Social Credit and the Just Price, I
Rodger, Robert
April 14, 1926 THE COMMONWEAL 625 SOCIAL CREDIT AND THE JUST PRICE I. "THE LIFE BLOOD OF SOCIETY" By ROBERT RODGER (In the series of articles entitled An Editor s Progress, recently...
...But brick, mortar, and machinery charges are made up principally of labor charges...
...the forgers claiming $500,000 worth of the community's goods...
...for the people as a whole paid for the goods, their purchasing power being diluted, or reduced, by the addition of the bogus notes to the genuine currency...
...This manufacturer spends the money in building and equipping a factory...
...In the ultimate, then, the manufacturer has paid for consumable goods...
...The goods they bought with the bogus notes belonged to the people as a whole...
...There was an increased demand in relation to supply...
...He has therefore to pay back $52,500 per annum in respect of principal and interest...
...By the issue of these credits the community has had to pay for a mass of plant and machinery valued in England alone at something like $600,000,000...
...Labor charges are simply cost of living charges...
...The good results that should accrue from the increased capacity to produce are lost, and more than lost, by the incidence of this double burden of a diluted purchasing power and plant charges...
...The just price, as conceived by Major C. H. Douglas, is designed to reverse this policy...
...In Six Centuries of Work and Wages, Thorold Rogers states that in the fifteenth century the wages of the artisan were about sixpence per day of eight hours...
...The ratio between the amount of money and the supply of goods at the market had been widened...
...and at any moment it may become a leading public issue.—The Editors...
...Other things, of course, have not remained equal...
...This, of course, was before the industrial revolution...
...A. J. Penty, and churchmen like Reverend Vincent M'Nabb have seized on the factor of machinery and condemned it root and branch...
...He insists that, normally, purchasing power is only issued on account of goods, and therefore no inflation of purchasing power can take place...
...Sixpence could easily accomplish the apparent miracle...
...Bricks, mortar, and machinery have been bought in order to erect a factory...
...This is the dynamic conception of wealth production...
...When banks create and issue credits they produce the same economic effects as the forgers...
...It provides for maximum efficiency and development...
...The Church, meanwhile, was at her zenith...
...Where is he going to get it...
...He also states that "food was so abundant and cheap that it was no great matter to throw it in with the wages...
...The industrial "slump" with its consequent starvation and misery would be a thing of the past...
...The industrial machine, with all its faults, is not the source of our economic ills...
...Lipson, also, states that "to the mediaeval mind it was intolerable that dealers and middlemen should manipulate supplies with the avowed object of forcing up prices...
...Besides the wages, salaries, profits, and other charges that he must put into the price of his products, he must also charge up this $52,500 loan and interest charge in order to pay back the forgers...
...The cost of maintenance was about sixpence per week...
...We have paid for it in a diluted purchasing power...
...Supposing, now, the forgers produce another $500,000 of bogus notes and this time lend them to an honest manufacturer...
...With the expansion of the industrial machine the burden on the community grows...
...That the principle of the just price had beneficent results cannot be doubted, for historians concur that the era during ¦which it remained in force was the golden age of labor...
...If the cost of this plant expansion is paid for in the price of consumable goods (the foregoing analysis shows that it is) is it to be wondered at that the masses are still poor despite our enormous increase in wealth-producing capacity...
...In the American hosiery industry it is stated that one operative (perhaps a girl) in charge of twenty-five automatic machines can turn out 150 dozen pairs of ribbedtopped stockings per day...
...The minimum of commodities for the maximum delivery of money is the keynote of the policy...
...This form of atavism, however, is as unnecessary as it is impracticable...
...The fact, as already stated, is that the financial system is "weighted" against goods and in favor of money...
...Our manufacturer has yet to pay back the forgers for the loan of the bogus notes and in addition, say, an interest charge of 5 percent...
...The present series, by an exponent of the system, is designed to outline the main ideas for the first time in this country...
...Briefly, Major Douglas traces the evils of industrialism, not to private ownership or to the system of profits, but to the control of the actual symbols of money by the relatively private banking monopoly...
...What would happen...
...A. R. Orage referred to the Douglas theory of credit...
...THE "just price" had its origin in the middleages...
...for, they contend, the only way out of our economic cul-de-sac is backwards...
