DOUGLAS CREDIT

New Zealand Herald, Volume LXX, Issue 21554, 27 July 1933, Page 11

DOUGLAS CREDIT

THEORIES ASSAILED ECONOMIST'S ANALYSIS NEW ° CHILDREN'S CRUSADE " METHODS OF PROPAGANDA The Douglas credit doctrines and their exponents were assailed not only with argument, but also with wit and irony, by Professor H. Belshaw, professor of economics at Auckland University College, in an address delivered last evening before the Auckland branch of the Economic Society of Australia and New Zealand. In the course of his lecture, which was entitled, "The Douglas Fallacy," Professor Belshaw analysed the technique of Douglas propaganda and compared the movement to the Children's Crusade of the Middle Ages. Professor Belshaw began with an apology. "I confess that 1 am only here under pressure," he said. "Indeed, I hare a suspicion that there was an organised conspiracy to set me up as an 'Aunt Sally,' to bo Mattered by the Douglas crusaders. So many people called on me, telephoned me and wrote letters to mo suggesting that it- was my job to tell the world all about Major Douglas that life was scarcely worth living. Strangely, tho only people who did not approach me were the bankers and tho insurance companies. Array of Army Officers "Finally I decided to face my (Douglas) creditors, arrange a composition of tho 'B' payments that were causing so much trouble, and release them as purchasing power. I even decided to publish a pamphlet so that I could refer my importuners to it as a final settlement of my obligations to the public. "In the course of my military service I never rose above the rank of private, and even as a private I was not a success. Now I find arrayed against me a whole general headquarters staff of captains, majors and colonels. Batteries of books, pamphlets and news-sheets are firing off ammunition from every bookshop." The Amateur's Advantage After mentioning that he had devoted himself for 14 years to tho study of economics, Professor Belshaw said it was generally considered a great advantage for a doctor, lawyer, dentist or engineer to have some close acquaintance with the technicalities of his profession. "That, however, does not apply to economists," he remarked. v "The people who are really competent to unravel the mysteries of economics ar& not economists, but doctors, lawyers, clergymen, engineers, captains, majors and colonels. Economists are denied that penetrating perspicacity, that inspired intuition, that capacity to overlook difficulties, that ability to ignore with disdain awkward objections, which are so necessary to an understanding of the proposition that A is less than A plus B." Economists were charged with pedantry, with worrying over trifles such as that the Douglas theory was unsound. It was said that they Were not prepared to "give it a go." Worse than all, they had been bought by the banks. This was proved by the fact that they disagreed with Major Douglas. Professor Belshaw proceeded to review the Douglas credit theory and to state and discuss a number of grave fallacies that were hold by economists generally to exist in it. All through the theory, he said, there ran a confusion between "real" and "money" purchasing power or income, as the case might be. Tho real income or purchasing power of a community was the volume of goods and services which it consumed over a period. This was independent of the amount of money used to buy them. If tho amount of money or credit was increased without a proportionate increase in the goods produced, or offered for sale, prices would rise and there would be no increase in real purchasing power. The Douglas method was certain to raise prices and to raise them in an uncontrollable and cumulative manner. Pursuit of False Vision Professor Belshaw also discussed th® failure of the A plus B theorem to operate as an economic law in the past, and explained why he held Major Douglas' reasons for this failure to be fallacious. "Why is the Douglas theory acijepted by so many people?" asked Professor Belshaw. "One must beware of accepting any proposition merely because it is accepted by a "crowd. A crowd is notoriously irrational and irresponsible." The Douglas movement was similar in its essentials to faith-healing or, as a better example, to the Children's Crusade of the Middle Ages. Explaining this analogy', the professor said the crusado was one of the strangest events in hist or j'. A ■ boy in Germany had a vision in which, he believed, an angel told him to gather other children and lead them to the Holy Sepulchre, which would fall into their hands. Children followed him in hundred# and marched over the Alps to Italy. There the sea was to havo opened up and permitted them to walk dry-shod to Palestine. However, the tides ebbed and as before. A couple of rascally sea captains took advantage of the children and offered to convey them to Palestine, but sold them instead a3 slaves to the Moslems. "In tho same way Douglas has seen a false vision," remarked the lecturer. "The path which ho would have us tread leads not to the promised land, but to disaster, not simply for the bankers, but for tho working man. tho farmer and the business man. Propaganda for the^Unlearned "Tho technique of the propaganda is simple. Firstly, discredit tho economists; they are the servants of the banks. Secondly, draw attention to the want and misery that exist* in a world of plenty. Then, thirdly, offer an explanation which appears convincing to tho man unaccustomed to tho mental discipline necessary for involved economic argument. The explanation is supported with diagrams and mathematical formulae which aro true only if tho underlying assumptions are true. They are very impressive, but prove nothing, because they merely explain what happens if the propositions aro true. Fourthly and finally, promise an economic millennium in quick time. Say that the sea of our difficulties is open before us and we shall walk dry-shod to the Holy Land of economic prosperity. "It is not perhaps unnatural that strugglers against strong currents should clutch at straws," remarked tho lecturer. "The economist can promise no such paradise in a dav because ho is more fully aware of the difficulties and pitfalls. He recognises what the Douglas enthusiast . overlooks, that we aro operating in an international system, that rapid rocovery demands international action and that action in any one country can do little more than hold a situation or expedite recovery once it is under of international action, recovery can only be slow and gradual. A patient convalescing after a long and serious illness may be temporarily stimulated by a glass ot whisky, but there is serious danger of a relapse. He can only be brought back to health with careful nursing and attendon." '