DOUGLAS CREDIT PLAN

King Country Chronicle, Volume XXVII, Issue 4396, 23 May 1933, Page 5

DOUGLAS CREDIT PLAN

LECTURE BY. fflß. ALLARDYCE.

The Municipal Hall was completely filled last evening when Mr. A. R. Allardyce, Dominion Secretary of the New Economics Association, delivered an address on the working and possibilities of the Douglas Social Credit system. Mr. H. Mason, chairman of the newly-formed local branch of the Association, was in the chair. Mr. Allardyce contended that the Douglas Credit system was a new economics of abundance, which did not require that scarcity should prevail before it could operate. Major Douglas was not a "congenital idiot"; he was a highly competent British engineer who, on seeing that there was never any shortages of material and labour, but only of capital, had investigated 95 British industries and found that, as a whole, industry could 'not purchase the goods that it produced. Thus he worked up the A plus B theorem—A representing buying power distributed by such things as wages, salaries and dividends, and B was that portion of costs, represented in the production, which was not distributed as buying power. And A could not buy A plus B unless it was augmented from outside. With the coming of the machine age, B. costs, or the gap between buying power and costs of production, increased rapidly and as the world used more modern methods it kept on increasing. In the 19th century, to save the tottering edifice, "export credits," to eliminate the gap, were commenced, and there followed the bogey of national debt, until to-day it was almost fair to say that the measure of progress made in a country was the measure of its national debt. At the present day every country had surplus goods. Now the gap could only be closed, partially, perhaps, by bankruptcy and liquidation, or by "war credits," or sabotage by destroying such things as coffee, rubber, etc., to bring the saleable quantity within purchasing power. The only way out was to issue free credit. If there were a hundred million pounds' worth of goods produced, and only fifty million pounds of credit to buy them, another fifty million pounds would be created to close the gap. Major Douglas considered that the best way would be for the retailer to reduce the saleable price of his goods by half. Then, after he had sold them at this price, the retailer would be reimbursed with a credit equal to his reduction. Thus, if a bootmaker had boots which represented £IOO worth of costs, he would, if the just price leyel was a half, sell these for £SO. At the end of the sale he would take his lodgment slip of £SO to the bank, and there.be given extra credit for £SO, thus adjusting matters for him, while the purchasing power of the people, by his reduction, had been increased twofold. Trickery would be impossible under this system, for anyone found guilty of malpractice could be struck off the rolls of those receiving.credit.

Then there was the national dividend, to keep those who could not produce in at least economic security. This, he considered, would not demoralise the people, for to be idle was not humanity's aim—would a person look for demoralisation in the poverty of Freeman's Bay or the plenty of Remuera? The social result of a national dividend would be less sickness, better conditions of life, less crime, and less fear. Such was the vista opened up by a system of economics which supplied money to buy the goods that industry produced. The real control of industry would for the first time rest on consumer demand. Where would the social credit come from? Bank rates, e'tc, were insignificant as mediums of exchange, for out of the transactions of the world only 5s out of every £IOO was do'ne by these —the rest was done by cheque, or by the alteration of entries in the banker's books. When £IOO was issued, no bank deposit was lessened, but the purchasing power of the community, at the banker's will, had been increased by £IOO. When the loan was repaid—the banker's will again—the purchasing power was reduced. And since money was lent against assets, or potential production, inevitably a fall in prices must result in a contraction of credit. The cause of the trouble to-day was. the monopoly of credit, and the remedy the redistribution of credit. The cost to the bank of the creation of money was nothing—then the creation of the national dividend would also be performed costlessly, for the system of book entries, whatever might be said against it, created good money. The speaker continued by giving instances which he considered showed that neither the war and its after effects, nor war debts, nor overproduction, tariffs, 'nor political control were responsible for the troubles of to-day, for it lay in the fact that no industry paid out enough purchasing power to purchase the goods it produced. Mr. J. N. Boddie asked what would be the position if £50,000,000 worth of goods were produced in a single year, and there being £40,000,000 purchasing power, £10,000,000 was issued to make it up; next year £40,000,000 was incurred in the costs of the goods, and there was still £40,000,000 to meet it in purchasing power. The lecturer replied that in the first year the issue of the social credit would mean that there would be £50,000000 to meet the same amount in the costs of the goods. All that money would therefore be cancelled. The next year, as industry never provided enough to buy its products, there would still be a need for the social credit.

Answering a question put by Mr. Frerichs, the lecturer stated that if there was a "just price factor" of a half, the value of a man's labour would be increased twofold.

In reply to Mr. Dobson, he said that the only thing stopping the operation of the Douglas Credit in New Zealand herewith was the smallness of the number of believers. When there was a Douglas Credit majority in Parliament it could come in 24 hours. Asked about the financial interests and their attitude to the proposals, he said their only way was to stop it would be to put a ring of destroyers to prevent New Zeala'nd butter reaching England— "and we have had rum

runners in America, then why not butter runners from New Zealand?" he asked, amid loud applause. Mr. Boddie asked about external debts, and received the reply that that they would be repaid just the same as at present, in kind. The meeting- closed with hearty votes of thanks to the speaker and the chairman.