"VELOCITY DOLLAR"

Evening Post, Volume CXII, Issue 35, 10 August 1936, Page 9

"VELOCITY DOLLAR"

ALBERTA TRIAL

BUSINESS OPPOSED

A novel experiment in finance, involving the introduction of what is being called a "velocity dollar," is about to be undertaken in the impoverished Canadian province of Alberta, wrote Sir Percival Phillips from Calgary to the "Daily Telegraph" on July 8.

Its originator is Mr. William Aberhart, the Prime Minister. He describes it as the first step towards the fulfilment of his Social Credit scheme, which swept him into power last September.

At that time Mr. Aberhart promised the Albertans Social Credit within eighteen months. Hitherto, however, only "enabling" legislation has been enacted.

Now comes the velocity dollar as a cure for unemployment. Mr. Aberhart prefers to callthis, which will replace the "real" Montreal dollar, a prosperity certificate with the nominal value of one dollar. It will take the place of cash, his theory being that, if it is given sufficient impetus, the scarcity of the dollar will be overcome and its substitute will become sound currency, acceptable alike to business men and the public. PRINTING PRESSES BTJSX. The printing presses are now busily turning out these certificates and .stamps to go with them. The Prime Minister expects to put them into circulation by the end of this month. If the original holder of this scrip dollar retains it for longer than a week he must add a 2-cent stamp, and at the end of every succeeding week whoever holds it must affix another. At the end of the year the Treasury will thus have sold a dollar's worth of stamps, and the last holder may redeem it without final payment. Monthly redemptions are available for retailers and wholesalers dealing with manufacturers during the period between the 7th and 13th of every month if the scrip is properly stamped. Redemptions will be met out of a "current fund." This fund will be created from three sources: (1) Cash given by Cabinet Ministers as part of their .salary in scrip: (2) part of the provincial relief grants, which would otherwise go to the municipalities—the latter, receiving their relief grants in scrip; (3) by cash substituted for scrip at the outset. Wage-earners will be asked to accept part of their salaries in certificates. The Government will accept certificates in payment of taxes and for Government goods and services with the exception of liquor sales. Certificates held by retailers will be redeemable for accounts outside the province. British, United States, and Canadian firms expecting weekly remittances from firms operating in the province will be asked to consider a monthly date for acceptance of certificates and to redeem them with the Provincial Government. The proceeds of the sale of stamps will be placed in a trust fund for financing public works projects. Mr. Aberhart insists that the acceptance of scrip will be purely voluntary on the part of business firms and individuals, but declares that merchants will be compelled to accept it or lose their trade. RELIEF WORKS. The first use to which the velocity dollar will be put will be to set the unemployed to work on new roads. At the end of last month 10,203 were without work in the province, 3153 in Calgary and 4915 in Edmonton. Total expenditure on relief was £900,000 in 1933, £820,000 in 1934, and £950,000 in 1935. Of this Calgary alone contributed an average of £180,000 annually.

Strong distaste for the experiment is felt among the business community. The retailers, wholesalers, and manufacturers of the Edmonton Chamber of Commerce have declared their opposition, and the Alberta branch of the Canadian Manufacturers' Association announced this week that it would refuse to accept scrip.

The local Boards of Trade in Calgary and Lethbridge are equally opposed to it. Small shopkeepers here, with whom I have talked, are dubious of the success of the venture. They say that they are willing to give it a trial since the finances of the province are in such a desperate state.

Medicine Hat, the first community approached, has been offered £560 in certificates monthly for relief in place of £380 in cash, but the municipality is hesitant and has asked Mr. Aberhart to explain the benefits of the scheme in writing.

The Prune Minister's supporters admit that, if an unduly large amount of scrip is returned for redemption at the end of the first month, the Government would be compelled to acknowledge failure of the experiment.