SOCIAL CREDITS

Southland Times, Issue 25362, 14 August 1935, Page 9

SOCIAL CREDITS

SHORTAGE OF MONEY TALK TO ROTARIANS A talk on social credits was given to Rotarians yesterday by Mr F. N. Robson. In introducing the speaker the president of the Invercargill Rotary Club (Mr F. M. Corkill) stressed the fact that Rotary was strictly non-political, but said that members were always glad to receive enlightenment on matters of economic and social interest. In opening Mr Robson compared the present economic hold-up which he contended was due entirely to a shortage of purchasing power, to the imaginary spectacle of a railway department, with ample trains available, announcing its inability to transport waiting passengers simply because the department had run out of railway tickets. Would the public tolerate such a position? Imagine it if the railway authorities then announced that nothing could be done because the printers had been given the sole right to print tickets and now .refused to print additional supplies. Could one visualize the railway department then trying to make its transport facilities fit the existing inadequate supply of tickets by wrecking half of their trains? Yet that, he contended, was a true simile of the present productive and industrial system being held back and thrown into disuse by an inadequate supply of money tickets. “I should like to make it clear” continued the speaker, “that I do not pretend to be a skilled technician in the intricacies of the present financial system. Yet it is possible to understand sufficient of the broad principles of •even a technical system to know what we require of it and where it fails us.” “When we have electric light installed, for example, we do not understand the technicalities of the installation or the science behind it; we leave that to the electrician. We know, however, that it should be possible to operate a switch and flood our house with light and heat. We know that the supply is there and that it is physically possible to use it in this way, so that if the electrician failed to make it available we should look for another more capable. “Likewise we now know that money can be produced even more readily than electricity. We now know that modern money is almost entirely a matter of book-keeping. It does not even have to appear in the form of notes and coins which actually form about 10 per cent, of our currency the balance being bank-created credits operated on largely by cheques. Statistical figures produced recently in England showed that out of every £lOO worth of business transacted less than 5/- was done with cash, 995) per cent, being operated with cheque money.” Money In Short Supply.

It was therefore obvious, he said, that there was no reason why money should be in short supply. That it was in short supply was now widely recognized, and he quoted in support of this contention extracts from a report issued by a committee of the London Chamber of Commerce. It would be generally admitted, he believed, that this body was a competent and responsible group of business men and it should be borne in mind that their report was drawn up only after many months of investigation and study. In its report the London Chamber of Commerce also quoted the governor of the Imperial Bank of India as saying: “One can scarcely agree that there is any overproduction in regard to requirements, but there is certainly over-pro-duction relative to purchasing power.” To emphasize this shortage of purchasing power, Mr Robson referred to Southlanders’ own immediate surroundings and reverted to the example of electric light and power. There were undoubtedly vast resources at Monowai, but to-day many families could not even afford to use proper lighting and heating. This was not the fault of the Power Board which was obliged to recover its financial costs, but was due to the inadequate purchasing power of the people. Yet there were available not only ample power, but also all the various electrical apparatus, such as electric washing machines, vacuum cleaners and so forth, to equip practically every home and thus make for the women folk all the difference between a soul-destroying drudgery and reasonable and proper leisure. If there were not already a sufficient number of such machines there were factories capable of quickly supplying them once the people had the money to buy them. Certainly the technicians on the productive side of the present economic system had done their job, so that the world had suddenly emerged into an era of unprecedented abundance and what recently were regarded as luxuries should now become necessities in every home, and an increasing measure of leisure would do much to improve everybody in health and in outlook. Douglas Proposals. It was here that the money technicians so far had failed, and it was here that the Douglas proposals began. As money was mere book entries it obviously could be expanded to fit the physical realities of production, and Douglas offered a mechanism whereby the total amount of money required to equate with production could be scientifically determined, thus doing away with the old haphazard method which had always resulted in successive booms and slumps. Through lack of knowledge on the subject many people had supposed that the Douglas proposals implied some new and weird form, of money. This was entirely fallacious. It was simply a mechanism to keep total purchasing power in constant equation with production, while the “just price factor” advocated by Douglas was designed to prevent the evils of inflation. Now that the Douglas proposals were being understood they were being supported in many high and responsible quarters. Douglas showed that the “real cost of production is consumption.” Th s meant that the real cost of producing a house, for example, was the timber, various materials, tools and work, together with food, clothing and so on, required by the workmen during the construction. That the people could do with more and better houses in Invercargill would not be denied. Was there a shortage of any one of these requirements? They were here in abundance, and waiting. But there was a shortage of money, which was a mere matter of book entries. In the brief time remaining at his disposal Mr Robson then outlined the salient features of the Douglas system.

He was accorded a vote of thanks on the motion of Mr H. F. Drewe, who said that the difficulty about introducing any such system was the heterogeneity of the countries of the world.