“Paper Gold”

Press, Volume CIX, Issue 32119, 15 October 1969, Page 14

“Paper Gold”

Sir,—C. E. Cullen seems still under the spell of the 1954 policy of the Social Credit League and is not aware of the vast about-face of his party since those days. He states: “Social Credit challenges the right of banks to create money as their own property and charge interest on what is undeniably the

monetary expression of the wealth produced, not by the banks, but by the people." This indeed was the policy of the league in 1954, but what did the deputy-leader, Mr O’Brien, say in 1966? When questioned on the policy of the league regarding their offer of 3 per cent loans particularly in reference to loans to ordinary people for such things as expansion of businesses, home-building, etc., he had this to say: “No, the 3 per cent would apply to local bodies, hospital boards and similar institutions, and the trading banks and the latter would make loans to such higher risk people at, say, perhaps 5 per cent”— Yours, etc., S. GLADSTONE. Runanga, October 13, 1969.

Sir, —The I.M.F. special drawing rights (“paper gold”) will not be visible; i.e., it will not be seen passing across the shop counters. The same applies to Social Credit’s costless credit, but nevertheless its effect upon the cost of living conditions of the people will be most noticeable. Borrowing will be entailed, i.e., borrowing from the trading banks at exorbitant interest rates, the vacuum thus created being filled with Reserve Bank credit at a nominal rate of interest to cover the cost of bookkeeping. Priority will be given to the most pressing local body works the result being that taxes, rates, and the spiralling cost structure of our economy will be held and also public works will be paid for once and once only. No more Lyttelton tunnels, which we were told would cost us $7 million but which we now find with interest payments will amount to $23 million.— Yours, etc., JOHN FORSTER. October 13, 1969.

Sir,—For "A. B. Cedarian’s” benefit, I did not ask “how Social Credit would provide extra credit,” but how they would calculate how much. I have still not received an answer to this question from any Social Creditor. A Keynesian’s answer is clear-cut: one creates just enough to counteract a tendency towards involuntary unemployment and no more. Of course, one could create “a tendency towards unemployment” by vigorously attacking inefficiency in the economy, and credit creation might then be justifiable. There is a kernel of truth in Social Credit and genuine progressive idealism in supporters like C. E. Cullen. It is just a pity that that which is valid cannot be

separated from that which is mentally muddled and dangerously extravagant If Social Credit leaders would study Keynes, a recognised economist, more, and Douglas less, they might get somewhere.—Yours, etc., MARK D. SADLER. October 14, 1969.

Sir,—But for his infirmity, “Blind Faith” would see that “to facilitate trade” is the function of money, and there is nothing funny about paying three times for everything to banking institutions, wherever they might be for performing a simple bookkeeping service. We use printed legal tender to the extent desired only for our own convenience, just as we do cheque money. “Higher prices less purchasing power for the workers, and cancellation of the people’s savings” are occurring now under the present system, and obviously Social Credit cannot be held responsible. It would not happen under Social Credit If “A. B. Cedarian” can improve on the plan for the control and volume of our money to be determined month by month by a national credit authority run on the lines of our judiciary, free from all control and influences, his ideas would be welcomed by the league.—Yours, etc., C. E. CULLEN. October 14, 1969. Sir, —Mr Sadler raises the bogy of Hitler's rearmament. World financiers could have stopped Hitler’s programme but it suited their book to arm Hitler to put down the menace of Bolshevism which they had started to save their spiritual home from the combined might of Russia and Britain. Their expert Dr Schacht showed Hitler the mechanism of managed currency to build power for war. For the second time Germany was reduced to rubble, but they had learned the financial means to restore her industrial power. With no national debt to service and the armed protection paid for by American and British taxpayers, she restored her cities and factories to become the dominant industrial and financial power in the world (beside Japan), and if other powers don’t like it they have only to copy her example and open the way to the spread of Social Credit technique. Her dominance in trade does not offend Social Credit policy.—Yours, etc., W. B. BRAY. Leeston, October 13, 1969.

Sir, —My criticism of the Social Credit version of ‘‘paper gold” is certainly not fallacious, as John. Forster was Social Credit candidate for Fendalton in the 1967 byelection and had the league’s policy of debt-free credit condemned by its leader, Mr Cracknell. Mr Cracknell did not propound any Social Credit policy for nearly three years in the House and then did so under pressure from both sides of the House. Shortly afterwards he stated, while speaking to farmers, that he would support overseas borrowing if National were a minority Government after the coming election. — Yours, etc., DISILLUSIONED NATIONALIST. October 14, 1969.