ECONOMIC ILLS

Southland Times, Issue 21658, 21 March 1932, Page 5

ECONOMIC ILLS

THE CREDIT SYSTEM.

RESPONSIBLE FOR DEPRESSION

Peculiarities of the modern credit system which he claimed was largely responsible for the present serious economic depression were outlined at the monthly meeting of the Southland Provincial Executive of the Farmers’ Union on Saturday by Mr J. R. Haigh in the course of an interesting address on Major Douglas’s credit scheme, which the lecturer described as “the new economics.”

In opening, Mr Haigh said that there was no politics in social credit proposals and the scheme he was dealing with was in no way political. A great deal was being heard at present concerning budgets and the balancing of them, but the farmer, who was the producer o£ real wealth, was more interested in how far his money would go than in balancing his budget. Twelve years had elapsed since Major Douglas first brought forward his credit proposals and they had not yet been refuted, although the powers behind the present credit system had been careful that too much was not known of his scheme. Major Douglas had found that consumption was always behind production and had ascribed as a reason for this a shortage of the commodity linking the two —money. The trouble at the present time was under-consumption. This was due to a shortage of money. Major Douglas proposed that the money system of a community should be regulated by representatives of a community instead of by the bankers.. Never before, said Mr Haigh, had the human race been faced with so hopeless an outlook as at present. The primary producer, the only producer of real wealth, was in a sorry plight and there was not much room to look for improvement for some time to come. If consumption ceased, industry must come to a standstill, and if spending power were reduced, industry must slow down, thus causing more unemployment. If the position proceeded far enough, the unemployed would become the controlling section, thus causing chaos and revolution.

One set of thinkers in New Zealand contended that more production was the solution to the country’s troubles, but it was significant that only the primary producers were urged to do this and not the manufac. turers. The primary producers wanted more consumption, not production, and a fairer return for their work. Production had gone up by leaps and bounds and crops had actually been burned to prevent them coming on to the market. Another school of thought advocated wages cuts, but the effect of this would be that consumption would drop even lower than at present. Another school* wanted to cut down interest, but Major Douglas declared that this would be no solution unless production and consumption could be brought together. Some people said: “Leave things alone and all will come right.” The economic system had become jammed and just as machinery when jammed it would not come right of its own acocrd. Production was great, the demand was good and, therefore, the potential consumption was immense. The trouble was a shortage of money. Money had been described as “any token of exchange which has reached such a degree of acceptability that no matter of what it is made, no one would refuse it in exchange for goods and services.” One of the secrets of the present position was the issue of paper money. The credit system had been developed to such an extent that it had become a very dangerous power, having placed, in the hands of a comparatively few people such power that they could control Governments. Thus it was time that something was done to control them. One per cent, of the banks of America controlled 99 per cent, of the resources of the country and this was typical of the state into which the world’s finance had fallen. The question of credit control needed investigation and amendment.

At the conclusion of Mr Haigh’s address, Mr P. Arnott moved a very hearty vote of thanks which was carried by acclamation.