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Hi Bill (McGunnigle),
Thanks again for shedding some further light on an area
that needs illuminating. My understanding is that Canada never was in the
'Sterling area', as were most other independent Dominions of the
Empire, and most of the Crown Colonies, etc.
Even though our trade with Britain and other Empire
jurisdictions was substantial, and protected due to "Imperial
Preference" trade agreements, we were in the 'Dollar area'.
Canada, for whatever reasons, perhaps to show we were
'independent' of British Government foreign policies, or maybe under pressure
from Washington, resisted efforts by Britain to form a more
cohesive intra-Empire trading 'bloc' after World War Two.
I believe that was something Winston Churchill was pushing
for, but Ottawa wouldn't go for it. It would be another one of those
interesting speculations to ponder "what if" that had happened. For
the Empire was physically even more internally 'self-sufficient' in
regards to resources and markets than America, or the Soviet bloc, or a
united Europe. Doubtless ''financial'' considerations played a large role in
scuttling that idea. Though the personality and mind-set of Churchill and
some of the other British proponents might have been detrimental to the idea
too.
I'll have to go through what you've written further, Bill,
and try to piece together how the 'competition' you mention fits into it.
Out of time right now.
Regards,
Joe
----- Original Message -----
Sent: Thursday, December 20, 2007 11:59
PM
Subject: Re: [socialcredit] Re: Article
by Richard Cook
Hi Joe
What
you have postulated is essentially correct. However the BofE never held
substancial amounts of NZ currency. NZ pounds were changed into Pounds Sterling in NZ by the NZ Reserve Bank. NZ companies
were required to purchase Sterling from the Reserve Bank in order to undertake
overseas purchases, thus NZ currency never reached Britain. I believe the pressure from the Bof E was from British Banks that,
up until the advent of the Labour government, had
monopolised loans extended throughout the NZ economy. They found themselves in
direct competition with a government backed bank that could afford to offer
loans at 0.5-1.0%. Obviously they could not allow any other British Empire
"colony" to follow NZ's example, because a substantial
amount of Britains overseas earnings came from Banking "investments" in the
form of loans to all Empire colonies, hence the pressure. I am sure something
similar was directed towards Canada and Australia to force them to remain
within the Sterling area prior to 1939.
The position of the Bof E acting as
the the holders of overseas exchange for Empire and Commonwealth gave it a
unique position as banker for the Sterling area. It could therefore exert
pressure on those countries by withholding the
exchange reserves it held in safekeeping for Sterling
area countries. I am sure the BofE would have acted in this way no matter
what, once it became apparent that the NZ government had determined to become
the master of its own currency and foreign exchange rate. It was a necessary
step for the Bof E to maintain its financial control of NZ's developement
against NZ government efforts to become autonomous.
This is my interpretation of the actions
taken by the Bof E in 1938. Nevertheless I concede that there are still too
many "What ifs" and " If only's" in the whole senario. That all the
negotiations have been embargoed until 75 years after the event doen't help
matters either. Furthermore I suspect that once the time expires they will be
reembargoed for a further 75 years. This seems to be a
common factor in these events.
regards
Bill
McGunnigle
--- Original Message -----
Sent: Friday, December 21, 2007 3:29
AM
Subject: Re: [socialcredit] Re: Article
by Richard Cook
Hi Bill (McGunnigle),
Many thanks for providing the background details in
regards to the New Zealand experience.
Could it be that what your first Labour
Government was attempting was tantamount to a continual 'devaluation' of the
New Zealand pound? (I don't know the answer to that, quite honestly,
but it would seem to me that might be the case.)
If that were so, then perhaps your main trading
partner, Britain, ran the risk that what had been acquired by the BofE
in New Zealand denominated funds through trade balance settlements, (instead
of a transfer of actual gold or silver), might quickly become progressively
worthless as effective demand for further NZ goods?
If such were the case, and its holdings of foreign
exchange reserves in NZ pounds were substantial, wouldn't it be likely that
the BofE would naturally try to discourage the new found 'financing' method
for Government infrastructure for that reason alone, if none
other?
Now I don't have the answers to that, and maybe I'm
way off track even in considering the issue that way. And if I am,
I hope anyone with greater knowledge in these matters will come
in and set me straight. But at the moment, that's what comes to
mind.
If your first Labour Government could
have gone instead to some variant of the CPD mechanism, which, in
effect, makes each unit of NZ currency held capable of purchasing 'more' in
NZ goods and services, I wonder how the BoE would've viewed that?
Other considerations aside, wouldn't it be possible you might have had quite
a sudden 'trade boom' with Britain and found funding infrastructure a
lot easier?
It's always interesting to speculate what might have
happened when we ask "what if" or "if only" we'd done something differently,
but really, all things are so interconnected it would be almost impossible
to ever know.
