CURRENCY REFORM

Otago Daily Times, Issue 22098, 31 October 1933, Page 3

CURRENCY REFORM

, 10 THE EDITOR Sib, —Of your two correspondents, “ Asinpm Tondes ” and “ Critic,” the former seems to be under the delusion that by finding forerunners for Major Douglas he can discredit the Douglas analysis and proposals. It is a futile attempt, since in the first place no army of forerunners would detract from the greatness of Douglas; and, in the second •place, there is little or no resemblance between the Douglas ideas and those expressed in the quotations offered. As proof of the latter contention I offer the contrast between John Gray as quoted and Major Douglas:—“Gray says a national bank should be established, etc,” Douglas says: “This theorem (A plus B and the bankers) has nothing to do with gold standards, inflation, deflation, or even bank policy. It depends fundamentally on the problem of the beneficial ownership of credit, and it would, for instance, be wholly unaffected by the nationalisation of banks.” Neither of the passages quoted has anything to say or even any indication of any perception of the fundamental propositions which in “The New and the Old Economics,” Major Douglas states to be basic to his views—namely “ (a) That financial credit pretends to be. but is not, a reflection of real credit as defined in (b); (b) that real credit is a correct estimate or, if it be preferred, belief as to capacity of a community to deliver goods" and services as, when, and where required; (c) tha.t the cost of production is consumption.” That your correspondent should fail to perceive the difference indicates at once his superficiality and ignorance. Major Douglas is hot, to use his own .words, “ concerned to assert priority ” as to the views he propounds. For the matter, of that we have excellent authority for saying that the world has never been left quite without a witness of the truth; and, on the other hand, ,it is quite possible to make a show of evidence that Shakespeare owed everything to his predecessors—his verse form to Marlowe, his history to Holinshed, and his plots to any and everybody. Yet Shakespeare remains Shakespeare, and Douglas will be Douglas long'after “ Asinum Tondes ” has gone his way. As for " Critic,” ho never seems to learn that abuse is not argument. He is certainly performing a service to the community in giving wider publicity to passages of such import from the New Age, but if he finds that journal so tedious — it must be because be finds it stiff read-

ing—there are plenty of other social credit papers of a simpler character whiph might tax his powers less.—l am, et c., Truth, TO THE EDITOR. . Sib,—“ Asinum Tondes ” quotes a criticiera of Thomas Attwood, by one Beer. He writes as if Douglas were the only one to agree with Attwood’s views aV set out. by Beer. But there are others who trace our present difficulties to similar sources—for example. Professor Gustav Cassel and Mr R. G. Hawtry, ‘ No one who’understands Douglas would suggest that Gray’s proposals were almost identical with those of Douglas, and the final remark of “Asinum Tondes” shows quite clearly that he has no sort of understanding of the aims of Douglas. There is no need to wait for better times to come; the best times the world has ever known are herfi to-day. Douglas has said: The labours of our scientists,' our engineers, and, our organisers have brought us to the edge of a new world—a world of leisure affording opportunities for the exEansion of a real culture such as history as never even contemplated." But we shall never be able to enjoy these good .times till we put our financial and costing system in order. _ ‘ Critic’s ” letter in Saturday’s issue consists of two contradictions, implied rather than directly stated. The reference to Major Douglas as “an obtrusive mediocrity” is in the nature of a denial of the expressed opinion of an increasing number or people that he is a genius. The next part of “ Critic’s ” letter contains an extract from _ the New Age to the effect that economists and bankers have no training which makes them any more fitted to solve our present difficulties than the manageress of a tea shop. Strange to say. some economists instead of denying this statement freely admit it. Even Critic ” will scarcely argue that men who _ adhere to_ out-of-date teachings are qualified to give reliable advice to a. modern world.—l am, etc,, National Credit. TO THE EDITOR Sib,—According to your correspondent, Critic," our Dominion economists will find amusement in his quotation from the debate between Professor Robertson and Major Douglas. May I be permitted to add my quota to their amusement by a quotation from G. D. H. Cole’s “ intelligent Guide Through World Chaos”?: — ‘ In this section I have attempted only to lay bare the foundations on* which the present system rests, and the causes, as I understand them, of the ‘friction’ in its working. It will at least be admitted that this ‘ friction' has now assumed a character which calls for searching examination of postulates once accented by most people as universally valid, but nowadays more and ’more severely criticised as the disorders of the economic world threw the underlying defects of_ capitalism into clearer and clearer relief.”—l am, etc., W F. October 30, TO THE EDITOR. Sir—ln your leading article of the 28th inst. you make certain statements with regard to the Reserve Bank Bill. You state that the principal contribution to the discussion was made by the Prime Minister, who “ has changed his lukewarmness towards the proposal a« a result both of his own independent study of the principles of central banking and also_ of the support that is given to it by influential authorities in other countries.” Not very long ago the Prime Minister wa e man enough to confess to a deputation that waited upon him that he knew nothing about monetary matters, and, that he knew more about farming. Since that time he has had a trip to the other side of the world, and although he may not have been blind to the conditions prevailing in all countries at the present time, whether they have a central bank or not, or whether they are creditor countries or de.btor countries, whether they are on the gold standard or off, the same conditions exist despite the super-abundance of production.' It is quite evident that the powers that be succeeded in blindfolding him. The history of central banking, as Captain Rushworth truly stated in the House, is a long trail of ruin. The principles of central banking are as follows:—(a) They must be private institutions: (b) the majority of the members of the boards must politically be in a position of en-

tire independence; the Government nominees must be in a minority; central banks must have the sole right of note issue; their' function is to sustain the credit of the country, to guide its financial policy, hold the reserves of the commercial banks, and intervene only m times of stress. These principles are self-explanatory. The Government is to be in a minority and the financial policy of the country is to be removed from its hands into those of the bank. The terrifying power which can be employed by the bank that controls the cash resources of commerce can be imagined by considering how easily it could create a slump, as Captain Rushworth pointed out, and then could acquire some industrial block or some group of banka by denying that its victims were “ Entitled ’’ to the credit which could save them. Thie is Empire finance, with a vengeance, with the central banks playing the part of emperors. You state that confidence is lacking, not currency. What do you mean by confidence? lam given to understand that the control of the note issue .is control of the currency, and control of the currency is control of credit, and control of credit is control of the Dominion.—l am, etc.. Currency,