THE A PLUS B THEORY

New Zealand Herald, Volume LXX, Issue 21458, 4 April 1933, Page 13

THE A PLUS B THEORY

Sir, —It needs to be stressed that Douglas claims his "A.8." theory applies to all years, good and bad. I have not denied a lack of purchasing , power in recent years. What I deny is tho existence of costs that give no purchasing power. As regards loans repaid, tho purchasing power lost is offset by the purchasing power gained when loans are issued. The fact that loans do not tend to diminish (taking good and bad years together), has never been met. We have only Mr. Robinson's word for it that all wages, dividends, etc., distributed by rawmaterial factories are, immediately they emerge, swallowed up by waiting charges. Major Powell, an accepted authority on the Douglas social credit plan, asserts that they constitute "surplus purchasing power." (hie of these gentlemen is wrong, who is it? While no one would contend that the tanner's wages actually buy boots made from his leather (tho example was used for illustrative purposes), yet they go into the common £>ool, and if not so used, they release other purchasing power which will buy the boots. One can easily imagine a condition of things when, too large a proportion of the population is ' engaged in producing capital goods, tho result of which would be to pile up a surplus of purchasing power in advance of consumers' goods —a thing which Douglas says never docs, nor can happen. Although I have used no statistics whatever, Mr. Robinson says "Mr. Johnstone's statistics arc as incorrect as 'Accountant's," which is an instance of careless writing. Ho refers to 10J million pounds withdrawn from the savings banks in three years as proving us wrong.- Those were slump years unparalleled in history. But these savings must have been put into the banks in previous years; was "A.8." out of action then? Your correspondent says banknotes on issue indicate purchasing power and carefully selects figures to prove this. Ho takes the record good year 1920 and compares it with 1930 and 1931, record slump years. What of it, anyway, was tho Douglas costs theory not functioning in 1920? The opponents of Douglas credit hold that purchasing power may relate forward, as well as back. This is the crux of tho question and. so far, Mr. Robinson and his friends have completely failed to support their theories. Accountant.