Social Credit and the Just Price, II

...The engineering firm must charge up these wages from which the fifteen cents come to the costs of the machines they produce...

...In order to present this example with all its force it must be remembered that what applies to bread production applies to every other branch of production within the growth of modern society...

...Now, while it is true to say that purchasing power in the form of wages, salaries, and profits has been disbursed all along the line of production which resulted in a supply of bread, and while it is true to say that the price of the bread is made up of wages, salaries, and profits, the point to be noted is that these wages, salaries, and profits are not available to buy the bread...

...While this financial credit, issued through banks, is absolutely essential to our existence, its control and manipulation by a small group of financiers have serious and adverse result on the community...

...Under present conditions that production can only be bought by a draft on the purchasing power distributed in respect of future production, and this draft is mainly derived from financial credit created by the banks...

...In other words, they are buying part of the production of a year ago by drawing on the purchasing power which will not come on the market for yet another year...

...It is certainly the case that the purchasing power of others besides those engaged in bread production will be making an effective demand on the bread supply...

...The sum actually distributed, however, for that week would probably be only about a dime in each quarter charged for the milk, the remainder representing previous charges...

...These costs, when analyzed, are made up of costs incurred by the flour-merchant, miller, farmer, producer of agricultural machinery, etc...

...If, then, the supply of condensed milk ready for sale in a given week is to be bought by the people in the condensed milk industry, the money distributed that week (wages, salaries, and profits) must equal the total price charged, i. e., twenty-five cents per tin...

...yet peers and knights jostle bankers and labor leaders in the columns of the press and on the public platform in order to preach the gospel of econotny and thrift, and the necessity for increased production...

...but if this example is common to all our industrial activities it is clear that the sum of wages, salaries, and dividends can buy only a fraction of the product...

...At the time of purchase a fraction of the price will go to the seller as profit, a fraction for the tin (made a month before) a fraction for the label (printed six months before) and the rest for the milk (condensed three months before...

...Hence the search for foreign markets...

...Harder work implies an increasing output, and an increasing output demands an expanding market to absorb the goods produced...

...Taking the indispensable commodity of bread produced under modern methods as an example, it is true to say that the money disbursed in the production of the bread cannot purchase the supply of bread at the price at which the producer must sell it...

...and raw materials and overhead charges...

...When the bread comes to market its price contains all the costs incurred, but the money available to put against this price is only that fraction of savings remaining in the hands of the people after meeting their living expenses...

...Where, then, does the money come from to buy the milk...

...By way of corroboration here is another example worked out in more detail: Take a tin of condensed milk and analyze its price...

...The reason for this is that the final price contains charges that may go back for a period of years...

...The only way out of the impasse is to establish the just price by the methods of credit control and price regulation, and that is really a matter of bookkeeping...

...As the purchasing power is largely made up of credit issues loaned by the banks, the policy dictated to the community is one of hard work and more of it in order that the loans, plus interest, may be repaid...

...It is obvious and undeniable that tfce credit issues which are so essential to industry have the immediate effect of raising prices by diluting, or inflating, the currency...

...In the same way as before...

...Other countries have the same problem to solve, and the whole drive of the system is to smash every possible competitor in order to obtain the necessary markets to absorb the surplus that cannot be consumed at home...

...This surplus is an artificial one...

...By their control of financial credit they control the industrial and commercial life of the community, and this in spite of the fact that they themselves are in no way responsible to any governing body elected by the people...

...The makers of the agricultural machinery, the farmer and his men, the miller, etc., have been steadily spending their wages and salaries in the cost of living—food, clothes, shelter, etc...

...But the amounts paid for the tin, label, and milk contain older charges still—contributions to the cost of tin factories, printing presses, cow sheds, condensers, and so on— all of them incurred at various times back to, perhaps, a period of twenty years...

...How will it be met...

...The baker's costs can be placed in two groupings: wages, salaries, and profits...

...The reason, of course, is not far to seek...

...They, in fact, control governments by their power over finance...

...It also demands a maximum return of purchasing power (through the medium of price) for a minimum supply of goods...

...The whole sum of them appears in the final price, but something like 90 percent of this sum has disappeared from the custody of the recipients...

...At the same time the home market is automatically restricted by the effects of these loans on prices and wages...

...Our financial system demands an increased and cheapened | production in order to meet the loans of the banks...

...Now, in a certain week in next year a portion of that condensed milk will be on sale...

...THE CONTENTS OF THE FINAL COST By ROBERT RODGER A PPROACHING the just price on the account/¦% ancy side, the statement made by Major Doug"** las that Mthe sum of the wages, salaries, and dividends distributed in respect of the world's production is diminishingly able to buy that production at the price which the producer, under the present system, is forced to charge," calls for examination...

...the needs of the people in the various countries are never fully satisfied...

...A system of production and distribution run on these lines is necessarily dependent on financial credit for its existence...

...And we have seen that through the agency of price the buyer of consumable goods has to pay for all plant and machinery expansion...

...The price will contain a portion of the fifteen cents (already spent this year...

...The system demands a maximum volume of production in return for a minimum volume of purchasing power (wages, salaries, and dividends...

...This analysis holds good, in varying proportion, throughout the whole of industry...

...We have seen further that retail purchasing power is distributed only through the agency of work...

...The policy being pursued would seem to be a policy of accelerated suicide...

...their abstinence from consuming is due to the fact that the purchasing power distributed is never sufficient to buy the goods produced...

...Say it sells at twentyfive cents...

...The ability of the people to pay the price will depend on the wages they receive in respect of production which may not come to market for still another year...

...The irony of the situation at present is that markets cannot be found...

...These costs are transferred to the makers of tin cans, passed on by them in the price for tin cans, accepted by the manufacturer of condensed milk, and finally included in the retail price of next year's condensed milk...

...Still confining the example to the milk industry, the fifteen cents might come out of wages received that same week from an engineering firm making metalstamping machines for tin cans that will hold next year's condensed milk supply...

...The wages, salaries, and dividends distributed during a given period do not, and cannot, buy the production of that period...