...Credit, though "the life blood of society," is a monopoly of the financier...
...The financier controls the machine, and it is run (through the medium of the employer) with a financial objective...
...Let it be spread over a period of ten years...
...and "that all merely speculative trading, all attempt to make gain by a skilful use of market changes, is to be condemned...
...It paid for the building of the factory...
...Labor" produces not only consumable goods, but also the means to further production in the shape of plant and machinery...
...Prices would rise...
...Here, then, is an avenue of approach toward the just price...
...currency notes being produced, but no goods to balance them...
...The community would lose $500,000 of purchasing power in favor of the forgers...
...He must get it from the community...
...That is to say, the level of prices is raised for the class of goods the manufacturer has purchased...
...food, clothing, shelter, and amenities...
...In doing so he brings about the same economic effects as the forgers when they spent their first $500,000...
...Publicists like Mr...
...On a rough estimate it has been calculated that plant and machinery exceed consumable goods by a ratio of about four to one...
...before the advent of machine production...
...Here is an example of the working of the system: Supposing a group of clever forgers were to produce arid circulate bogus notes to the value of $500,000...
...It is that which gives the machine direction, viz., the factor of finance, which needs correction...
...Our industrial system exists primarily to deliver money, not goods...
...A just price would be one that enabled the community to purchase the whole of the goods produced, and also allow for an effective demand to be made on the potential capacity of the productive machine...
...The currency would be inflated by that amount...
...The element of plant charge must be written off the price of ultimate goods...
...and his remedy is a scientific regulation of prices calculated strictly according to society's means of production...
...Now, it is rather a curious fact that though the artisan of that time could live for a week on the proceeds of a day's work of eight hours, the average artisan of today cannot do so...
...Professor Ashley, in his Economic History, states these main conclusions, arrived at by Saint Thomas Aquinas: "that prices should not vary with momentary supply and demand, with individual caprice, or skill in the chaffering of the market...
...the factor of finance has intervened to rob the community of the benefits conferred by the scientist and the inventor...
...What applies to stockings has a general application, more or less, throughout other branches of production...
...So the community has to pay twice...
...It was first propounded by the Church, and the teachings had direct effects, for parliament, municipality, and guild endeavored to achieve in practice the ethical concept enunciated by ecclesiastical authority...
...The just price in its modern application is somewhat complex, being complicated by the factors of machinery and finance...
...The machine is credit driven...
...If, then, our productive powers are so great, sixpence today should keep the artisan, other things being equal, not for a week only, but for something like a year...
...and there is something salutary in the thought that a falling back on first principles might restore something of religion's lost prestige with the masses...
...Such a system, Major Douglas contends, could be put into operation with only the minimum of disturbance to existing institutions...
...And this in spite of the fact that the development of machine power has enormously increased our capacity to produce goods...
...Well, if the production of goods had always kept pace with the manufacture of money, the value of money today should be in the same ratio to the value of money 500 years ago, as production today is to the production of 500 years ago...
...April 14, 1926 THE COMMONWEAL 625 SOCIAL CREDIT AND THE JUST PRICE I. "THE LIFE BLOOD OF SOCIETY" By ROBERT RODGER (In the series of articles entitled An Editor s Progress, recently appearing in The Commonweal, Mr...
...It involves nobody's dispossession nor the nationalization of any existing interest...
...Goods are kept in short supply...
...And it is simply a matter of financial readjustment...
...To them machinery is of the devil and to the devil (presumably) it must return...
...Reginald M'Kenna, ex-Chancellor of the English Exchequer, and today "Britain's foremost banker," would deny this...
...The social credit movement, established in England upon Major Douglas's ideas, is steadily attracting more serious attention...
...it is now called upon to pay for it again (over a period of ten years) in the price of the product...
...Manufacturers have redeemed it, or are busy doing so, out of our payments for the goods they produce and which we buy...
...Consequently, prices would tend to rise...
...There has been a levy of $500,000 imposed on the community by the forgers...
...The community, therefore, through the price of its necessary commodities, has paid for the erection of the factory...
...Several cabinet ministers are known to be studying it...
...Operating through the agency of price, the financial system steadily filches purchasing power from the community, so that life for the mass of the people is never far removed from subsistence level...
Vol. 3 • April 1926 • No. 23
