The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1934-04-30
Liberal Viewpoint
By DIR. HARRY ELMER BARNES

by DR. HARRY ELMER BARNES -
| Following is the last Of three articles by Mr.
Barnes the social redit idea launched by
Major C. H. Douglas and OF her British economists.
THE fundamental tenet of social credit would
Il make possible an exact adjustment of pur-
chasing power to the available supply of neces-
sary and desirable goods Otherwise. they hold,
the whole social advantage of modern tech
biological efficiency is lost
Today the producer must pay out money to
cover not only wages salaries and dividends, but
also rents raw materials interest charges, taxes
and the like. The producer must adjust his
prices so as to insure some profit after paying
for these items. But most of the consuming
power is vested in those who receive wages, sal
| aries and dividends.
Quite naturally the producer sets a price
which is so high that recipients of wages salaries
and dividends not buy anything like the
| total product of industry designed for home con-
sumption.
An ever increasing surplus of unsold goods
| piles up. The producers find themselves in
straits and many can not meet their loans at
| the banks. The latter then set their machinery
| in motion and the country finds iself in a de-
preston from which it is becoming ever more
difficult to recover
The way out is to go to the heart of the diff
| hculty and to assure adequate and permanent
mass power Then there will be no surplus of
goods and no cause for depression.
To realize this ideal, the social credit advo-
Gates see clearly enough that the common eco
nomic enemy Of mankind. finance capitalism or
| credltism, must be ended They see that
credit must be soCialized. The fundamental
basis of purchasing power must no longer be left
in the hands of private banking interests.
I TNDER the social credit idea all monetary
| ~ functions would be assumed by the central
government operating through the treasury and
central bank. Private banks might continue to
exist, but they would not be banks in the present
sense-not credit and commercial institutions
They would be compelled to operate as private
| individuals making loanS-to have an equal
amount of specie on hand against every loan
The consent of depositors would have to be as
sured before any loans are made. The private
banks could not create credit
The government on the other hand would
| loosen credit and make it much more adequate
and facile than it is today. Money would be
loaned free of interest to manufacturers and
merchants who produce and vend goods which
are socially necessary and desirable
Freed from interest charges and other costs
imposed by preSent-day capitalism, the pro-
ducers could sell for lower prices and thus mar
ket more goods, even though consumers pur-
chasing power did not increase.
But the social credit school also PROPOSES in
addition, to issue national dividends which will
| go to consumers and add to their purchasing
power.
Excessive development of new capital plant
would be prevented by compelling those who
wish to establish new businesses to borrow from
private bankers whose loan powers would be
limited and expensive to the borrower.
Abandoning the gold standard, the social
! credit devotees come out fatty for commodity
money.
MONEY will be based on goods and services.
Iva There will be no increase of money except
as we increase needed goods. But, likewise,
every increase in such goods will be accompanied
by an increase in the supply of money, thus al
lowing the production of goods to be paraleled
by an equal increase in the power of the masses
| to buy.
Under such a system no surplus will accumu-
late and the basic cause of depressions will
| vanish.
The Douglasites maintain their affection for
! democracy and hold that their scheme can be
put into operation without resorting to Fascism
| dictatorship and the regimented state.
| They further contend that foreign markets
are becoming much more limited in their pur-
chasing power and we must seek most of the sale
| of our goods in the home market. The latter
has vast and undeveloped potentialities.
In this way the social credit school believes it
answers the MARKHAM contention that capitalism
is doomed because foreign markets are evaporat-
ing
This also means that the very important
cause of wars which exists in the struggle for
foreign markets will be eliminated.