----- Original Message -----
Sent: Thursday, February 10, 2005 11:14
AM
Subject: [socialcredit] The MacMillan
Presentation
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.
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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
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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...
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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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