THE BANKS AND SOCIAL CREDIT

Otago Daily Times, Issue 22719, 4 November 1935, Page 10

THE BANKS AND SOCIAL CREDIT

TO THE EDITOR. Sir, —lf the Douglas social credit ideas have done nothing else they have had the important effect of providing a widespread public interest in our monetary system. The opinion which I had formed of the Douglas social credit plan was that it was not very well understood by those who wrote about it. My own view was that social credit differed from thd banks’ credit, in that the banks gave credits to their clients on the security of goods and assets in the possession of its clients, and the credits so granted were further secured by the assets possessed by the shareholders of the banks, while, on the other hand, the social credit proposed to be granted to the individual or the State’s clients was to be granted chiefly on' goods and assets yet to be produced, the costs of production being secured by the collective goods and assets of the State. That opinion is confirmed by what I have learned from the letters over the signature “ S.” in your correspondence columns. I have little doubt that the collective wisdom of the State will not take that risk. The difficulty of arriving at true values of goods and assets already in existence is very great. To arrive at the values of goods and assets yet to be produced is impossible. Your correspondent “ S.” confesses Ins opinions to be conjectural and very difficult on the matter of arriving at the value of gold. May I present lurr. with an obvious fact? The value of gold is the value of the labour cost of its produc-

tion, and the value of the labour is the gold it produces. The value of a promise to pay is nil unless it is redeemable in either gold or coal or other commodities of equal labour value. Thus when gold is the measure of value and the medium of exchange—and even if it is not the medium of exchange—the higher the price of gold the higher the price of labour. It is because of that fact that the owners of gold can raise, or lower, at will the price of labour and the relative cost of all labour products. Is it any wonder that there is a universally constant demand for gold? I suggest to your readers that they note the fact that whatever progress has been made in economic recovery has been co-incident with a rise in the price of gold.—l am, etc., November 3. Measure of Value.