Douglas Social Credit System

Te Puke Times, 13 June 1933, Page 2

Douglas Social Credit System

There was only a moderate attendance at the address given in St Andrew’s Hall on Friday evening by Mr Bjerring, Secretary of the Waihi Douglas Social Credwt Association on the Credit System evolved by Major Douglas, but the greatest interest was dis- 1 played and the remarks of the speaker were closely followed. Mr J. A. McGhie presided and V introduced Mr Bjerring to those present. The lecturer prefnAft his address by referring extraordinary position in the World today, when people were starving in the midst of plenty and when millions were registered unemployed apart from all those who were not registered. In 1929 there was a surplus of 10 months supplies of foodstuffs and in 1931 the surplus was equal to 2£ years supply. In Canada wheat had been burned because if, was cheaper than coal and this helped to raise prices, and in Australia wheat farmers had been forced to leave their farms because they could not pay their interest. The key to the position was money, which was the buying power that functioned to transfer goods from + the producer to the consumer. Real wealth was not money. If 1 a man had millions but neither food nor clothes the former would be a secondary consideration. In 1930 Australia produced £391,000, 000 goods and the industries that produced them ouly paid out £120,000,000 in wages and salaries and dividends so the purchasing • power of the people was less than half the value of the goods produced.

Mr Bjerring proceeded to refer to the displacement of workmen :l% by machinery, which accounted ’ll for over production of goods in the world, as the people through not receiving wages were not able to purchase. He next spoke of banks and the system of credits and deposits. Every bank loan, be said, created a deposit and was issued on a security in case of failure to repay. He quoted from the MaoMillan re* ‘ port on Banking and Finance to

the effeot that by granting loans (allowing money to be drawn on overdraft) a Bank created money* If a customer was granted an overdraft and repaid the amount 1 it was re-loaned. There was DO limit to the credit Banks could issue. A loan was only a book entry. Banks did not lend de* posits. If prioe levels fell to thS extent that the securities held by a Bank were affected the instit* ucion would call up or want a reduction of the overdrafts and in order t.o find the money the debtor would have* to take less than the value of the securities. The value of the latter having thus declined the Bank would begin a policy of credit contraction and call up further over* drafts.

Under the Douglas Credit * System there would be enough money to sell and buy all the goods produced. The entire con* trol of credit would be placed ifl, the hands of a body to be called the National Credit Authority, After the War Major who was an engineer and economist, discovered that whilst credit was plentiful during the War it was almost unobtainable fojr peaoeful purposes and that in 98 British industries the salaries) wages and dividends paid out did not provide enough purchasing power to buy the goods prOduoed. He therefore proposed to solve the problem as to how td sell tile goods by increasing the purchasing power of the people by credit?' Under this system there would be no taxation-as they knew it today. The proposal was that if Australia for instance, produced say 500 million pounds worth Of goods yearly and its purchasing power was only half the atnoUht the National Credit Authority would put in Circulation as a ' National dividend a further £250, 000,000 so that all goods produced could be purchased. In this connection a Just Pride Regulation Factor had been devised by which the price of all goods was determined by the ability to purchase them. ThUB the goods would l e sold at half price and the seller would be reimbursed by an issue of credit from the National Credit Authority. Retailers would be asked to enter into a contract to the above effect. If the goods produced amounted to £1,000,000,000 and the total purchasing poxftik paid out by industry was 250,000,000 then the price discount would bo 75 per cent. It was claimed that a short Act of - Parliament would be all that was needed to bring the proposals ihto operation. Mr Bjerring gave many othef details concerning the scheme and at the close of bis address answered many questions. He was accorded a hearty vote of thanks by acolammatlon.