THE DOUGLAS PLAN

Wanganui Chronicle, Volume 77, Issue 263, 6 November 1934, Page 4

THE DOUGLAS PLAN

Sir, —I should like to deal with a few points of Air. Bartrum’s last letter. In the first instance, I am glad he has per ceived my reason for quoting Air. Walter Leaf, ex-chairman of the Westminster Bank, and Air. Hartley Withers, the well-known protagonist of the present banking system. They both demonstrate that bank balance-sheets conceal important essentials regarding profits, and that is precisely why 1 quoted them. He speaks of us as receiving “solemn warning of coming payment for our sins” at a time “when large loans were raised at Home and spent here,” and when “we in New Zealand w r cre not piling up credit at Home, but were living practically up to our income.” Granted that under a scientific financial system loans, cither internal or external, would be quite illogical and unnecessary how in the name of goodness can it be a sin to use the production (i.e. income) of our country to the full? Rather is it a sacrilege not to do so, when so many people are suffering hardship or even destitution. Obviously, the only sensible thing to do is to institute a financial system which will make available to the people the total production of the country, pari to be consumed locally and the rest to bo used in exchange for goods from overseas and for payment of our interest. The only way to achieve this is to establish and maintain an equation of purchasing and production; and since purchasing power is clearly lacking, it must be increased up to the correct limit, while simultaneously inflation (a rise in prices with the increased flow of money) must be prevented, except in the case of commodities which are at present being sold below cost. To put the discussion on a proper footing and for the benefit of the general reader, may 1 give a brief sketch of our Douglas Social Credit plan for New Zealand? (1) Appointment of a National Credit Authority of nine members with the sole right of creating credit; three members to be appointed by Parliament, three by the Trades Unions (including the Farmers’ Union), one by the University, one by the Banking Institute, and one by the Municipal Associations. (2) The N.C.A. to take over the Central Reserve Bank, on behalf of the State, reimbursing shareholders in full. (3) The N.C.A. (under Act of Parliament, but as free from interference as the Supreme Court) to estimate from statistics the shortage of purchasing power and to create the necessary credit on the basis of the real wealth of the country. (4) The N.C.A. to pay to all exporters of primary produce the cost of production plus reasonable profit (Is 3d for butterfat and proportional prices for other commodities). (5) The N.C.A. to declare a just price discount of (approximately) one-third in the retail sale of the chief articles of food, on clothing, house rent or its equivalent, and on electricity. The retailer granting the discount is to be credited and the N.C.A. account to be debited with the amount of the said discount by the retailer’s bank. (G) The N.C.A. to review the situation and adjust credit every three months. (7) An adequate allowance for all pensioners and for the comparatively few unemployed (of both sexes) who would, in this undeveloped country, be reduced to a minimum by the scientific equation of production and consumption. (8) No interference with savings or investments. (9) Costless credit for State purposes, i-e., public works, etc. Those are the main principles of our plan so now we have something definite on which to hang our arguments. Now for some facts about our trade with Britain. Last year we exported £40,000,000 worth of goods to Britain and imported £11,000,000 worth in return. So our credits in London represent one-way trading with Britain, and they can be used only by means of imports, which, under our plan, the N.Z. public will be able to buy. Any loans we get in London, also, can come to this country only in the form of goods; for when we raise a loan in Britain we arc simply credited in London with the amount, and the only way we can use the loan is by buying goods with it. We must buy from Britain and she will buy from us. Here is ’n extract from the latest issue of “ farming First,” the official organ of the N. 4. Farmers’ Unior.i, Auckland Province. It is headed “Latest News” and reads as follows:—“The British Government has definitely told the N.Z. Government that no official offer can be made to N.Z. direct, but that if an offer comes from N.Z. to take off all protective duties except those on decidedly economic industries, there will be on restrictive action against imports from N.Z.; otherwise Britain will take action at the right time.” This is very definite; one-way trade will not be tolerated by Britain, and the public of N.Z. must have the purchasing power to buy the requisite imports. 1 should like to stress that statement as the most profoundly important item Ox news we have had for some time. Under the present financial system there is no hope for the farmers, and increasing numbers of them arc waking up to this fact. Now since 1913 the world-price level of the things we import has dropped more than that of the things we export, so that in paying the farmer on the scale mentioned above, the N.C.A. would be paying only . a reasonable price for the imports, which it would receive in exchange for the farmers’ exports. Everyone knows that, with the farmer on a sound finan cial basis, the rest of the community would benefit enormously, and taen, through the application of the just price discount, also doing its shard in

tue scientific equation of product? 44 and consumption, the economic systim of.N.Z would be put on a sound basis. Ln the event of any attempt to profiteer, a limit of profit (not price fixation) would have to be applied, and tie maximum penalty for tho delinquent in this respect would be exclusion from the just price discount benefit. 1 feel that this sketch of our plan, put into print, may help Mr. Bar,.um in some ot his difficulties, and also keep our discussion! “on the rails”: and 1 might add that we Douglas Creditor* arc confident of our ability to answer satisfactorily any objections or any questions that may bo raised. Let every thinking man give his jnbhtriud attention to an economic plan which i* based on common sense, sound economic principles, and on justice and otpi’ly.— i am, etc., K. O. C- MARKS. 3/11/34.