| Subject: | Re: [socialcredit] McKenna | | Date: | Friday, September 28, 2007 07:14:25 (+1200) | | From: | Peter <cymric @.......nz>
|
| In reply to: | Message 5036 (written by william_b_ryan) |
I would appreciate a copy, thanks Bill.
This section of the submissions is an excellent addition to understanding
the issues of the consumer trying to pay for industry as well as the goods
and the controversy over 'credits to industry' currently covered by
increasing household and industry debt.
Peter
----- Original Message -----
From: <william_b_ryan@yahoo.com>
To: <socialcredit@elistas.com>
Sent: Tuesday, September 25, 2007 2:59 AM
Subject: [socialcredit] McKenna
> We have been discussing Reginald McKenna. I just
> realized that McKenna was a member of the Macmillan
> Committee that questioned Douglas in 1930. This is
> from a previous posting:
> -
>
> A couple of years ago Victor Bridger graciously sent
> me a vintage copy of Douglas's presentation to the
> Macmillan Committee of 1930 that was published some
> years ago in Australia. I've just gotten around to
> converting it into a photocopy in PDF format, an
> approximately 2.5MB file which I'll be glad to email
> to anyone who requests it.
> -
>
> Evidence Submitted to the Macmillan Committee of
> Finance and Industry by C. H. Douglas, M.I.E.E.,
> M.I.M.E., M.I.Mech.E.
>
> (Reprinted from the Official Minutes of Evidence)
> TWENTY-FOURTH DAY Thursday, 1st May, 1930
>
> Present: The Rt. Hon. LORD MACMILLAN, Chairman,
> Sir THOMAS ALLEN,
> The Rt. Hon. LORD BRADBURY, G.C.B.,
> The Hon. R. H. BRAND,
> C.M.G. Professor T. E. GREGORY, D.Sc.,
> Mr. J. M. KEYNES,
> C.B. Mr. LENNOX B. LEE,
> Mr. CECIL LUBBOCK,
> The Rt. Hon. REGINALD McKENNA,
> Mr. J. FRATER TAYLOR,
> Mr. A. A. G. TULLOCH,
> Sir FREDERICK LEITH-ROSS, K.C.M.G., C.B.,
> Mr. G. ISMAY, Secretary.
>
> Major CLIFFORD HUGH DOUGLAS, M.I.Mech.E., M.I.E.E.
> called and examined...
> -
> An excerpt:
>
> 4461. PROFESSOR GREGORY: May I go back to the
> motor-car? You say if the motor-car costs me £100 I
> will get a chit, which I deposit with Mr. McKenna's
> bank, and he finally deposits it with the Treasury,
> and by a series of book-keeping entries 25 per cent.
> of additional purchasing power is created?--
> [Major DOUGLAS] That is one form of mechanism.
>
> 4462. [PROFESSOR GREGORY] That is one form of
> mechanism, but I do not want to pay too much attention
> to the consumers' side--what is the position of the
> manufacturer? Are you assuming that the car costs the
> manufacturer £100, or that it costs the manufacturer
> more than £100? Is the actual cost price to the
> manufacturer what you pay for it?--
> [Major DOUGLAS] Do you mean, is he making a profit?
>
> 4463. [PROFESSOR GREGORY] No, I am asking is he
> covering his cost if he sells at £100?--
> [Major DOUGLAS] Oh! yes.
>
> 4464. [PROFESSOR GREGORY] You are assuming that he is
> carrying on his business on a perfectly definite
> commercial basis?--
> [Major DOUGLAS] Absolutely. He is selling in
> competition with other people who may sell at £99.
>
> 4465. [PROFESSOR GREGORY] Your £25 does not really go
> to that motor-car manufacturer at all?--
> [Major DOUGLAS] No.
>
> 4466. [PROFESSOR GREGORY] It is added to the general
> borrowing or purchasing power of the community. Well,
> I do not see, in those circumstances, how you can
> prevent prices from rising.--
> [Major DOUGLAS] I cannot see, as a matter of fact, how
> it can possibly cause prices to rise, again as a
> matter of mechanism, by this process. Supposing they
> do rise, your subsidy becomes inoperative.
