AN AMAZING PROPOSAL

Otago Daily Times, Issue 22064, 21 September 1933, Page 6

AN AMAZING PROPOSAL

TO THE EDITOR. Sir,—Mr Hartley Withers, the celebrated author of many books on finance and money and one time city editor of the London Times, the Economist, and other financial papers, has trenchantly and logically criticised the Douglas Credit proposals in his work “Bankers _ and Credit.” In the course of his criticism of the proposals he states; “The major’s amazing proposal to let each manufacturer make good the loss caused by selling goods below cost of production by a draft from the Treasury on the national credit seems to the Labour Party critics to be ‘ equivalent to a continuous flooding of the nation with paper money, which would rapidly sink in value. This would inevitably take the form of a rise in prices, which no authoritative fixing could prevent. ‘ Major Douglas,’ they continue, ‘ denies that this issue of paper would inflate prices, on the ground that it is issued against real credit or a potential productivity.’ But first let it bo noted that no provision appears to be made for cancelling any of these notes, which would, therefore, increase indefinitely. Secondly, the people who receive the notes will presumably wish to spend them, and, in the last resort, to spend them on buying goods. In the result, either prices must go up in the face of the abundant purchasing power and limited supply of consumable goods, or, if all prices could be rigidly controlled by law, the money demand would far outrun available supplies. Short of a bureaucratic rationing system, some parts of the country and some consumers would find themselves with no goods at all. In fact, we should be back in the worst experiences of the war, in soaring prices, inadequate supplies, queues, and the rest of it —only very much more so.”—l am, e tc. f ' Observer. Wellington, September 18.