DOUGLAS INCONSISTENCIES.

Auckland Star, Volume LXIV, Issue 190, 14 August 1933, Page 6

DOUGLAS INCONSISTENCIES.

Mr. Bleakley claims that the Douglas "B" theory of costs is sound, and essays to prove it by merely asserting that "Douglas himself has never been beaten in controversy on the subject." It would be interesting to know what his opponents think. However, here is what amounts to a demonstration of the fallacy of the theory as applied to depreciation. Take a factory manufacturing machines for sale and also for its plant. Machine parts are made within the factory for the plant machines, and are affixed,when old parts wear out. The cost of these replacements (the equivalent of the depreciation) is distributed in wages, salaries and dividends paid within the factory as purchasing power, and are therefore, according to Douglas himself, "A" costs. But Douglas asserts that depreciation is a "B" cost. When Mr. Bleakley reconciles this contradiction it will be time enough for him to dispute my statement that the "A-B" theorem has been "shot to pieces." ' Here, also, is a statement of Douglas that exemplifies | the latent fallacy in ail his theories. "If I grow a ton of potatoes I do not grow the money to buy a ton of potatoes. The banking system makes the money arid claims it as!itsown. . •. . since this money will .'buy' my potatoes, they belong potentially, with everything else, to the banks." Does your correspondent stand for this kind of piffle? The assertion is that the banks own everything that is purchasable, and yet there are tens of thousands of people in Auckland who can go into the banks and compel them, under a heavy penalty, to hand over "money" which Douglas says "they claim as their own," and with it purchase just what they like. The Douglas people look on the banks as lenders (only) of money and credit. They deliberately shut their, eyes to the fact that the currency they lend immediately comes back to them in the shape of bank deposits, i.e., bank liabilities. Mr. Archer asks "if principal sums, repaid to banks, are not recovered from selling prices of products, where do they come from?" They are added to prices as "profits," ' but profits are "A" costs (not "B" costs), even according to Douglas. Moreover, profits are included in prices, whether there are bank loans to bo repaid or not. Still further, the effect of paying off a. bank loan out of profits is merely to transfer the loan from the bank to the owners of the business. Will Mr., Archer answer a straight question: If he were a cost clerk in a manufacturing business would he include repayments of loans in his selling prices? * ACCOUNTANT.