NOTE CIRCULATION

Otago Daily Times, Issue 24783, 6 December 1941, Page 13

NOTE CIRCULATION

"■',>V--x-r6 TBK CDITOB ' - 'i ■ ■ V f Sir,—Mr James Begg points out the increase in the note issue. Social Creditors, however, do not confuse purchasing power—the ability to purchase commodities—with the tokens that convey that power. Major Douglas made this .point clear when he defined increwe in power!^ n SosLl!credu claims to cure the probfcni?bl poverty midst plenty. Under war conditions it' is extremely doubtful if. plenty; still exists except in a few products—apples, for instance. .When' Social Creditors claim that the habds of *the r mm iSßg throdioy^jns^cient )ndustry*f?tasSh iSmwemKre? that the whole producTbrlhdustry includes war production. If the ’ community does not receive sufficient purchasingpower to purchase the whole product of industry 1 , how can the people lend ' the Government sufficient to purchase the war production? Can anyone still maintain that more than a small fraction of even’ our local loans represents a forfeit, for j the time being, of actual purchasing power? In the .past we nave heard a lot about borrowing from the future; but the goods being used exist now. One cannot borrow a shell from the future, /Social Creditors consider it is high time the financial system reflected fact' and . that considerable good would come if we rid ourselves from^the inhibitions of a defective money System.—l am, etcDunedin, December*. , A. G. M.

.':. W), W* IDITOI Sir,—Mr Juries Begg states that in 1935>..'': the ■ note £7,000,000 andvtb-da^. is "£18;000,000 arid that this amounts to £8 for eyeiyi man, woman and:;^ild.:^:i thfe . muriitjr-yet sfeems Vto have/ enough judging by -the applications to the. court for mtiFe«^Mr|;.-we£es;VHe' then" asks^Caftif» beiithat:;putting ? w: th«: people is ■noK'giving >thft;results* expected* ?' 'The : assumption, or, deduc-; Six years 0f£11,000,000 in note circulation gives . an average*;ol>• EtPper headincreased? ; purchasing jpower.~i»r incorrect .-v-'Qiie; : migM fu*t t ijasTk£. Over how long a> period are we supposed to have re-. ; ceived ah additional £8 per individual to spend--* week,, a month, a year ?or six yearst", However,: that is really immaterial, as the real; reason for,; and ,result,,,of, the increased note 'issue' is 'increased activity throughout 'flew.-./Zealand.: The two periods referred to bear*, testimony to ' .fflii;..;; :',- v;> ■■,■,"•.'-' .:,-'■. . •'• ii. : \ ■:., r^ ln 1935.CW* had a note -circulation, of £7,PP0.000. In 1935 we had not completely emerged; ; , from v that man-. made:evil; slump.' We ~ had many thousands ■, of: jmemployed, thousands vMoi« ! tens' of'thousands: on reducsed, incomes, and : not .producing *or.i rendering j service to anywhere near our capacity,. We we're short of Short ;of materials, not short of manpower,*,not short of machinery,- not -short,of good seasons.. Summer followed spring 'as, it has done since the irairi or. sunshinier Just, shorts of --.money. '- Tif 1841 there isi very little uhemploy? ment, industry is working at aTgreatly accelerated speed. Men and women are employed.',-" Admittedly;. • considerable/"employment is. for war services, Vbiit the point is that activity could not have increased without'ah increased volume of money.; Why not the same in times of peace? Mr Begg's statement' relative to increased - purchasing power not giving

the desired results, and the continual application for increased wages, is closely allied to conditions. Increased Wages do . not give increased purchasing power, except than for, a very brief period after the increase is made. Increased .wages mean increased costs, irrespective of whether the wages are paid out for production in any or all its stages, or'for services. The increased wages must mean inceased prices, so the benefit is nullified, or, in other words, there is no increased purchasing power. Wages rise, prices rise. This cannot be remedied until the power to create money is again vested in the people's representatives, Parliament, and used by them. At present the sole right belongs to a private monopoly—the banking system—and until such time as we demand that Parliament equate purchasing power with the total value of goods for: sale,' prices will follow wages. Money for national undertakings could be created through the Reserve Bank by the Government, our present War effort "could be financed debt free and the effort intensified, retail prices • could be subsidised, and we would then have .real increased purchasing power.—Ti am; etc., >;■>;; Progress.':.,'

X Suv-His ■ Social Credit friends will hot be so interested in Mr Begg*s .figures about the note circulation as in, Mr Begg's mentality; Mr Begg evidently himself regards with suspicion, if not with fear, an increase in the number of bank promises-to-pay circulating in the country, arid quite rightly too, if we had to look to the banks themselves to meet the promises. I have :ridt yet found out what it is they undertake nowadays to pay, but, like the rest of the public, remain content enough as long as the economic activities of the,.community r caxi- produce goods' arid services on demand. But Mf Begg is really trying to get in a challenge—it might be unfair to say a the. Social Creditors on the ground that although the note circulation, and therefore the Volume of dkedit on which: in New Zealand the note circulation is based, have -increased,: the people are. but are still asking for more; Naturally they are asking for more, because .this increase has; not been brought about in the Social Credit way, increasing mcbmes -without increasing costs, but in the ignorant,, unscientific way that seems to be the only way known to our present financial and political experts. Despite all, the talk of avoiding inflation; the present regime is well and truly headed for the old vicious soiral bfi rising wages, rising .costs*, rising prices, familiar to the earlier twenties: arid the only remedy known to the present manipulators of finance r* the good old-fashioned : ; sluttip. Some economist oan generally be .found to attribute it:to mn. spots or;the inherent wickedness of hurnan nature. But officials and Mr Begg are already telling us-that "there is too much money iri the country." That is the kind of sun spot we should look fOrY and the inherent weakness is more in the natural stupidity of mankind tMnm its supposed-wickedness or original There are several other things I might point but to Mr 3eg*. but I remember that your space is limited, and thank you for the opportunity to enlighten.hirii so far.—l am, etc.. . : . Dunedin, Dec. 3. ;•■■'. Truth.;. to ths eorrdF • me to inform Mr James Begg that.note circulation' has '.no] relation/to ' purchasing; power in the sense in .'which; he views it. The' average-housekeeper knows only too welT that the cost Of , living has '- riseri considerably since 1935. and. with taxation which has also risen by about 80 per! cent, since then, £8 is a mere drop in the bucket, j The letter titled "No Tears" signed " Guardian" in the same column as Mr, James Begg's letter of Tuesday should be sufficient reply to the letter to which I refer.—l am, etc., '«.'--', ■ " Housekeeper " , December 5.