MONETARY REFORM

Nelson Evening Mail, Volume LXVI, 28 June 1935, Page 6

MONETARY REFORM

“PERSONAL ATTACKS” AND “MISREPRESENTATION” (To the Editori Sir, —“C'ommoh .Sense’’ follows very closely in the footsteps of his master, Mr Atmore. Worsted in argument, lie resorts to personal innuendoes against his opponent. Like .Mr Atmore ho falls back on suggestions of this suit. (1) It a .man is not a Douglasitc, lie must be living a sheltered life and he cannot have suffered from the slump. (2) If a man is not a Douglasitc, he must refuse to admit that great poverty and distress exist in the world and he must believe that the present condition of things is perfectly satisfactory. (3) If a mail is not a Douglasitc, lie must be a hardhearted monster who has not a scrap of sympathy with the sufferings of humanity. No doubt we shall next be told that if a man is not a Douglasite, he must be a drunkard,- thief and murderer. What sort of argument is this? As for myself, 1 devoutly wish it were true that I had not- been severely hit by the slump, but I have yet to meet the man, rich or poor, who has not badly felt the pinch. Again, in my letters even during the past fortnight I have distinctly stated that I “concur with Mr Atmore in. deploring tlie existence of poverty in tlie midst of, plenty.” Why then these constant misrepresentations? Further, I do not think that Mr Atmore can boast of any warmer feelings for the distressed than I and other opponents of his doctrines possess.. After all Mr Atmore has not a monopoly of all the virtues. But his tactics simply illustrate the old proverb ; When you have no case, blacken the character of your opponent. Innuendo is no argument, however, and these contemptible personal attacks are made solely to cover up the weakness of the Douglas doctrine. In another instance also, “C.S.” attempts to bolster up his case by what appears to be a deliberate misrepresentation of his •opponent’s views. In his letter of Tuesday night he makes the following statement: “In ‘Gamma’s last scries of letters, he stated very definitely that gold was the only satisfactory basis for a monetary system.” I should like to nail this down to, tlie counter, and I challenge C.S. to quote iii his reply any passage from a letter of mine in which I have made such a statement. On the contrary 1 have asserted (23rd Feb. 1934): (1) i hat thfc gold standard had always had serious defects, (2) that it had now completely broken down, and (3) that it woulci have to be replaced by better system. Why cannot “C.S.” fight faiv? “C.S.” endeavours to make out that the disastrous results of inflation in Germany are merely ,an empty bogey that neeci not scare any people of sense. But the German inflation does not stand alone in history. Just the same sequence of events with a filial crash occurred in connection with Laws Mississippi scheme, the French assignate, tlie American greenbacks and many other cases of inflation. It is impossible to dismiss airily all these calamities winch caused so much suffering, especially to the working classes. Must we add a New Zealand catastrophe before we are convinced? “C.S.’'' claims that a currency must be based on something or other and says that it had best be based on goods and services. Just how this vague principle is to be put into concrete practice no one has vet made clear. But 1 should like to ask “C.S.” what basis English money has at the present time? None whatever, yet what currency in the wide world is working so smoothly and successfully as English sterling? “C S’” does not attempt to deny that all the weight of authority is solidly against the Douglas scheme, but ne assures us that nevertheless Dougiasism is sweeping the world and gaining crowds of adherents. In view ox the recent Australain elections in which Douglas candidates gamed but a handful of votes and in many cases forfeited their deposits, the wave of Dougiasism of which “C.S.” tells us does not seem to have reached any great magnitude in this part of the world. The truth L that. Major Douglas’s visit, instead of giving a fillip, nearly killed Douglasisiii" in both Australia and New Zealand, and it seems to be having the same effect in Western Canada. But m any case I would attach much more importance to the opinion of half a dozen men i : ke Kevnes, Cassel anci Stamp than to a' hundred Theatre Boyal audiences consisting of people who have never made a. special study of economics. Many thanks to "V Mean lor his valuable letter.—l am, e^C- ’ q’A . Nelson, 26tli June. WHAT IS INFLATION? (To the Editor) Sir Much confusion has been caused by the loose and misleading use of tlie term “Inflation,” and Gamma s labelling as inflation, any upward movement of the volume of money in cn culation, has certainly not diminished this confusion. , . • „ Our money system at present is m state of violent deflation, prices of commodities are almost, .without exception, below reasonable cost of production, oi as it is generally termed, below solvency level, and the placing of additional money into circulation m sufficient volume to raise these prices to a P° in at which the producer could obtain at least repayment of his costs ol production, or in other .words, to the solvency level—would certainly not be true inflation. and nothing but good could be caused by it. This new money must, however, be issued to the masses oi the people, who comprise the consumers, otherwise it cannot get into free circulation. but merely becomes sterilised in some bank. Social credit goes direct to the consumers. . . . True inflation, therefore, is the issuing of paper money in excess of the quantity necessary to maintain commodity prices slightly above tlie solvency level —just sufficiently above to allow producers to obtain a fair profit for their efficient efforts—and the only really effective indicator of either inflation or deflation is the price level of commodities. This I referred to in my first lo The old law of supply and demand once worked fairly well, but man in lus cleverness lias discovered ways ol preventing both supply and demand from being effective. There is tit the present time both ample supply and intense demand, but both are largely ineffective because the connecting link, tlie medium of exchange—money —has been withdrawn from the masses, who are the greatest potential consumers. Iho obvious remedy is to give back to the masses, tlie purchasing poiVer that has been taken away from them. Removing the present obstruction, lack of the medium of exchange in circulation, or in other words instituting a sound workable money system, would enable the old law of supply and demand to iunction satisfactorily and it would most certainly do so. With reference to purchasing power, ‘‘Gamma” in several of his letters, makes much of the fact that the same coin or