Regards,
Joe
----- Original Message -----
Sent: Wednesday, December 19, 2007
9:12 PM
Subject: Re: [socialcredit] Re:
Article by Richard Cook
Hi Joe
Further to John Rawson's remarks on the use of Reserve Bank Credit for
infastructure building works by the 1935-1949 Labour government of New
Zealand, from my historical research into that
government, The Bank of England expressed great
disapproval of this method of financing New Zealand's internal
infrastructure developement. It, therefore, took the unprecedented step in late 1938, supported by the British
government, threatening to freeze all of New Zealand's overseas exchange
funds to which it had security rights, (New Zealand was part of the
Sterling area then) unless it discontinued the practice. This put a
temporary hold on the practice, but, in 1939, with the outbreak of
WW2, the Bank of England was in no position to continue to hold that
threat over NZ, because NZ was a reliable supplier of essential raw
material for the war effort. Consequently despite the enormous amount of
expense, relatively speaking, that the war cost NZ, the bulk of the war
debt for NZ was to its own Reserve Bank at a nominal interest rate. NZ had
a balance of payments surplus during the war years because of this. Demand
for NZ products after WW2 continued to exceed supply and it was not until
the 1970's that NZ started to experience balance of payment deficits.
Significantly the end of the 1st labour government in 1949 saw the
downturn in the balance of trade with the advent of a series of National
governments that steadily reduced the strict monetary exchange rules
enforced by the 1st Labour government. However, ironically, it was the 3rd
Labour government 1972-75 that removed exchange rate controls, and it
was from that point onwards that NZ began to experience serious balance of
trade deficits. The swing to the extreme right during the 1980's and
1990's completed the exchange rate "liberation", and NZ has never been
able to post an overall balance of trade surplus since then.
I trust this amplifies some of the
detail around the question
regards
Bill Mc Gunnigle
----- Original Message -----
Sent: Thursday, December 20, 2007
9:48 AM
Subject: RE: [socialcredit] Re:
Article by Richard Cook
Thanks Joe.
The first parts remain theory either way
for me and I keep an open mind until someone comes out with hard
facts.
But your comment on NZ is wrong. There was no debt attached to
the use of Reserve Bank credit for Government operations. It was new
money issued for the purpose, non-repayable. For local bodies and the
Dairy industry, yes, you are right. But the interest charged was
only 1% and the finance probably would not have been available
elsewhere. Making this repayable meant that more could be issued as it
was returned, or alternatively made the debt bearable if it was not. .
This distinction is in accord with our present party policy here.
I
notice Richard has not replied to your comment on inflation, so try this
translation. "No more inflationary than any other issue of new
money from any source." That would, of course, include money issued by a
Credit Authority as per Douglas recommendation.
The issue over
government use of new money has nothing whatever to do with (demand
pull) inflation. If it is confined to the amounts needed to balance the
prices of goods, there should be none under either system. The
critical point is that, in a dictatorship, Government spends all new
money into circulation and therefore determines what shall be
produced. We saw that in Soviet Russia., and to some extent in
Nazi Germany, both of which seem to have operated a form of monetary
reform. In a democracy, the public would be given at least some of
the new money to spend into circulation so that they get to determine
what goods shall be produced per economic democracy. However, in
the modern high taxation state, it would be ridiculous to pass all new
money to the public and then simply tax a large proportion back from
them before it could be spent.
It is a pity if great ideas are made
ridiculous by slavish adherence to totally impractical
concepts
Regards. John R.
Date: Tue, 18 Dec 2007 20:03:47 -0500
From:
thomsonhiyu@shaw.ca
To: socialcredit@elistas.com
Subject: Re:
[socialcredit] Re: Article by Richard Cook
(John Rawson wrote:-) So the whole reform constitutional
argument is based on the clause "To coin money"? It could be
claimed logically that, since coinage was the only form of money
then, this was intended to cover all money?
(Joe replies:-) But it wasn't the only form of 'money'
then, John.
(John Rawson:-) I note again your reaction to the
Guernsey story, but you have never given hard facts for your
attitude. So far there appears to be more evidence for this
event than against.
(Joe replies:-) That story was thoroughly vetted on here,
or the predecessor list, quite some time ago. The ''States
Notes", if I recall correctly from what was determined in
examining the issue then, were redeemed by import duties. They
weren't 'debt-free' money.
(John Rawson:-) After all, why should anyone invent such
a happening in such an unusual place otherwise?
(Joe replies:-) There was a lot of
propaganda put forth by various 'monetary reformers', John.
BC's own G. G McGeer, a former Vancouver Mayor, who was later a MLA,
a MP, and finally a Senator, was one latter day one. He was
aided and abetted by still others who'd previously created 'facts'
out of fiction to further their own ends. The myth might
grow and grow, but it's still myth.
(John Rawson wrote:-) And would you argue that
the actions of New Zealand's first Labour Government in funding much
of infrastructure, state housing for homeless, and the dairy
industry with Reserve Bank credit at 1% is a myth?
(Joe replies:-) They 'primed the pump'
with deficit financing. That's all they did. It
relieved unemployment, and stopped the deflationary spiral
that you were in.
In a deflation it's hard to sell
anything other than essentials, for why would you want to buy
anything today if you felt you could get it cheaper tomorrow?
And when prices have to be lowered below financial cost to move
existing product, there's no inducement to produce any
more.
So your government turned that around,
and when prices started to come up, then there's an inducement
to buy before they go higher. It's a quick fix, but it doesn't
really solve the problem. And when it's carried on for any
length of time you'll get an 'inflation' that'll negate its
benefits. It is a crummy substitute for Social Credit properly
applied.
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