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They Want Your Land by ED Butler
The famous British historian-philosopher Lord Acton is best remembered for his famous statement that “All power tends to corrupt, and absolute power corrupts absolutely.” But he made another penetrating statement which unfortunately is not as well known: “Few discoveries are more irritating than those which expose the pedigree of ideas.” If primary producers wish to retain their independence, then they had better start to examine the pedigree and development of the ideas which now openly threaten their future.
Primary producers all over the world are facing a revolutionary movement which is progressively eliminating the smaller producer, or forcing him to continue on his property with a decreasing standard of living. Skilful propaganda is urging that the traditional concept of farming must give way to progressive centralisation and “scientiﬁc control”. It is claimed that this development into bigger units is “inevitable”; that this will result in “greater eﬂiciency”. The talk about the necessity for “greater eﬂiciency” is dramatically disputed by the fact that there are food gluts in many parts of the world.
If the present primary producers, many of whom are allegedly “uneconomic”, are producing, or could easily produce, surpluses which are difﬁcult to sell at proﬁtable prices, then how is this problem to be solved by eliminating the “uneconomic” producers and having a comparatively few big producing units creating even bigger surpluses through the greater eﬂiciency which it is being claimed results only from business? The truth is that behind the programme for progressively centralising control of primary production, there is a long term policy which has as its objective the elimination of the independent primary producer. The drive to centralise primary production is not the result of “inevitable trends”, but of conscious effort to create the completely centrally planned society. Financial policy is the main instrument being used in the non-Communist world. Control of food is control of life.
Farmers Barrier To Totalitarianism
Genuine farmers the world over, and throughout history, have been noted for their sturdy independence. As a section of society, they have always manifest the highest principles of citizenship. When heavy taxation played its deadly role in helping to destroy the independence of the Roman peasantry, one of the great stabilising influences in the Roman Empire was eroded. Primary producers have always been stubborn obstacles to the plans of all totalitarians. The Soviet planners under Stalin were forced to liquidate millions of Kulaks who refused to co-operate with their totalitarian planning. As will be shown, the Soviet planners were eventually forced to capitulate to realities by permitting those working on the State collective farms to also have their own small holdings.
Most Australians, particularly primary producers, loudly proclaim that it is ridiculous to suggest that they would ever accept Communism. But no people in history has ever voluntarily accepted Communism; it has been imposed upon them. It will be said in answer to this that Australians are not threatened with violent revolution. That is correct. However, there is a much more insidious form of revolution threatening countries like Australia. It has been described as Sovietism by stealth. A revolutionary policy is being imposed upon Australians through Fabian Socialist ﬁnancial policies. It is these policies which are producing results which are the basis of the campaign to destroy the independent primary producer.
But who are the Fabian Socialists? This question raises the importance of “the pedigree of ideas”. The importance of ideas cannot be stressed sufficiently. The ideas associated with Christianity fashioned the development of Western Civilisation. They are still a potent inﬂuence in human affairs. In 1848 a man called Karl Marx, and his colleague Engels, outlined in The Communist Manifesto ideas which have changed the course of history. In this basic Communist document, Karl Marx listed his famous ten steps for Communising a State. It was made clear that these steps were means to an end, not an end in themselves. The Communist Manifesto said that they will “in the courses of the movement . . . necessitate further inroads upon the old social order . . .” As a former Canadian Communist Party Member, trained in Moscow, put it 100 years later, “. . . one control tends to cause another, until, as a logical result, the State controls and ﬁnally owns everything.”
The following are seven of Marx’s ten points.
1. Abolition of property in land and application of all rents of land to public purposes.
2. A heavy progressive or graduated income tax.
3. Abolition of all right of inheritance.
5. Centralisation of credit in the hands of the State, by means of a national bank with State capital and an exclusive monopoly.
6. Centralisation of the means of communication and transport in the hands of the State.
7. Extension of the number of State factories and instruments of production; the bringing into cultivation of waste lands, and the improvement of the soil generally in accordance with a common plan.
8. Equal obligation of all to work. Establishment of industrial armies, especially for agriculture.
The Conspiratorial Role Of The Fabians
The Fabian Socialist Society was founded in Britain late last century by a group of Marxists who realised that the English-speaking people would not accept violent revolution. It is signiﬁcant that the Fabian Society took its name from Fabius Cunctator, the Roman dictator who defeated the great General Hannibal by a policy of gradualness. The policy of the Fabians was one of permeating and inﬁltration. One of the most famous Fabians, George Bernard Shaw, an open admirer of Soviet Russia, frankly outlined Fabian‘ tactics: “. . . we urged our members to join the Liberal and Radical Associations in their district, or, if they preferred it, the Conservative Associations - we permeated the party organisations and pulled all the strings we could lay our hands on with the utmost adroitness and energy, and we succeeded so well that in 1888 we gained the solid advantage of a Progressive majority full of ideas that would never have come into their heads had not the Fabians put them there.”
Note carefully the importance of ideas, and the fact that people can advocate ideas without knowing their pedigree.
In 1894 the Fabians launched the famous London School of Economics, an institution which has had an enormous inