DOUGLAS PROPOSALS.

Evening Star, Issue 22366, 16 June 1936, Page 6

DOUGLAS PROPOSALS.

TO THE EDITOR,

Sir, —On May 24 i asked Mr Sherwood four very pertinent questions relating to the Douglas proposals and their effect on the New Zealand people. Up to now he has remained silent, but several of our local Douglas supporter have taken the subject in your columns, but the matters with which they have dealt have no relation to the points of difference or to the questions asked by me. It will therefore be as well to bring them back to the points of difference between us. Major Douglas states : “Money is nothing but a ticket system which has nothing whatever to do with all these abstract descriptions of it, such ns a medium of exchange or a storehouse of value or any of these things. It is a ticket system, and nothing else.” I say money is a product of labour; therefore it is a commodity and is wealth, and must possess “ value ” in itself. Its functions arc to act as a medium of exchange, a measure of value, a standard, and also a store of value. Professor 'Walker says: “ Money is that which passes freely from hand to hand throughout the community, in final discharge of debts and full payment of goods, being accepted equally without reference to character or credit of the person who uses it to consume or enjoy it or apply it to any other use than In turn to tender it to others in discharge of debts or payment for commodities.” Now, if we take Professor Walker’s definition it will be immediately seen that whatever is used as money must be tangible and movable. If it is to be accepted by any person in final payment of debt or given in exchange for goods it must possess a value in itself equal to the value of the goods given in esphange for it, or it must be guaranteed to be convertible to the value of the debt in goods or services. The only money that would be taken under mode i conditions would be “ legal tender money,” or a class of money which contained in itself its full commodity value —commercial value. The class of money consistent with the above definition and interpretation would be: (1) Metal coins consisting of gold, silver, and copper; (2) convertible and inconvertible Reserve Bank notes; (3) Government Treasury bills. So far as the "above three classes of money are concerned, it will be noted (1) that they are composed of a product of labour, and are therefore a commodity or property; (2) their value as a commodity or property, measured in terms of labour cost, will vary—i.e., the cost of labour to produce gold will be greater than that to produce silver, that of silver to copper, that of copper to paper, the commodity used mostly for present-day money. Now, a point of great importance which must not be overlooked if we are to understand the weakness of the Douglas proposals is that of the difference between the utility and commercial value of money. Taking the above three classes of money, it will be understood by most renders that coins consisting of gold contain 100 per cent, both of utility and commercial value. They will function in New Zealand as a medium of exchange, a common measure of value, a standard and store of value. In foreign countries they can, although in coin, be converted to their real money value in terms of the moneys current in those countries, the reason being that it is the world “ standard metal ” for international money. So far as the other classes of money are concerned they can fulfil the same function as gold money, provided they can bo “converted on demand” to gold at the desire of tive individual. If they cannot be converted, then their value as money is relative to the volume in circulation and to the number of exchanges to be made in the New Zealand market, and the goods coming into the market. On the assumption that the production of goods to exchange remain fairly constant, then the greater the volume of money the less its value, the smaller then the greater its value as money.

A point of great interest at this moment, and one that proves ,how absurd is Major Douglas’s, statement that money is only “ tickets ” is that “gold” has not altered in terms of genuine money, it has only altered in terms of “tickets.” To illustrate, 240 troy oz of 22-24 carat gold with 2-24 of alloy can be made into 934 sovereigns and one half-sovereign, in other words into £934 10s of genuine British money. The same quantity of gold, when gold is quoted at £7 per ok in London is equal to £1,680 of paper pounds, or “ tickets.” The point to note is the New Zealand pound “ ticket ” —is tied to sterling—the British paper pound, therefore the greater the appreciation of sterling in terms of gold—i.e., the less paper pounds that have to be given for loz of gold—tho higher the value of the New Zealand money. In other words, the higher the prme will we get for our exports, measured in terms of British money. This has been noticeable during the last few weeks in connection with our butter, etc. As gold has fallen the export price has risen. Should our Government take the advice of Major Douglas or Mr Sherwood and our local Donglasites and increase the volume of “tickets” our money will become inflated and our internal price level for goods will rise, and real wages will fall Export prices will fall, and the volume of goods that have to be given in return as interest will have to be increased. Again, I must impress upon all citizens, whether they be financial capitalists, industrial capitalists, or workers, that the Douglas proposals are the origin of that old British political mind that looks upon the dominions as an exploiting ground for British financial interests. They should be opposed by all who have the interest and welfare of tho people at heart, I pointed out to readefs to note whether Mr Sherwood would reply to my questions. As before stated, he has not done so. The reason is obvious, ns will be seen from the above. If he had done so, or if Major Douglas or any of our local correspondents were to state the actual facts, and tell the people that they stood for a policy that meant the exploiting of the New Zealand people for the benefit of Britain they would not get a hearing. In conclusion, if our local supporters wish to carry on this discussion I ask them to deal with the point in dispute. All the other matter is irrevelnnt. It is all a question of whether anything can be found to act as money that is not a “commodity.” If it can, then tho Douglas proposal and statement that money is nothing more than “tickets” is sound. If not, it must bo apposed by all sensible people throughout New Zealand.—l am. etc., C. M. Moss. Juno 16.