ECONOMIC PROBLEMS.

Waikato Times, Volume 113, Issue 18850, 21 January 1933, Page 9

ECONOMIC PROBLEMS.

THE CURRENCY QUESTION. DOUGLAS CREDIT PROPOSALS. DISCUSSION AT OKOROIRE CAMP. A subject that is most prominently before the public to-day is the question of currency and its relationship to the world’s economic ills, and for this reason the interest of a widely-scattered district is centred in the camp which has been estt. > - lished at Okoroire Hot springs by the New Economics Association of Christchurch for the purpose of considering this vital matter and propagating a wider appreciation of the Douglas Social Credit proposals, which ha\e been freely quoted as the solution to the problems of to-day. The camp, which was organised by the association in conjunction with the Okoroire branch of the Farmers Union, was officially opened yesterday with an attendance of about JO campers. It is anticipated that this number will be considerably augmented In the next few days, and many visitors from various parts are expected t attend the various lectures. A picturesque site close to the well-known mineral baths has been selected for the camp, and complete arrangements have been made to ensure a successful gathering. The full course of lectures will continue until next Friday. The camp was organised by Mr D. C. Davie, of Christchurch, who was responsible for the introduction of the New Economics movement into Canterbury. Others present are Messrs A. R- Allardyce, of Chris.church; A. Bullock and A. Wheeler, president and vice-president respectively of the Douglas Credit movement In Wanganui; and A. Graham, secretary of the Auckland organisation. Mr A. E. Robinson, secretary of the Auokland Provincial Executive of the Farmers’ Union, Is also present, and Captain Rushworth, M.P., was expected last night. Other campers came from as far afield as Hokianga, Dunedin, Timaru, Auckland, and the Bay of Plenty. This is the first open camp that the association has held, and everything points to Its being a successful event. Lectures on currency matters will be given in the morning, afternoon and evening throughout the week, and with the discussion which will follow the course should he productive of much good. The afternoon session will be devoted to lectures to visiting farmers and others interested, and will com r mence at 1.30 o’clock, concluding at 3 o'clock. Several heavy showers fell yesterday, but these did not in anv way affect the enthusiasm of the campers, and the opening lecture in the aflernoon was heard by over iO interested listeners. Development of Monetary Movements. The speaker (Mr D. C. Davie) traced the development of the monetary movements in New Zealand since Major Douglas first published his thesis in the English papers in 1920. it was not until-the last year or two that the awakening of interest In currency reform became very marked, and since then widespread attention had been continually focussed on this vital question. In October, 1930, a small study group was formed in

Christchurch, and shortly before this a similar step was taken In Dunedin. The Christchurch organisation began as a study circle, and because the members knew little of the Douglas scheme they called theniiselvea the New Economics Association. They felt that while monetary reform must come it might arise from a different source than the Douglas proposals. However, their knowledge had since Increased and a large number of Canterbury people were now interested in the movement. In other centres good progress had been made, the movement in Wanganui being the strongest in the Dominion. Great work had been done in propagating the Douglas gospel by Miss King, of Dunedin, and Dr. Smith, of Hokianga, who had been instrumental in interesting such men as Captain Rushworth and Mr A. E. Robinson. It was through the influence of these advocates that public attention was being drawn to Douglas Social Credit.

The movement had made remarkable progress in Australia, where the pioneer centre was Melbourne. The Sydney people had also taken it up very seriously, and had made Douglas Credit such a live issue in New South Wales that every member of Parliament there had been bombarded with Douglas Credit questions, and a promise that the Government Statistician would analyse the soheme had been obtained. The fact that the Douglas Credit crusade In Australia was so frequently mentioned by visitors showed that It was regarded as being of vital Importance there, and the speaker hoped that by the time the camp was over it would be a toplo of discussion throughout New Zealand.

Object of Currency Reform. Besides the Douglas Credit movement there were other monetary organisations such as the Stable Money League of Napier. These had done good work in the cause of currency reform, hut he believed that Major Douglas’ scheme was the best. However, before any schemes were considered the objective of currency reform must-first be decided. The aim was, in short, to deliver the maximum amount of goods and services into the homes of the people with the least work and the greatest speed. It was not to raise prices or cause extra work, which was immaterial. Referring to the price stabilisation scheme, the speaker said the object of this was to stop prices from rising or falling. This might tend for good or for bad. While it was possible that low prices meant poverty and starvation it did not follow that high prices would improve the position. It was nonsense to suggest that any scheme to put things right should demand that in this age of production and plenty one section of the community must suffer. It had been argued that farming prices had fallen, and if other prices were reduced the i farmers would be in a better position, i which would be reflected in all secj lions of the community. The only | objective of production was consump- : tion. People were continually deluded i by the argument that if production increased and the goods were shipped out of the country more money would come into New Zealand. It must be realised that no money ever left the country, so that ’ if the butter-fat yield increased and a larger sum of I money was expected the only course open to achieve this was for someone to buy the credit created in London by the butter-fat. No money left Now: Zealand and none came in. What actually happened was that oertaln ! entries and cross entries were made j in books, and credit was given. If ’ there was not enough money in New Zealand to buy the total production of

