CORRESPONDENCE

Taranaki Daily News, 13 July 1933, Page 2

CORRESPONDENCE

DOUGLAS SOCIAL CREDIT.

(To the Editor). Sir,—ln his letter of July 6 Mr. Frank Bell says: “Douglas claims to have evolved a form of currency credit which can be withdrawn from circulation, without the final holder being either credited or penalised.” To my knowledge. Douglas has made no such claim, and if Mr. Bell will refer to previous correspondence on this subject, he will see that I contended that consumer-credit alone would not be a liability upon either the 'individual or the State. I have previously stated that this consumercredit will be issued in the form of a discount and a national dividend in order to fill the gap between purchasing power released in the form of wages, salaries and dividends, and the cost of goods produced. In other words, this con-sumer-credit will equal the “B” costs in industry. Producer-credit will be issued to finance all new production—that is, that it will pay for the “B” costs of industry, but as such credits are repayable it is evident that an amount of goods equal to the “B” costs will remain unsold. It follows, therefore, that consumer-credit issued as a free gift and equal to the “B” costs of industry will enable the producers to recover all the costs incurred in the production of goods. In the final analysis, these consumercredits are the means by which . loans issued for production are repaid. A farmpr, in beginning business, is financed by the National Credit Authority to the extent of £lOOO. This £lOOO of producer-credit is a loan, to be repaid in a fixed period. Of this £lOOO, £BOO is spent • on overhead expenses (“B ’ charges). This amount will go out of existence by being deposited with the National Credit Authority by the recipients (builder, manure and hardware merchants, etc.) who, since all production is financed by new credits; will use the' money to repay their own overdrafts. The remaining £2OO is distributed as wages, salaries and the fanner’s own profit (“A” charges). It is evident that the farmer must receive £lOOO in exchange for his products, but only £2OO is available as purchasing power. Therefore £BOO must be distributed to the consumers as consumer-credit in order that the farmer’s products may be purchased. The farmer receives in prices this £BOO plus the £2OO already available, and with this £lOOO repays Iris loan. The liability incurred by the producer is thus extinguished, through the of consumer-credit, and insofar as the issue of such consumer-credit diminishes the fund from which such credus are issued, such an issue may perhaps be termed a community liability; but the only effect has been to dimmish the volume of credit thereafter to be issued. It can therefore be seen that the term “liability” does not convey the piecise shade of meaning required, since the issue of consumer-credit involves no obligation to repay, either on the part of the individuals to whom it is issued, or on the part of the community. In order to obtain the correct perspective in examining the ab ? ye , and indeed in examining all the Douglas nronosals and the problems connected tiierewith, it is of vital discard all false nations of the intrinsic value of money ana to regard all money in its tote light-as being merely a medium of exchange, ** tick fU * facilitate the exchange of real wealth. I am, etc., E Hawera, July W.