IS MR. ATMORE ALSO AMONG THE DOUGLAS PROPHETS?

Hawke's Bay Tribune, Volume XXIII, Issue 7, 19 December 1932, Page 10

IS MR. ATMORE ALSO AMONG THE DOUGLAS PROPHETS?

(To the Editor). Sir, —Our inter-related problems of unemployment and low prices of primary products are too ruinous to permit statements to pass unchallenged which load the public to believe that either the whole or practically the whole, of our sufferings are caused by bankers and their manipulation of credit. Mr. Atmore is too old a controversalist and too skilled a debater to go the lengths that Captain Rushworth did in his Hastings address a few months ago, yet' the essentials of his deliverance wore the same as given by the M.P. from the remote north. For a student desiring knowledge this repetition of the so-ealled “truth about the slump’’ and the “new economics” which are so gravely concerned about a little experiment is village finance which took place in the rush light age upon a small island which looks like a fly spot on the map. seems unreal and alien to the hard facts of the moment. This experiment of the folk of Guernsey over a hundred years ago has been admitted by one of the Douglas social credit scheme prophets to have had an immediate cost to the community in the price paid for credit extension, and as Professor Carman comments, if every town was permitted to do what Guernsey did in a year’s time the £1 note will not buy us much as a penny docs to-day. .

One wonders if our friends have read more than a stray quotation of an odd sentence from the authorities they quote. Professor Gustav Cassel has been trenchant in his criticism of the failure of politicians and financiers to follow his advice, but even in his most debatable utterances, and they are not few, he never reduces our present compli xities to the simple but untrue formula, ’tis the bankers that are the trouble. In the conelusiou of his

series of Rhodes lectures at Oxford last June, Professor Cassel laid down four essential conditions of recovery—cancellation of the major part or the whole of war debts and reparations, restoration of reasonable freedom in international trade, a radical reduction in the demand for the gold reserve of central banks, and the need for cooperation to stabilise the price of gold. For years Mr. Montagu Norman, who is again to be elected governor of the Bank of England, has been working for such ends. The fact is, international bankers arc deeply concerned with the maintenance and extension of world trade upon a payable price basis. They have been behind world conferences to regulate production and distribution. If the final word was with them, instead of with politicians who regard their constituency as more important than the whole universe, our afflictions would have been curtailed, and remedies more quickly applied.

What I have written on bankers in general and British bankers in particular does not need repetition. There has been much to confirm the world respect for the unequalled ability aiid probity of British bankers. Within the last few weeks a prince of the royal house of Japan hoped the bankers of his country would learu to serve as well as the British bankers do. If Mr. Atmore cares to tread what Dr. Fisher, the Professor of Economies at the Otago University, calls the dangerous and delusive bypaths of the Douglas Social Credit proposals, one would have expected from his standing a scrupulous fairness to our banks, even if he thinks they could be supplanted by the half baked ideas of Major Douglas. It is not a fair statement to repeatedly speak of the Bank of New Zealand paying a 14J per cent, dividend on watered stock to an audience that probably did not know the facts that he must know. For years the shareholders in that bank received no dividend on shares for which many paid much more than the nominal value. The reserves were built up by those premiums and individed profits, until to-day they amount to close on four millions of pounds, so that the total dividend and bonus of 14 1-3 percent. on the nominal capital is really a dividend of 7 per cent, on the total capital belonging to the shareholders used in the bank’s business. In the case of the National Bank the dividend of 7 per cent, on the nominal capital is a return of less than 3i per cent, on the total capital employed in the business. Australian banks, with one exception, have paid this year lower dividends than that. The banks do not want a fall in commodity prices imperilling their security. It is well to be quite clear. The repetitions of Messrs. Rushworth, Atmore and company are in the main the postulates of the Douglas Social Credit Scheme. It is not only economists and bankers who call that scheme unsound. The British Labour leaders have recorded their decision in these words: “In our judgment the Douglas New Ago Credit Scheme is theoretically unsound and unworkable in practice. For the reasons already adduced it is out of harmony with the trend of Labour thought and is, indeed, fundamentally opposed to the principles for -which the Labour Barty stands.” The framers of the report were Lord Bassfield, R. C. Davies, Frank Hodges, F. B. Varley, G. D. H. Cole, D. Hugh Dalton, J. A. Hodson, C. M. Lloyd, Sir Leo Chiozza Money, R. H. Tawney and Arthur Greenwood. For those who would read a short yet detailed critique of the Douglas credit proposals, the forty-paged phamplet of Lloyd Ross, of Otago University, titled “Tickets Without Goods,” is the best I know. Professor Fisher says of it: “Mr. Ross’s -work will be a valuable aid to people who are anxious to preserve their balance. ... It clearly brings out the weaknesses of all schemes of reconstruction which rely entirely on currency reform and which do not realise that more fundamental readjustments of a different character are also necessary.” The plight of primary producers is bad all over the world, but it should be strange to say that it is worst in some of the richest districts, because God’s free gifts of fertility, sufficiency of rain, abundance of sunshine even in winter, have been capitalised on inflated land values, creating a burden of interest debt impossible to be discharged when prices fall. Generally in those same districts public services have been multiplied without due care, so that the burdens are duplex, and God’s free gifts have been exploited with 1.0. U. ’s on future industry only possible to be paid if prices of produce are maintained at the highest scale. The man who in by-gone days paid £lO per acre for his farm can scratch through, but hig neighbour who more recently paid £lO per acre deposit and has to find interest on another £4O per acre, is expecting orders to quit. His equity has completely vanished.

What is to be done? Higher exchange or export bonus, or any other proposal to gamble on the chance of higher prices returning, will, if recovery is delayed, mean a great bill to pay for the support of over-high land values. In any case to so shift the load on to the shoulders of the whole community irrespective of the varying need of those in distress is certainly not the principle upon which the Government or its board has acted upon in Hawke’s Bay earthquake rehabilitation.—Yours, etc., H. R. FRENCH, Hastings, 10/12/32.