>
> 4467. [PROFESSOR GREGORY] Let us suppose in a given
> period of time, one month, the total turnover of
> consumable goods in this country is £1,000,000,000,
> and let us take your figure of 25 per cent.; that
> means that at the beginning of next month there would
> be £1,250,000,000 of purchasing power available. I am
> only using your own figure of 25 per cent.--
> [Major DOUGLAS] No, that is not quite true. I should
> not regard it, incidentally, as very important if it
> were true.
>
> 4468. [PROFESSOR GREGORY] Let us clear up that point
> first?--
> [Major DOUGLAS] The result of your having done this is
> greatly to increase the total amount of sales in the
> country. Now, the whole of the price which is
> collected from the public becomes an item for
> cancellation, just as it does at the present time.
>
> 4469. [PROFESSOR GREGORY] How do you get it back? You
> get it from the consumer, you pay it into the bank,
> who pay it into the Treasury, who get additional
> credit from some source, but you never do get that
> back?--
> [Major DOUGLAS] I will pursue this subject as far as
> you like, but I am frankly much more interested in
> making you see that the thing is perfectly possible.
> If you would really like me to get out a considered
> report as to the mechanism by which it can be done I
> shall be delighted to do it, my services are entirely
> at the disposal of the Committee, but the point that I
> want to hammer home is that it is inconceivable that
> you cannot get a mechanism which will enable you to
> equate purchasing power to the capacity to deliver.
>
> 4470. Mr. KEYNES: Is it not probable that those of us
> who are criticising are not inclined to accept the
> inherent difficulty which you develop in paragraph 16
> of your Memorandum. You divide payments there into A
> and B payments?--
> [Major DOUGLAS] Yes.
>
> 4471. [Mr. KEYNES] The cost of production to the
> manufacturer is A plus B. Of that A goes to the
> public and is spent by them on manufactured goods, but
> B goes elsewhere?--
> [Major DOUGLAS] Yes.
>
> 4472. [Mr. KEYNES] Where does it go?--
> [Major DOUGLAS] I felt sure that this would arise,
> because it generally does arise. May I put it this
> way? The wording of this statement is very careful. I
> always make the wording very careful. I say "Since A
> will not purchase A + B, a proportion of the product
> at least equivalent to B must be distributed by a form
> of purchasing-power which is not comprised in the
> description grouped under A." I have not said it must
> be paid.
>
> 4473. [Mr. KEYNES] I did not want to go on as far as
> that. Just previous to that you see "Group B," which
> includes raw material; I assume you mean imported raw
> material; is that right?--
> [Major DOUGLAS] "Group B. All payments made to other
> organisations (raw materials, bank charges, and other
> external costs)". Yes; simply what we should call in
> a company, bills payable at the end of the month.
>
> 4474. [Mr. KEYNES] If they are paid through another
> business then that business will pay the amount as
> part of its cost of production to individuals? Is
> that it?--
> [Major DOUGLAS] Yes, I quite understand the
> difficulty. The real weight to be attached to this
> undoubted statement of fact--as it stands it is simply
> a statement of obvious fact--is whether the transfers
> from one firm to another are financed by either trade
> credit or from the firm's own credit, let us say its
> working capital, or by a bank's credit. The exact
> weight which that has in the whole of the statement
> depends to a very large extent on that. If the B
> payments are really financed from working capital then
> that working capital must, I think, inevitably have
> been obtained by the process of investment which is
> criticised under (b) in the same précis. That is to
> say, the whole of the savings which have formed the
> working capital of that concern must previously have
> appeared in the cost of production.
>
> 4475. [Mr. KEYNES] That would be true, but I thought
> the emphasis here was on the phrase "other
> organisations," and what you are saying has no bearing
> on that.--
> [Major DOUGLAS] I am sorry! I missed that.
>
> 4476. [Mr. KEYNES] I thought the force of the argument
> here was that it was a payment made by this
> manufacturing firm to other organisations?--
> [Major DOUGLAS] Yes.
