THE STRUGGLE FOR MONEY
A Study of the struggle which is the
underlying root cause of all the world's troubles and problems, from poverty to
world-wars and the hydrogen bomb; and is quite insane and unnecessary. Who at
present owns, and who ought to own, all money and credit, asks the author--the
Banks, the Government or the Consuming Public?
BY
H.M.M.
WILLIAM MACLELLAN
240 HOPE STREET, GLASGOW. C.2
1957
CONTENTS
Chapter
Page
1
THIS SORRY SCHEME OF THINGS ............................ 7
2
FINANCIAL AXIOMS ..................................................
17
3 THE DEFECT OF CREDIT CREATION .........................
21
4
THE DEFECT OF BANK INTEREST ............................ 29
5 THE DEFECT OF PREMATURE CANCELLATION OF
PURCHASING POWER ................................................ 34
6 OUR BOGUS DEBTS
................................................. 43
7 THE BANKERS' BOTTOMLESS VAULTS
..................... 55
8 THE REMEDY
............................................................ 60
9
RICH AND POOR ............... ........................................
70
10
SUMMING UP .............................................................
74
11 FINAL WORDS
............................................................ 86
12 UNDER WHICH KING? (C. H.
Douglas) .......................... 90
CHAPTER EIGHT
The Remedy
In general terms the remedy consists in
restoring to the consuming public the purchasing power it is robbed of daily
with every new credit--as distinct from replacement credits--created by the
banks to finance the needs of production and commerce, and the activities of the
Government and Local Government bodies; and this consists, among other things,
in transferring the National Debt--so far as it is internal debt--to the other
side of the nation's balance sheet, as the National Credit it really is--while
recognising and acknowledging the rights of all those who have been induced to
invest their savings in Government securities provided it really is their
savings that are invested, and not merely money got by way of bank overdrafts, a
practice fathered by the banks during the First World War, and still practised
for all I know. This would form the foundation of the National Credit
Account.
Replacement credits are
ones which cancel and replace earlier new and replacement credits. They don't
cause any fresh inflation, but they keep earlier inflations and debts alive
after the incomes they represent and replace have been spent, and cease to exist
as anybody's purchasing power; and they carry these earlier debts forward in
current costs and prices and debts. They are never anybody's income.
So if justice is to he
done, and "the strange discordance between the consuming and producing power"
Sir Winston complained of is to be overcome, free issues of money or credit,
from the National Credit Account, must be distributed to the consuming public,
to bring their total purchasing power up to the level of total prices; and so
enable them to buy and pay for everything they care to produce, cancel the bogus
debts attached thereto, and so become solvent and free, probably for the first
time in history.
The whole present
structure of costs, prices and debts is built up on cumulative, inflationary,
snowball lines; whereas the community's total personal income, which is set the
impossible task of liquidating this cumulative snowball, is non-cumulative. It
is earned, spent, and gone earned, spent, and gone--in endless succession. Hence
the mountains of bogus debts called into being to bridge the gap between the
two, and the mountains of useless labour and wasted material they involve, now
crushing the peoples of the world, and threatening their existence. Their
salvation depends on, and awaits, the squeezing out of all this inflationary
water from the price snowball.
To stop the bankers' depredations we must:
1. Set up a National Credit Account. At present we
have only a National Debt Account;the banks having usurped all our
National Credit--to create our National Debt
2. Institute a National Dividend;
3. Finance New Production by drafts on the
National
Credit Account, and not out of Savings;
and
4. Allow a Just Price Discount on all personal
purchases,
out of income, for final use or consumption--to
adjust
book prices to actual incomes.
The National Credit Account: This would
be a 'Compilation of the money valuation of all the country's capital assets and
resources, whether publicly or privately owned--everything, in fact, that might
appear in prices as a cost, if requisitioned or used; and this necessarily
includes an actuarial estimate of the commercial capitalised value of the
population itself--an indispensable asset that gives value to an other assets.
