PROFESSOR SODDY AND THE DOUGLAS PLAN.

Timaru Herald, Volume CXXXVII, Issue 19625, 20 October 1933, Page 13

PROFESSOR SODDY AND THE DOUGLAS PLAN.

To the Editor ot •• The Tlmaru Herald " Sir, —I have no doubt your readers are wondering why “Virtue” failed to reply to the main points of my previous letter, and why he wandered off at a tangent to give an uncalled-for biography of Professor Soddy, instead. It will be recalled that, as "Virtue" had convicted himself of extreme ignorance of the real nature of our present currency system, I contended that he was incompetent to justly criticise any of the methods now being suggested for its improvement or abolition, and that, all he had written on the subject. must, on that account be discounted. As “Virtue” has decided to remain silent on this, the central, and most important point in the whole of our discussion, we must take it for granted, that he has left the field, admitting defeat. He attempts, however, to cover his retreat, by raising dust outside the arena. He pokes among subsidiary things on the fringe of the subject we have been dealing with. Por example, he still holds that, because Soddy began life as a chemist, it was utterly impossible for him ever to become a proficient economist. I wonder if “Virtue” ever heard of the Alsatian student who, beginning life as a doctor of medicine, in turn became a doctor of science, a doctor of philosophy and a doctor of music. Soddy is a Nobel Laureate, and has an intellect capable of almost anything within the range of human possibility. Again, “Virtue” reverts to Austria, and contradicts Colonel Repington, w'ho states in one part of his diary that, during the currency of the bread subsidy, the people of Austria were happy and prosperous. Major Douglas quoted this passage; and, in a wild endeavour to falsify Douglas. Mr Lloyd Ross quoted a totally different passage from the same book,’ dealing with a different period, the period of marked inflation, when prosperity and happiness had vanished, and “Virtue” followed Lloyd Ross’s lead to make it appear that Douglas had falsified history, to support his own cause. I think your readers will prefer to accept the statements of Repington and Douglas. Then, without the slightest evidence on the point, "Virtue" says I am wrong in stating that Douglas, in replying to Professor Copland named five causes which render purchasing power deficient, as compared with the collective prices of goods offered for sale. And, not only so, but he makes quite sure that I will not enumerate those five causes. Well now. to bowl him out, here they are: (1) Money profits collected from the public. (Interest is profit on an Intangible, and, as it is paid to the bank, it cannot be used as purchasing power); (2) savings, that is mere abstention from purchasing; (3) investments of savings in new works, which create new costs without producing fresh purchasing power; (4) difference of circuit velocity between cost liquidation and price creation, which results in charges being carried over from a previous cost accountancy cycle. (If a bank advances an overdraft of £IOOO, and the advance is used to create a capital asset lasting 20 years, then, the recall of the loan, to keep in time with the depreciation of the asset should be at the rate of £SO per annum. If the overdraft is called up and cancelled in five years, then, for the next fifteen years, a depreciation of £SO is levied on the community, for which no equivalent purchasing power exists); (5) deflation, caused by the sale of securities by banks, and recall of loans. Now, that “Virtue” has got what he asked for but did not expect, I wonder if he will be one whit the wiser.—l am, etc., A. M. PATERSON. Timaru, October 18.