DOUGLAS THEORIES.

Auckland Star, Volume LXIV, Issue 211, 7 September 1933, Page 15

DOUGLAS THEORIES.

The most of Mr. Robinson's reply to my criticism is merely verbose and irrelevant. He takes up 3in to tell us of hirt experiences at Woolwich, without givinn- a single bit of ovidence, much less any proof, of the B theory, and ends by eayiug that ho "can assure" me that every factory has B costs. If his "assurances" would prove the Douglas case there would be nothing further to eay. For the present I will content myself with asking, does or does ho not accept Major Powell's etatement that raw material factories create "surplus" purchasing power? He tries to draw a distinction between gold and other production and goes on to back this up with kauri gum and bank advances, which fills up space without answering my simple question, "Could not the miner lend his credit to a dairy farmer?" My point ie not confined to mining and dairying, but is descriptive of a general principle, i,e,, that it is the production of wealth that creates money and credit, not the banks. If A obtains an overdraft of £1000 from •a bank, pays the money to B for a machine, the latter lodging the amount to his credit in his bank, the transaction, stripped of non-essentiale, is the loan of a machine by Bto A. The bank did not lend the machine. To argue that banks do not lend their deposits is misleading. Their function is, in effect, to arrange loans by one customer to another. Mr. Robinson says when a customer cashes a cheque he "gets a bank promise to pay." Is that all? If Jones draws five "promises to pay"' out of his credit account and buys a suit of clothes, does he not get the clothes? Docs the bank claim these "as its own?" He says "a credit monopoly must own everything," but I disposed of that alleged monopoly by my gold production illuetration, which is merely typical of all production. This point is bound up in the nonsensical idea that banks create money "out of nothing." To support this, Douglasites quote, some authorities without understanding the true import of what they are quoting. Thus the Rt. Hon. Reginald MeKenna, when it was pointed out to him the use Douglas people were making of his remarks in this connection, wrote: "The alleged quotation is not a quotation at all, and its purport misrepresents my views. It is true that, by piecing together parts of sentences from different speeches, something like the language quoted can be found, but in each case the extract is divorced from the context, and is made to eerve a purpose for which it wae riot intended." Douglasites admit a run on the banks would close them up. Thus, because the banks have to pay out money, which Mr. Robinson says belongs to the banks, (and which they can create "out of nothing"), they go bankrupt while they potentially own all the wealth of the country and landowners as well! He gives instances of increased production in eight items, four of which are minerals. But there is no evidence of aii "oversupply" generally of foodstuffs, clothes, houses, etc:, as compared with the number of consumers. As regards New Zealand, imports have declined, output of local secondary industries likewise, while hoiiisn construction hae practically ceased. Butter production m. higher but this goes toswell exports. Where ie the evidence of "actual" plenty ? Mr. Robinson knows a number of rural landowners who are, eo he says, mortgaged to the banks. Might I suggest that the mortgages are owned by rich men in England and' New Zealand, and by stock companies? But he knows nothing at all of the owners of the immense land values of the cities and towivs of the Dominion. Two men own the Rhomlda Vallay in Wales, including the mines and the villages. Does he j imagine the British banks own these two ! men? ACCOUNTANT, i