DOUGLAS CREDIT

New Zealand Herald, Volume LXX, Issue 21572, 17 August 1933, Page 11

DOUGLAS CREDIT

CLERGYMAN'S ADVOCACY RAISING PURCHASING POWER FINANCING" THE CONSUMER With the object of acquainting its members with the case for and against the Douglas credit system, the Auck-' land Creditmen's Club recently ar-i ranged for two addresses to bo given from opposing Angles. The first of the lectures, which was in support of the system, was given by the Rev. W. W. Averill, vicar of All Saints' Church, Ponsonby, at the club's luncheon in. Milne and Choyce's Reception Hall yesterday. Among those who listened to the address was Professor H. Belshaw, who will speak against the system at the club's luncheon in a fortnight. Some people, said Mr. Averill,, imagined that to be an advocate of Douglas credit was hardly respectable, associating it with a new kind of.Bol-", shevism. That was because the proposals were new to New Zealand and because an attitude of ridioule had been fostered in certain quarters, but the system had been advocated in England for 10 years and had gained the support of many notable thinkers. When such men as the Rev. P. T. R. Kirk, general director of the Industrial Christian Fellowship, and vicar of Christ Church, Westminster, and the Rev. Hewlett Johnson, De.an of Canterbury, advo-' cated Douglas credit principles in a book, "Christianity and the Crisis," published with the imprimatur of the Archbishops of Canterbury and York, one could at least be satisfied that as a supporter of the proposals one was in respectable company. Support from Economists . Professor Belshaw had said that among the ranks of economists there were no supporters of Douglas credit, but Major Douglas himself had a worldwide reputation as a scientist and economist, he had given evidence before the MacMillan Commission and the Canadian Government, and had addressed learned societies in all countries. Professor Irvine, formerly professor of economics at Sydney University, was writing articles in support of Douglas credit in the New Era, and Arthur Kitson, for 30 years president of the British Currency Reform Association, was now definitely an advocate of Douglas credit. It was an unfortunate fact of history that every great discovery in the realm of science and every great move forward in the progress of civilisation had been accomplished in -the teeth of tho fiercest opposition from the experts, who were only in the outworn systems then existing. Future generations might marvel that there were educated men to-day who could seriously oppose Douglas credit.

The Creation of Credit The nfiain trouble with the world at the present time was an inability to buy the great wealth which it produced, due firstly to the introduction of machinery, which, while increasing the capacity to produce wealth, created unemployment, which made it difficult for the people to buy the wealth so produced, and due secondly to the facV that the banks kept money in short supply, thus making it possible to charge higher interest for the use o{ it. Professor Belshaw admitted that the banks created credit, but claimed that, after the repayment of the debt, plus interest, the advance actually remained as purchasing power in the .form of deposits, forgetting that the original loan must be recovered from tho public before it could be repaid, thereby cancelling deposits to the amount of tho original loan. The transaction represented no issue of permanent purchas- • ing power, as the whole was extinguished when the debt was repaid. The Douglas proposals involved tho ■ taking over by the community from the banks of the control of the creation, issue and retirement of money. Through its representatives, the community at present provided itself with the services it required, such as transport, education, defence, justice and post and telegraphs, yet it left its most vital.._ service, its money system, to. the control of private companies, the banks,' whose directors administered it in tho interests of their shareholders and Baw 1 to it that it was issued only as a debt, bearing interest. ... Provision o! Money The community, said Mr. Averill, had a right to provide itself with the money 1 it required without payment of interest to any association of private persons. That was not intended to be an attack . on bankers; under Major Douglas' system, banking would retain its proper . and well-conducted sjggtem of acting as guardians of the people's savings and the task of financing the productive side of industry. » " The first step under the Douglas credit system was to form a National Credit Board, not subject to interference by Parliament, to be the sole authority for the creation, issue and retirement of money and credit. The community must create money, not according to any arbitrary standard, such as gold, but according to industrial and economic requirements. It was no longer possible to maintain the fallacy of the gold backing of currency; during the past 20 years the gold holding of the Bank of England varied from £130,000,000 to £150,000,000, whereas the actual currency in circulation was > approximately £600,000,000 and credit operated on by cheque had been in the vicinity of £60,000,000,000. What kind of basis could £130,000,000 bear to , £60,000,000,000? If the amount of gold in the vaults of a country had any effect upon its buying power then the United States to-day should be a perfect paradise. ' o New Purchasing Power Not one single ounce of gold was needed to back a money system. The v first task of the National Credit Board would be to hold a national stock-tak-ing, estimating the total value_ of the goods available for sale (including imports but' excluding exports) and the total purchasing power of the country as distributed in wages, salaries, dividends, etc. Upon the first total would j depend the limit of money to be issued. Tho difference between the first and second totals would determine tho amount of now purchasing power to be created for the purpose of financing the consumer. , To Major Douglas lay the credit of •:< having been the first to realisetthat.t t . there entered into the costs of cOmmo-, dities an element not available for , their purchase, namely, an amount charged with the prices of things which was not distributed in wages or < salaries, so that, taking the industry of a nation as a whole, the. individual could never at any time purchase all the commodities he produced. The. present shortage of money on the buying side of the market made the A ; plus B theorem a self-evident fact. Pro- ; fessor Belshaw asked why, if theorem were correct, had it ■ not become apparent long before The answer was because until recently its existence had been artificially hidden by tbe export of the unsaleable surplus of commodities. " , . The Douglas system proposed to mane good the deficiency in purchasing power by subsidising the farmer, raising the wages of relief workers pending their reabsorption in industry, restoring the cuts in the social services, sucli as widows' and old-age re - storation and extension of the educa- ... tional system, giving gwtep. Mi for cultural employment of leisure and , the extension of Child endowment It , would reduce prices over all or certain. ■ lines of commodities..