments in the form of interest.

In small groups the “transfer-orders” tend to lack the acceptability that would make them smooth and convenient means of payment. If launched by large banks, so the “transfer-orders” or “Giro-orders” become national and international means of payments, our most pressing economic problems would be solved. We could build, new, clean, energy machines without increasing inflation. And if a lender failed, the loss would be only like that suffered when a young worker dies; the nation would be deprived of his future contribution; but no loss or breakdown would be caused to the lender.


Bryn Beorse Feb. ’79

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