DOUGLAS CREDIT PROPOSALS.

Taranaki Daily News, 15 July 1933, Page 8

DOUGLAS CREDIT PROPOSALS.

(To the Editor.)

Sir, —I must apologise for the delay in answering Mr. Sheafs letter in your issue of July 8, but I returned to Hawera only last night, having been absent on business since Monday. Mr. Sheafs mention of “leading Douglas pamphleteers and propagandists of Australia” rather makes me gasp as I picture the dear Bishops of Armidale and Perth rushing from place to place, gowns flymg, shedding Douglas pamphlets here and there from pockets already filled to a capacity that was never intended by their worthy tailors. Now, for Arthur Kitson referred to by Douglas as the “doyen of economics.” In 1921 Arthur Kitson and the editor of the Times (London) entered into controversy regarding unemployment. Among several possible remedies Arthur Kitson selected that of Major Douglas and quoted extensively from Major Douglas’ works, restating the fact that there was insufficient purchasing power released as wages, etc., to buy the products of industry (A plus B theorem), and giving in detail the application and operation of the “just price” factor of Major Douglas. In May, 1921, Arthur Kitson stated: “In suggesting Major Douglas’ remedy I was struck with'its remarkable simplicity, complete freedom from anything approaching disorder, class warfare, or revolution. Although I have hitherto differed in detail from Major Douglas, fundamentally we are in complete agreement.” Kitson is a man who has independently reached the same conclusions as Major Douglas, and he stands four-square with Douglas. It would be as wrong to say Douglas was a follower of Kitson as to say Kitson was a follower of Douglas.

In reference to foremost economists, I can see that Mr. Sheat and I “talk different languages.” Major Douglas is the foremost economist of the British Empire. Possibly Mr. Sheat will not agree, but it is the undoubted corollary of the correctness of the Douglas theory. Surely he must be satisfied with the credentials of Professor Irvine, recent author of “The Midas Delusion,” who had ‘“Credit Power and Democracy” used in Sydney University as a text book for honours in Economics. This book and “Economic Democracy” (both Douglas’ books) have been and probably still are text books for economics in at least two Universities larger and much more important than the University of New Zealand. Continuing, we have H. G. Oliphant, Dip. Ec. (not B.Sc.), Economics Lecturer for W.E.A. Adelaide during 1923 and later, Captain Adams, B.Sc. (Econ.), B. Com. (London), Arthur Kitson, and for a little tone, the Very Rev. the Dean of Canterbury. (England), Dr. Hewlett Johnson. I do not intend painfully to argue, week by week, about the credentials of those I call foremost economists. The subject matter appears to me to be a specimen of fish known as the “red herring.” Mr. Sheafs reference to the wider monetary group can be briefly dismissed as far as I am concerned. Until three weeks ago I had never even heard of this group, or knew such a group had ever existed. My association with the present Douglas Credit Group dates from May 25, when I met for the first time the men whom I presume Mr. Sheat refers to as “my friends." Mr. Sheat has made a mistake, and I am sorry I cannot help him to grind his axe.

It is the reading of adverse criticism on the Douglas proposals which shows so clearly the soundness of Douglas. Has Mr. Sheat read “These Present Discontents,” by Major Douglas (1922), page 29 onwards, wherein Major Douglas replies to Mr. J. A. Hobson? I would also commend “The Douglas Theory” to Mr. Sheat, as this is a reply to the very argument Mr. Sheat has put forward, namely, that the failure of an effective demand is not due to any lack of the monetary power to purchase all the commodities that could be produced, but to the refusal of those in possession of this power of purchase to apply enough of it in buying consumables, because they prefer to apply it in buying nonconsumables; in other words, to buy capital goods. Mr. Hobson regards it as an explanation; Major Douglas presents it as a fact arising out of a defective credit system. Major Douglas’ solution is not involved, as Mr. Sheat would have believe. A similar mechanism exists today, only acting in the opposite direction, in our sales tax. The data obtained from the application of the sales tax is going to prove very useful when Douglas Credit is introduced in New Zealand.—l am, etc., E. W. MATHEWSON. Hawera, July 13.