SOCIAL-CREDIT

Hokitika Guardian, 26 July 1933, Page 3

SOCIAL-CREDIT

By X; ARTICLE YI. We have ’secii that if pape r currency is to foe issued without it becoming va£«eleKß, it muffi, have wealth -and c-cedit behind it to ensure that when it retuim s to its ultimate source—either the 1 banks or the Treasury—it will , establish credit there to its face value'. Just at present we have lost our measurement of value, which lias been likened just now to- an india-rubber football. Whether the World Conference 'will re-bstalb'lish it on a gold or bi-metallic basis remain's to be 'seeni.lf' not it is difficult to see how currency can be stabilised or exchange arranged. But there still remains credit, and the face v.'.lue of the paper currency is the measure of the , amount ’of credit it will purchase. 'Hence the necessity- for keeping the credit irreproachable of those standing behind paper currency issue—whether the .hanks, the individual, or the country. ■ , We have seen- that- (1) the Banks could issue in New Ze d and some £lO,,000,000 extra 'Currency (.if required) without exceeding the safe margin as between currency and gold bullion, and securities reserve; (2) the- Government could if necessary issue paper currency for purposes; of national' y'emerge'nbj without establishing a precedent,' as this w;’ig. .done foy. Great Britain at. ,the time of the war ; (3) the present situation is not caused, bv shortage of currency but by hick of confidence preventing the industrial development which in turn causes the circulation of . currency.

! Th.(i cure therefore rests primarily on the revival of confidence to undertake j schemes which necessitate expenditure of capital in.', sueh'a \vJ.y as to bring in a tangible financial return. Constantly cutting down expenditure cannot revive -prosperity. Take the"' illustration ;of any business. Once its credit is - questioned and .the' finances become j tightened; it ••simply drifts 'from bad :to worse. The-wages sheet',may be re- ; .'(Prijoed, and (repairs and it’naifntenanc.e i neglected, .but this is reflected ill the l quality and.'arnount of output. A new ). manager comes: in. ■ with -vision and ; knowledge; of how the, business may be lextended and made .prosperous, again. He -would -be : unable; to do anything, . However, ; unlqss he could obtain the necessaiy. credit. 1: -He, .cannot obtain :this credit unles 6 his schemes-can be shoi|n to ;be ~sound:. That is the trouble with New Zealand to-day. 'With' per--baps oneo .exception.---there • are '- po definite and sound economic schemes evolved by the Government in a form which would leave no doubt as to their ability "to pay reasonable' interest oii capital bird provide sinking -fund 'fbj* repaylnent of .sbeh capitail. ' There are. ihebulous schemes more -of less ingblved in questions of relief of unemployment, and other political consiidoraidns. A .definite arid, economically sound I programme of public ' expenditure must be first, evolved; and fiien the neees-s'-ry financial credit to' carry ' out such schemes ban be arranged. There must be Some tribun-ai to decide,. However, whether proposed expenditure 'is a financially sound -proposition or not.; That is '.where banking 'knowledge and: experience is essential. Without. it there' would be . very grave danger of : political expediency leading, to that reckless extravagance .; of / which New Zealand 'has .had a ruinous experience.- , Roosevelt has putthe .--position quite plainly wdicn, he said That while',; any country , can be. utilising. it 8 . social qreditr issue 1 currency for -its'•-requirements, the stabilising of that..-currency-.is.. .» matter for the banks. " At time pf writing the 'World Conference, appears', fo have come- to a deadlock through notrealising this.; At fii'st. sight it seems quite easy to link- together all curb - a-fc ; t-he iratjio now .existing- 1 — : with the exception perhaps of the -mark; and the'rouble. ; Rut . obviously if there is no check on the amount of currency , any country may issue—and RooSevclt has himeelf 'demonstrated that there is I not—the impossiblity of -linking up. the! currency o-f all nations is at once ap- j parent. ' | Those who condemn Presided Roosevelt for -hi s attitude towards stabilisa-; tion of currency at present should' remember that he i s taking the 1 "only luoneSt and honourable - course. If he had sanctioned the linking' -up' 'of the' djoiUar with sterling iarid" the franc, and -had' immediately afterwards -by is.suing thousands of of new paper dollars depreciated ~ their value, die would have been rightly accused of j dragging down the value of other currencies. Until he has completed his programme and finalised the position of the dollar in respect to it s pur- i chasing power in America He could not. of 'neaessity. ~go into the. matter of. stabilising with other currencies'. i •It remains therefore now to be con-sidered-how social. credit may be utilised to. issue currency, for legitimately economic -purposes and at the same : dime link up. such currency with the i currencies of other countries in such i way | a s, to prevent its becoming worth-*! less. The fact that the Douglas Credit { system is unsound .and impracticable, does not mean that “social credit,” js in. the same, category. , (