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note can settle many debts. As lie puts it, “The same coin in tlie course of its circulation suffices to buy its own value of goods over and over again. This simple and obvious fact really topples over Mr Atmore’s argument for inflation." T)oes it? Ignoring the fact that Mr Atmore’,s suggestions are not inflation, a little investigation will disclose the fact "that both Mr Atmore, and social creditors generally, fully realise the feature mentioned by “Gamma," and that all .statements refer to "purchasing power,” not only to tlie amount of money. Purchasing power consists of effective demand,—made effective by both volume of money and velocity of circulation. Volume of money in exi,stance alone, will not give effective purchasing power. Most of it may he locked up by hoarding or in banks, and the only safe indicator is the then current price level of commodities, as previously stated. Social credit proposes to use this indicator. If then hoarding, or other sterilising actions, took place, commodity prices would fall, more money would be created and put into circulation, and prices would move up again, while the hoarders would find the hoardled money would certainly not increase in value and it would not pay to hoard. The system would, therefore, be selfbalancing. “Gamma's” assurance that “Air Atmore’s scheme means inflation in its worst and cruellest form, and would bring ruination upon us all,” is merely absurd. It will frighten no thinking person, and “Gamma” will need to hunt for a new bogie.—l am. etc.. COMMMON SENSE. Nelson, 27th June. (To the Editor) Sir, —Although I have believed for many years that man’s extremity really is God’s opportunity 1 am continually having my belief reaffirmed, as it was when reading the letter of J. Prouse, Bclgrove. If this depression led to a national acceptance of God’s laws in personal matters, as well as business deals, large and small, and the framing of laws and statutes like those God gave to Moses, simple, logical and above all, workable, well, I’d say it was worth, it. even although I know something of extremity. 1 am not alluding to any-, thing in the nature of a “revival,” although that would undoubtedly follow and lie welcomed. I am speaking of the acceptance by all the people of God's advice, shall I say. as it is clearly told as in tlie Old Testament*, as to how an individual shall conduct his life and affairs. You will find it all there from personal hygiene to agriculture. In our homes we usually apply the simple principle of wrong-doing followed by punishment, but we have not, as a nation, the sense to see tlie same law operates with adults as with children. We may not wince under the supplejack, the razorstrop or tlie willow-wand. Our punishment conies in more tragic ways and tlie innocent are involved with the guilty. I quite believe Air Atmore and “Gamma” and “Common Sense” and all the others who write and lecture and study, honestly believe they are oil the right road to it solution of our manifold difficulties, but I also believe that every honest man would willingly leave the tangled ways of finance for a simple following of the Law, if only lie could see it. That’s the trouble; their very wisdom and learning is their stumblingblock. I would be pleased if Air J. Pr.QUse would write again and tell ns all, if that book “The Economic Mechanism of Scripture,” can be purchased at a price compatible with depression wages.—l am. etc., “POOR, BUT HOPEFUL.!’ ■ Rai Valiev. 26th June.