“DEBT-FREE CREDIT”

Otago Daily Times, Issue 23884, 11 August 1939, Page 14

“DEBT-FREE CREDIT”

TO THE EDITOR

Sin—My reason for introducing the term “ debt-free credit ” in my reply to Mr C. H. Chapman’s last letter was that he had used that term in describing Mr Lee’s proposals, and I was not clear whether he favoured thepe or not. That, too, is the reason for my assumption that Mr Chapman also favoured hiaking a. compensating price reimbursement payable from some, source—evidently a State department— ’ outside of . the banking system. /This technique is, however, favoured by several advocates 6f the Douglas 'lsysr . tern. I suggest, therefore, that, the next - Douglas Credit conference should; debate the question of what Douglas really means. If these advocates cgn come to a definite, or' even 'a majbrity decision,, on what are and what are not authentic Douglas principles, they will have rendefed themselves, and in--cldentally the readers of the correspon-• dence column, a valuable service,the present time the Douglasites seem/ to work oh the principle of “so many* men, so many minds," and as. each..aud > every one apparently considers his; or ■ her mtrepretation of Douglas the only / valid one, it is no wonder that the ; readers of the various interpretations/ get somewhat fuddled. I have some ofV Major Douglas’s works which I have/ studied, and 1 have also studied some/ of the alleged interpretations of him.,; Failing to find any consensus of opinion that could be called a majority bloc in ■ the many versions which I have read, , I have endeavoured to apply the prin- - ciples of a compensating price to the/: dairy industry, and also the other/ principle, that of a national dividend, ' to the social security benefits accounts, and to visualise the result which the impact of this added purchasing power > would have on the existing economic structure of society. / Let us take the farming industry, To?’ cover costs, alleged or real, the: dairy / industry would need something: like/ £3,500,000, and the meat and wool / growers anything, acording to Mr Mul- , nolland, between £5,000,000 Hand £7,000,000—8 total let- us 'say, £10,000,000, Thiswould "-hive; to be/ offset, let,voV.ll»' :»(wt-£%oQo i 'ooo for social security .benefits. Whether the issue of this credit is made from inside or outside' the banking system is immaterial. What is important ii that 1 the primary producers would receive S a compensating payment of £ 10,000,000 ■ over and above the selling-/price of ; their produce, and the taxpayers would -; receive £20,000,000 as a remission on their present :idalfr-'::6f>ehftt'gi«:i'f /This & would mean that the purchasing‘power of the general publlc ?would be increased by£3o,ooo, OCfO. ///,-' 38; Between 1035 and 1939 the gross an- /; nual payments in New Zealand oh ac- - count of salary and wages increased ; by approximately annually. This has resulted Iniar.'Marked -degree of internal prosperity; arid, the; consumption of goods has increased. Prices / also have risen,, but the result has;, been that, through importations from/ overseas, we have had a depletion of/, sterling funds, and consequently have/ had to impose import restrictions. Add to the £40,000,000 annually paid in/, gross wages .and salaries another - £30,000,000^/as suggested and ■ /we . would virtually have to place a ban ■ on all imports except of those goods ,u which we found it practically a gnd physically ' impossible to, produce. What would be the result? J think we should find "that there .would be more money available for investment than could be absorbed by--capital investment. . By capital investment;;! mean investment in factories, machines,, etc., which would be necessary to produce the goods we require and could consume. The result would be. that deposits awaiting investment would; depreciate In value, and there,: would be a rush to Invest in any property that offered security for principal, irrespective of whether it paid Interest or not. This would, I think, result in a sharp rise in all property and land values.- Further, if Mr Chapman will refer to my letter of August 3 on "Collective Farming," he will observe that there is a variation uv income between the lowest and the highest group of dairy farm income of over 800 per cent. A compensating price, whether issued " debt-free or under the existing orthodox system of finance, does nothing to level out these inequalities of income.; My opinion, for what it w worth, is that., the Douglas formula, if applied to the present economic system, would, firs., emphasise the inequalities that are inherent in it; secondly, would destroy the profit motive on which the-present system Is based; and, thirdly, would not help in the reconstruction of an alternative system of economic structure that could replace one destroyed. As the majority of Douglasites affirm hostility to the present banking system and an equal—if not a stronger—hostility to any system of economic planning. It is up to them to show (a) that It will help to level out the Inequalities I have referred to, or (b) that it will lead by definite and not too violently revolutionary steps to a better world economic, order. It needs, however, to be attached to some definite economic realities ana not merely be the emotional ebullution of minds which, preceiving the evils of the present system, charge these to the influence of the banks in much the same way as. Nazism charges all its woes to the influence o' , o wr y- 1 ' IC G. J. Broker.