(A number of years ago the value of a citizen of the U.S.A. aged 25 was said to
be about £10,000. That was before the Second World War. The figure varies with
the actuarial expectation of life and the plant capacity of the country, so
should be considerably higher now.)
These capital assets are the country's
Real Credit, and sum up and measure its capacity to create and deliver goods and
services; and on it the National Dividend would be based, and financial credit
be created against it by the Treasury.
The National Dividend: Once the fact is
grasped that all the financial credits the banks create and lend us are really
our own--being drafts on the nation's real credit--ability to produce a wealth
of goods--it becomes apparent that whatever the community has the ability to
produce or do, and cares to produce or do, it can not only finance without the
slightest difficulty, but also finance the consuming public .to buy and pay for
it when produced or accomplished; and in so doing liquidate, for good, all the
formal debts incidental to its production or doing, without having to incur and
sustain fresh and larger debts in the process, as now.
The National Dividend would be based on
the National Credit, and would be a debt-free issue of credit from the National
Credit Account, and added to the bank account of every member of the community,
at regular intervals, independently of any other income he--or she--may have or
earn--everybody's share being equal.
The National Dividend is a gift from
the past--from the National Heritage--and represents what I have slumped
together roughly and called the unpaid wages of the Machine; and its purpose is
to keep the community's income always abreast of its productive
capacity.
This would usher in an honest
self-liquidating economic system, and a new and hopeful era for the whole world,
free from bogus National Debts and the cut-throat competition for money and
markets they engender, at home and abroad, which at present threatens to put an
end to everything and everybody.
Financing New Production: Just as
people can't eat their cake and have it, even so they can't invest their money
in industry and at the same time retain it for buying the final products of that
industry--i.e., consumer goods--in the price of which the money invested
re-appears as a cost. although it no longer exists as anybody's purchasing
power.
The money invested increases output,
costs and prices; but reduces to the same extent the community's purchasing
power and ability, as consumers, to pay these prices and buy the fruits of the
investment in the shape of goods produced. Hence the need for financing all
production by drafts on the National Credit Account, and not from Savings; and
counter-balancing the costs for the consuming public via the National Dividend
and the Just Price Discount.
The banks do actually finance industry
at present by drafts on the nation's real' credit-its ability to produce goods
and render services. Their offence, or crime, is that they wrongfully--or
sinfully--record them as drafts on their own credit, a proceeding which drives
us, and the world, on to ruin and disaster.
The Just Price Discount: Every business without exception must fix its prices to cover all
its costs and yield a profit if it is to remain in existence.
Its prices are made up of
two groups of costs-Inside Payments and Outside Payments. The Inside Payments
are the wages and salaries paid to the employees, plus the distributed profits
or dividends allocated to the owners or shareholders. The Outside Payments are
all other payments, made to outside firms and concerns for goods and services
needed to run the business--buildings, plant and machinery and tools, raw
materials and intermediate products--and final products in the case of retail
businesses--transport, repairs, and so on-also rates and taxes; and these
Outside Payments are obviously not income to anybody in the business that makes
the payments.
If we call the Inside
Payments A, and the Outside Payments B, total costs are A plus B; so it is
equally obvious that the owners and employees of the business cannot, between
them, possibly buy--with their joint incomes, represented by A--the total output
of the business, the price of which is A plus B--even if they wanted to, which,
of course, they don't.
That is true of every
individual business, so it is true of all businesses collectively, in any week,
month, year, or period of years we like to take; from which it follows that the
country's total income--every country's total income--all the world's total
income--is at all times insufficient to buy its total output; and to that fact
all the world's major troubles are due.
That is the late Major C.
H. Douglas's famous A plus B theorem; and many people, including not a few
professional economists--but no bankers, so far as I am aware--have rushed into
print to prove it false, only to reveal their utter incapacity to handle figures
correctly. Disregarding the elementary fact that comparisons between A and B
payments, to have any value or validity, must be taken for the same periods of
time, they analyze the B payments--the Outside Payments--and find, correctly,
that they were all, originally, at one time or another, Inside Payments--i.e., A
payments, payments of income in some business or other--and conclude from that,
quite wrongly, that B payments are payments of income too; consequently, they
contend, the community's total income is always able to buy and pay for
everythmg that is produced. And if they are Socialists or Communists they may
add that all that is wrong is that most of the money is in the wrong hands, the
hands of the rich.
