|Subject:||Re: [socialcredit] McKenna|
|Date:||Saturday, September 29, 2007 08:10:21 (-0400)|
|From:||Joe Thomson <thomsonhiyu @....ca>
|In reply to:||Message 5036 (written by william_b_ryan)|
I'd like to receive a copy please, Bill. The section of Douglas's testimony
you quoted below, and more, is reproduced in an Appendix to the John Hughes'
book, so I thought I may have had it all. But on checking back, I see
Hughes has abridged it somewhat, and I'd like to see the whole thing.
----- Original Message -----
Sent: Monday, September 24, 2007 10:59 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
> [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
> [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
> 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
> [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
> [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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