DOUGLAS CREDIT

Wanganui Chronicle, Volume 75, Issue 244, 15 October 1932, Page 6

DOUGLAS CREDIT

Sir, —After many days, two upholders of the Douglas Credit Scheme have honoured me with replies to my criticisms, offered in a lecture on September 22. First let mo express my regret that these criticisms have received far more attention than the major part of my address, which supported the demand for monetary action to increase our purchasing power within New Zealand. That such action is urgently needed, the Douglasites and I agree. The pity is that, with the best intentions, they are distracting attention from the proposals put forward by the Government’s committee of economists last summer—practical proposals which would likely be accepted (and perhaps amended with advantage) if they had the enthusiastic support of any considerable groups. Because the enthusiasm is diverted to Douglasism or wild schemes for pricefixing and huge issues of paper money, the do-nothing policy holds the field and we drift further and further into ruin and suffering. Not to overburden your readers, permit me to reply to “Signpost’s” argument —the only argument I can find in his half-column. He states: — Mr Brailsford’s fear of inflation may be allayed by the following statement in “The Nation’s Credit”: “As a result (of sales at the just price) the public would get the goods they want at less than financial cost, i.c., their purchasing power would be greatly increased. The retailers would recover the full financial cost of their goods (including their profit) partly from the public and partly from the State. They would then repay manufacturers, who would repay banks the loans by which the manufacturing process was initiated. The latter would then cancel the money representing the loan, as they do at present, except that this cancellation would take pla'ee after the goods which the loan brought into existence, have been consumed.” There would bo no inflation.

Excellent’ Lot us all get our goods then by paying a shilling for what costs £1 to produce and market, leaving the State to make qn the 19s with a discount voucher. Still (it would appear from ri.is argument) there would be no inflation because the payments would go to cancel the advance. Douglasism really nroj oses a limb to the discounts, but tiie argument quoted above would if there "’ere n.» limit. Again: When these payments had returned to the bank that created the original credit, how would the retailer replenish his stocks? The radio retailer (say) has sold you a £lOO radio set for £75, the £2,5 balance being made up by the State’s discount voucher. The retailer must then have some means of buying another £lOO radio. Is he to be restricted (under a Russian rationing system) to buying new stock or is he to have free use of his £lOO purchasing power? If he has free use, he can spend it to buy retail goods to the value of £133. In any case ho would have free use of his profit, as would the wholesaler, and the producer and the wage-earners and dividend-receivers ; n all these processes and they could all buy goods worth £lOO for each £75 in their hands. If the discount were reasonable it might mean simply that purchasing was encouraged only enough to carry off the increasing supplies of goods. That brings us to the real question: Is the Douglas plan of calculating the discount reasonable? As I tried tn show in my lecture, it is not.

It is unsatisfactory to have to reply to a pen name. I can only conclude from “Signpost’s” doubts about Douglas’ rejection of State control and his remarks about the “A plus B” theorem and the just-price formula that he is very ignorant of Douglasism. It would be more satisfying if some upholder of Douglasism would *OOOlO out in the open to try to put us right.

I am glad to see that “Signpost” has sufficient respect for Keynes Io quote him. If he would read Keynes’ passage on monetary cranks, in the second volume of “A Treatise on Money.” h<f might learn something. Keynes wants ou- monetary system reformed. He has shown the method. It is not the Douglas plan. I am. etc.. JOHN A. BRAILSFORD.