SOCIAL CREDITS.

Waikato Times, Volume 112, Issue 18723, 25 August 1932, Page 9

SOCIAL CREDITS.

(To the Editor.) Sir, —I note that Mr Arthur Sainsbury thinks he has found a fatal flaw in the Douglas cure and regrets what he calls bursting the Douglas bubble. He need have no regrets, the Douglas analysis and cure -will -stand as recognised facts long after we have all passed away. I -sometimes wonder if Mr Sainsbury really understands the Douglas cure; as he made no comment on my brief explanations in the Times of August 10; but reverts 'to an old -statement that the cure is founded on the issue of weekly credits which he (erroneously) calls doles, and also wrongly states that consumer credits will remain in circulation and mount up year after year. Take a simple instance and follow It back from the consumer; say a pair of hoots on the retailer’-s -shelf having -a financial cost of £i, that Is to say money charges amounting to £1 have been incurred along the line of production. It has already -been admitted that purchasing power in the hands of oonsumers will be less than the cost -of the article by a fraction, say a fourth. This missing fraction is the important point. There can he but two alternatives: (1) Either -somebody has it, in -which case it must be purchasing power and therefore would not be missing, or (2) it has already found its way back to the banking system to be placed against an overdraft or loan and there, by the ordinary process of banker’s book-keeping, has been cancelled out of existence, in which case nobody would have it. The latter is the correct alternative.

To return to the boots having a financial cost -of £1 -still on the retailer’s shelf: The consumer has only 15s •purchasing power to buy with, the missing 5s has already been cancelled out of existence; what is to be done? If sold for less than £1 either the retailer, wholesaler, or some producer further back will receive less than financial cost, and soon go bankrupt. At present the only other alternative is for the article to remain unsold, both of which proceedings are so common at present as to need no further comment. Douglas -suggests a third alternative which is in effect to re-issue direct t-o consumers the lost fraction (5s in this case), which has been prematurely cancelled, so enabling consumers to discharge all the -debt to producers, who would in their turn repay to the issue department all the credit (money) borrowed for that amount of production. Thus (lie books would balance, and money equal, to the consumable goods sold would go out of circulation.

If Mr Sainsbury wishes to claim the 25,000 dollars reward, it was -offered by the Poliak Society, U.S.A. I think it would be only fair to readers of the Times if he published a copy of his letter to the Poliak Society and their reply.—l am, etc., C. F. CLAASEN. Rawene, Aug. 21, 1932.