The reasoning is as false
as to say that, as everybody now alive was born, therefore everybody born is
still alive!
(B payments are carried
by "replacement" credits; and replacement credits are debts due to the banks,
but are never anybody's income.)
Critics of the theorem shut their eyes
to the glaring evidence provided by the whole labour world's eternal cry for
higher wages, and their resort to endless strikes to enforce their claims,
merely to try and keep themselves abreast of ever-rising prices--a feat
impossible of attainment, because every increase in wages is also a
corresponding increase in costs and prices.
They also shut their ears to the
Government's eternal cry that we must increase our exports--merely because the
home population hasn't the money to buy everything it produces.
Mr. R. A. Butler, when Chancellor of
the Exchequer, was reported as saying at a meeting in Edinburgh on 2.4/10/52.,
that if Britain could not improve her export trade, she could not improve her
balance of trade, " Unless you sell more than you buy in food and raw
materials," he said, "you will go bust."
Sheer lunacy! Let him explain how the
world can sell more than it can buy, since every sale is a purchase except by
piling up debts--bogus debts-and cutting its own throat.
The same pathetic, and brainless,
banker-inspired cliches are being dinned into our ears every day in the week, in
and out of Parliament-and in the Press-without investigation as to their meaning
or truth, by those who utter them.
Hitler said earlier that Germany must
export or die; and the whole world can say the same and belIeve it to be
true--and even go to war in defence of that belief--without apparently realising
the fact that as every export is an import somewhere, and every import an
export, they are all bound to "bust" or die-and probably will, unless they learn
to talk sense.
For the contention to be
true that the community's income is able to buy everything that is produced, it
would be necessary, either that all the money now classified as a B cost should
have been saved intact from the day when it was an A cost and somebody's income,
and not spent at all until the work done, or the service rendered in return for
these payments, was embodied in the costs and prices of consumer goods and sold
to a final consumer, months or years ahead; or else that producers of raw
materials possibly on the other side of the globe--and the makers of
intermediate or final products, should delay paying their workers until the
retailers of the final products had sold them to final consumers, and passed
back the money received to the various contributors in the productive
chain--only to find, in both cases, that they had all starved to death because
of the lengthy interval between the work done and its just reward in consumable
goods.
A little thought would
have shown these hasty critics that although all B payments were at one time A
payments, that time is always in the past--often a very distant past and,
needless to say, all money and credit that was income in the past was spent in
the past--probably within a week or two of its receipt, for most people--and
repaid to the banks, and thereafter ceased to exist as anybody's income,
although it continued to exist in the costs and prices of to-day--via
replacement credits--as a B payment and a communal debt; and so is not available
for final personal purchases at all.
How much have you
left-you who may read this--of your wage or salary at the end of a week or
month? And where has it gone after you spent it? Back to the banks to cancel
earlier bogus bank debts, and no longer exists as anybody's purchasing power.
Yet your employers will still be in debt to the banks for the money you have
spent--as well as for the money you haven't yet spent--if any!
Great Britain's bogus Internal National
Debt to-day (1954) of £24,468,484,647 (Whitaker's Almanack 1956) is living
testimony to the truth of the theorem.
Nationalising industry, or the
banks--or both--does nothing, and can do nothing, by itself, to redress this
discrepancy between incomes. and prices. Only a change to honest bookkeeping can
do that; and if we get honesty there, nationalising anything of a productive
nature will be easily seen by everybody--even Socialists and Communists–to be
the most inefficient and unsatisfactory way of doing it.
