FALLACIES

Hokitika Guardian, 11 March 1933, Page 3

FALLACIES

CURES” FOR WORLD’S TROUBLES

Possibly at no t.mo fit the world’s l.stuiy have more fallacies been propounded in all seriousness n« cures lor he troubles which have overtaken the niman race. Som e of these are so lidicolouti 1 oil the -fft'ce of them that hey are , n ot worth serious congideration. Others Bke 'exchange hud the Jduglas credit system b o ing based on half truths are really more dangerous, as even those who hav ei learned to ill-ink for" thsttisdiyes are led iri’esistilily a certain 'distance •by facts which are adisputable. Just where the path branches off which -leads to confusion, jo’ farce,’ ! o r ■to disaster 1 is not' -sometimes -apparent.

Let us look for a moment at some :»f: these indisputable facts which show clearly that some change -in the present monetary system is- unavoidable. The fact that the wide us. e , of labour saving machinery, and mass production ,j s year by year throwing thousands but of employment—particularly -skilled artisans—raises a question which cannot be ignored as to the responsibility of th e community toward these unemployed.

if civilisation is to survive, these people must b e given a chance to earn a living in some other occupation, in tile specialised industries, w'he re generill speaking, through the -use of model'll machinery, one man con do the work that half a dozaa did only a yea‘ or go ,ago—and do lit belter—there is is no chance of surplus labour, being absorbed. So it is imperative that occupation shall be found on the land.

To effect this credil must be given—not- indiscriminate credit, or unlimited' credit, but such credit as will enable' the recipient to rejoin the ranks, not necessarily of wage earners, but wealth producers. v This credit is available to the community because eoUectively th 8 . people of any country possess wealth on which % based financial credit.' In New Zealand it has been r-hown that the banks ,-ould *:ow iS'su. ? three times the pre-: sent not e i ss u o , and could have done so without''inflating the exchange to anything like ‘the pei‘cerit.!jcr e to which it .has now boon deliberately -fo r c ed. With ibe. co-operation o'f The Gfovebiimerit, JS.-'i -hder proper safeguards currency could Kg issued to meet all legitimate requirements. So far the facts ard c’ct nr.dwncovfrove:rtable, but ,tb.> -deductions, from them may be utterly fallacious.' Th 8 Government could Issue 'directly' —or through a State Bank, as much paper currency ad it' chose," arid' could declare it legal tender within N®w Z&i-' land. But the nior. e p per pat in “circulation in thfe Way the less it would ouy.- At present £2o' of our money will buy tge equivalent of £il abroad, and the world value will promptly /react ' -on th e internal value. ' Th e crtiel joke i-s that we have deliberately depreciated our currency—without issuing fh e extra paper wfci.h would have—if the issue h .d been made without proper safeguards—-automatically inflated it. The wool grower is ‘.getting about 26s a bale mar-e for his wool but. in a depreciated currency which eo-one r or later' will buy 20 per cent., J«S3 in New ■ Zealand tha-n at t-he date when the exchange wrs tinkered with. The fal.acy' that inflation of exchange can permanently benefit the farmer is perhaps the first that will make' itself ‘apparent. ’ ;

A second and even more dangerous fallacy is that the credit of th e country should be ueed indiscriminately t° subsidise the manufacturers- through, the banks, .so .that- goods may be sold be-low-cost. I have 'before hie a manifest;, of the Douglas credit proposals outlining the price regulation factor; what' they term the “just price.” I* is difficult' to believe .it is meant seriously but this is what it. says: “Let us suppose the case of baker.. He has hitherto- been selling 100 loaves at 6d each—total £2 ICs. Th e banks now guarantee him the- payment for 400 loaves. Assume (for it-' doesn't' matter what- the figure "is), that his costs'.remain proportionately the sam. ? on the larger quantity as on the smaller, in that case he' will want to receiv e £lO. the bank's can say to him “Sell the leaves at lkl' each which will-, bring vou the usual £2 IC* from your customers, and we will give the other £7 10s. The result is clearly the same as though the Lank went, to all the trouble of -disf.rib'uti.ng the £7 10. s round th e neighbourhood.” It ‘does not take much foresight to •see thiriir the credit of a country were need in sucli a ridiculous way it would ■not be long' before th e credit wolild cease to exist'. Nb .stretch of imagination can picture banks of any kind simply broadcasting theft funds in" tli'is manner. But I am merely qifoti'r.g it to show to ivliat' absurdity faulty ,reasoning may leal. And yet I am fold that “Douglafiism” ns making dimazing progress in New Zealand, If it is'making any progress at all it will certainly be -“amazing."” But as it promises' to .rive the : individual som’etbf.ng for rothi'rig it' Will possibly'ob't:ih support 'froth those who . cannot'"veal-se that s uc'h ntomis'*', based on absolute fallacy are incapable'of fulfilment. There may'"lie some eveum for the ri'vVple In.-fng Ptfri had afstmv on the ciirrcncy inflation i&siieV Profe's:mi- -of ‘economics who' should Imv'e acted' m" infallible technical guides were d'r'i dpd in on in mu and' direr-fly -'ohtradicted o”o -.nn'Othe”. Tim bahk- : t i<Y authorities also not Wta.''i’”dns •' ' a.nd' e‘>rr-!ng more

...pio-'it than all” the foot, flint tustiailia. had a different rate of'ev’hh~dieeOrvnV our ifradei ’ and appartmtly piddirg this

country in some respects at a- clir•advantage. t But the Douglas credit gyst-ehi i« sheer economic quackery and would not receive r. moment’s -serious-cen-hderation' but for the fact that some - sound system of utilising, interfil'd credits Will have to- be evolveo. PcnEiblyifhe evolution is now taking bfdce, but to' be effective it will be on lines very different from those set forth ill the Douglas propaganda.