the country then there was insufficient to purchase clothing 1 , boots, petrol, and other gocwis that were imported in exchange for exports, so that fundamentally it was a financial question in terms of New Zealand money. Man-made Unemployment. “The best brains of the world are said to have been trying to solve the problem of unemployment, but this is w'rong,” continued Mr Davie. “For the past twenty years they have been trying to create unemployment by making labour-saving machines. The object of years has been to lessen labour, and unless they are lunatics, men should make the most of these machines for their own benefit. The Douglas Social Credit proposals provide for this. “For some months past the raising of the exchange rate has been advocated, and now it has come,” he continued, in turning to the subject of exchange. “The majority of the farmers do not understand what this means, and I am afraid that some of their leaders have been dishonest and have misled them. Everyone knows that the farmer is struggling and finds it increasingly difficult to meet his obligations and maintain even a poor standard of living. Therefore those xvho advocated the raising of the exchange rate worked on fertile ground, as increased money for the farmers was mentioned. However, the farmers’ produce Is sold In England for English money, and it Is impossible to Import English money Into New Zealand. The assumption is that the primary producers were being trioked out of a certain amount of money, and the farmers think that if the exchange rate is raised, and they receive, say, Is 3d a pound for their butter, instead of Is, the extra 3d is paid in England. This is erroneous. It Is all a matter of arrangement between the interested parties, who exchange credits at Home and abroad. There is no extra money involved.” He explained that wdien the exchange was raised to 25 per cent, it meant that the additional money required to make up the difference in New' Zealand and London credits must come from the people who bought goods in New Zealand, or, in other words, prices on suoh imported commodities as petrol must be increased by 25 per cent, to meet the position. While everyone realised the position of the farmer and sympathised with him, the speaker was not prepared to say it was Just that the other people of New Zealand should be asked to pay him a premium. That w r as exactly what was going to happen. It amounted to the same as passing the hat around in the community to pay a premium to the farmers, and to the speaker it was un-British for one section to expect another to make such a secrlllce. There were families in the towns on the verge of starvation, and the small sum that came to them from unemployment relief would be further reduced by this levy. .It was wrong to ask women and children to go without food to help the farmers.

More Money Wanted. ft was not suggested that, the farmers should not be assisted, but what was wanted was more money for industry, which the higher |exchange rate would not give, although it increased the purchasing power of certain individuals. Most of those who were crying out for an increase in the exchange rate had demanded wages cuts and retrenchment three years ago, and it was certain that these latter had not improved the position for the community. It was futile ito go on raising wages, but it was not a question to-day of raising or lowering wages, but of putting new money into the people’s pockets to lnorease their purchasing power. Why was civilisation not reaping the benefits of the wonderful machinery and other developments of recent years? The whole question of economics, which meant housekeeping, should he more intensely studied by the women. Would any housewife, with her cupboards full of food, tell her family that they must pull in their belts and economise? Yel that was the position with llie world to-day. However, to increase Hie supply of goods into the people’s homes would mean increased money, and to many people that spelL inflation. It was true that there was ' a danger of this coming about unless I the whole scheme was handled scien--1 liilcally. Under the Douglas pro- ! posals it was noL necessary to have I inflation and chaos. In order to get a correct idea of the scheme it was necessary to review the financial system of to-day, and this would be done during the course at the camp. Analysing the banking situation, Mr Davie said that if the actual figures were looked up it would be found that the total money in New Zealand to-day amounted to £51,000,000, of which the note and coin issue was about £11,000,000. The remaining £41,000,000 consisted of book entries. The orthodox idea of this latter sum was that it was money that was lent out, but this was wrong. It was ail a matter of entries and cheques. In other words, when money was put into fixed deposit it became dead, and when a man borrowed from the banks new money was created of an entry in a book. People asked why the banks paid interest on money. lie contended that they did this to put it out of the way so that people would seek an overdraft and pay a higher interest rate.

The Douglas Proposals. 'Referring to the Douglas Social Credit proposals the speaker said that Major Douglas had a very keen realisation of the uselessness of creating money that would make higher prices, lie took the view that as new machines came Into existence people should he correspondingly better off. Some had asked that if money was to he created, where were they going to stop? Major Douglas had worked out a formula covering this, which concerned a national book-keeping account showing on the credit side the value of all the improvements and the goods made by the people. Obviously the creation of this wealth had cost, the producers something, and what It really cost was the amount of goods consumed during the production of Die improvements, or. in other words, the depreciation. This was what Douglas placed on the debit side of his account. The difference between the debit and the credit, sums was Hie amount that the people, should have for their work. Under Hie Douglas scheme, if they arrived at a sum of money io be issued to the people, one molliod of distributing Ibis was to sell goods to them at prices below cost, and reimburse Die vendors with new money lo make up the loss. New money must he found lo help the farmer, lml under the Douglas scheme, everyone received something from the difference between depreciation and appreciation. Douglas credit money could be issued In the form of a national dividend to benefit all sections. It, had been staled that il was impossible lo give money for nolliing, but would it he for nothing? Why should not llio children and people of |U day receive llm bonrllls nf the inheritance made for them by I iheir grand paeon I s. in the form of I electricity, inventions and oilier dove-

lopments of civilisation? The Socialists objected to profits and dividends, but the Douglas Social Credit proposals advocated a dividend which should be available now.

At the conclusion of the address there was a brief discussion, and the speaker answered a number of questions.

To-day the lec-turer was Mr A. R. Allardyce, of Christchurch, who spoke ■on the origin of money and purchasing power.