All money and credit
distributed as income is only income once--i.e., at the point in the productive
chain where it is received, directly, as wages, salaries, or dividends (A
payments); thereafter it continues in existence, somewhere, as a B cost, and is
carried forward into the future, by means of replacement credits that are never
anybody's income. These replacement credits are debts--bogus debts--repayable to
the banks; and as things are they can only be repaid by substituting new debts
for old ones. They can never be wiped out. They can only mount up as additions
to the National Debt, and suck away the financial life-blood of the nation,
and--by repetition everywhere--of the world.
Although it is true that
the employers and employees of any business do not want to buy the whole of
their own output--because it would be too much of a good thing, and would
prevent them from buying other people's goods; collectively, taking all
businesses and outputs into account, they do want to buy it all, since they have
produced it--unless they are producing the wrong kind of goods--which is exactly
what they are doing, and have to do to a very large extent--guns instead of
butter; atom bombs instead of houses; exports in excess of imports--and they
ought to be able to buy them all--even the guns, and atom bombs, and surplus
exports--without putting themselves in debt.
All these B costs in
prices are "water"--bogus debts--which must be squeezed ont of prices, or
compensated for by financial adjustments, if the public are to acquire and own
all the wealth they--with the help of the machines produce; and, by acquiring
it, survive. The question is how it is to be done. Douglas's Just Price formula
supplies the answer.
If money or credit didn't exist it
would be easy to see that the Real Cost of producing anything is the amount of
energy--human and non-human--consumed or used up in producing it--which means,
if we care to think it over, that the Real Cost of Production is Consumption.
So, if we know the money value of the nation's total production and consumption,
capital appreciation and depreciation, imports and exports, in any accountancy
period--and Government departments can easily supply that information--the Just
Price of any article is easily and automatically found.
The formula is that its Cost Price
should be to its Just Selling Price as the money value of the nation's Total
Production (including Capital Appreciation and Imports) is to the money value of
its Total Consumption (including Capital Depreciation and Exports):
Cost
Price of Total Consumption
including
Capital Depreciation and Exports
Just Price = Cost Price x
-------------------------------------------
Cost Price of Total Production
including
Capital Appreciation and Imports
Thus, if in any accountancy period,
twice as much in terms of money--is produced as is consumed, the Just Selling
Price of articles bought by final consumers in that period would be half their
Cost Price. If the ratio were three to one the Just Selling Price would be a
third of its Cost Price; and similarly with other ratios.
The beauty of this formula is that
besides conveying the products of industry to would-be consumers on all income
levels with the maximum of speed and efficiency--that is, as fast as productive
capacity can adapt itself to real demand--the fluctuations of the discount rates
serve also as a useful barometer, indicating to everybody when it is desirable
to increase production and when to slow it down; and provide them with a
personal urge or incentive to do the one or the other when required; for if
production and productive capacity increased faster than consumption--as it
normally does even now--the Just Price Discount would rise and the net Just
Price fall in proportion, which would enable people on lower income levels to
increase their purchases as the needs of the higher income levels became
satisfied, until the wants of all income levels were fully satisfied; and when
that happened demand would fall away to some extent, and stocks accumulate, so
producers would naturally slow down production for the time being and take a
holiday. But as stocks got lower while production was suspended the discount
rate would fall too, which would raise the Just Price correspondingly, and
reduce everybody's purchasing power, and consequently their purchases, and so
give a clear indication to the whole community when it was time to increase
output again; and the declining purchasing power of their money would give them
a strong incentive to set the wheels of industry whirring again to increase
it.
But though the Just Price formula is
based on all production and consumption, capital appreciation and depreciation,
imports and exports, the Just Price Discount is granted only on final consumers'
purchases, as all production costs are eventually embodied in final retail
prices.
It is obvious, of course, that
retailers couldn't possibly grant such discounts without going bankrupt, so
where else should the adjustment take place than where the financial
maladjustments have their origin--in the banks themselves. Retailers would give
final purchasers a receipt for their purchases on a standardised form. These
receipts would be handed into the banks by the purchasers--as cheques are
now--and the appropriate discount be credited to their bank accounts.
*****
Re: [socialcredit]
Reply to this message