>
> 4477. [Mr. KEYNES] Its working capital is required to
> meet its expenditure under Group A during the period
> of production just as much as under Group B, so what
> you are saying now does not seem to me to distinguish
> between Group A and Group B?--
> [Major DOUGLAS] Yes, it does, because in Group A you
> paying out to the consumer; all the payments under
> Group B are purchasing power; which, if it was
> obtained by re-investment, was originally in the hands
> of the public and never gets back into the hands of
> the public at all.
>
> 4478. [Mr. KEYNES] Other organisations which were
> receiving money under Group B are getting back that
> amount from this first one?--
> [Major DOUGLAS] Yes, that is the case; but there is a
> large amount of purchasing power which is permanently
> retained purely in the productive system, and never
> gets out into the consumers' system.
>
> 4479. [Mr. KEYNES] If all firms were united in a
> single firm would your difficulties be overcome?--
> [Major DOUGLAS] That is the obvious remedy for the
> financial difficulty but not necessarily the right
> remedy. Even from the purely financial standpoint it
> is a little difficult to say; you understand a time
> lag comes in.
>
> 4480. [Mr. KEYNES] You think it would vanish?--
> [Major DOUGLAS] No, I do not think it would completely
> vanish.
>
> 4481. [Mr. KEYNES] Why not?--
> [Major DOUGLAS] Because there would be a considerable
> amount of money being paid out in wages for delayed
> production, and your hypothesis assumes that the
> distributed costs of a given week are the total prices
> of the goods for sale in the same week.
>
> 4482. [Mr. KEYNES] It would be diminished?--
> [Major DOUGLAS] It probably would be diminished I
> think, yes.
>
> 4483. [Mr. KEYNES] Insofar as the fact that you have a
> differentiation in industry means that some people
> have to have bank accounts which they pay to others,
> it means you have to create a certain amount of
> credit, and really it acts as a revolving fund?--
> [Major DOUGLAS] Yes.
>
> 4484. [Mr. KEYNES] If a revolving fund has been
> established, why do you have to add to it?--
> [Major DOUGLAS] If the revolving fund is as large as
> the total amount of money required to finance the
> whole of all business from the time the first process
> takes place to the time the article goes out to the
> consumer--it is possible--I should not be inclined to
> admit it offhand--that the question might disappear;
> but that is certainly nothing like the actual case.
>
> 4485. [Mr. KEYNES] If you once raise the volume of
> credit to whatever level may be required by your
> profit in relation to the volume of production you
> have only to go on increasing it in proportion as
> production increases?--
> [Major DOUGLAS] No; there are all sorts of questions
> that would still arise. The question of turnover,
> depreciation, and the fact that the purchasing power
> of credit, or whatever you like to call it, which has
> been transformed into price values of fixed assets in
> the industrial system would in existing circumstances
> have to enter into the cost of the goods--and cost
> items of that type would always raise the price of the
> articles above the amount of purchasing power.
>
> 4486. [Mr. KEYNES] And if in the interval you had to
> have new machines to replace old ones you would have
> to have individuals to produce them. How does that
> differ from any other form of consumption?--
> [Major DOUGLAS] Because you are not starting from
> zero. You are starting from a world as it is.
>
> 4487. [Mr. KEYNES] How does that bear on the matter?--
>
> [Major DOUGLAS] It bears on the matter that you have a
> tremendous amount of real capital which at the present
> time is creating prices and which has not contributed
> anything like that amount of purchasing power.
>
> 4488. [Mr. KEYNES] Do you mean that the receipts of
> capital are greater than the amount it pays out in
> dividends?--
> [Major DOUGLAS] Yes; that is an obvious statement of
> fact; the accounts of any company will show that.
>
> 4489. PROFESSOR GREGORY: What happens to the
> difference?--
> [Major DOUGLAS] It is represented by the fixed assets
> in the company which it cannot distribute in the form
> of money...
> -
>
>
>
>
> ____________________________________________________________________________________
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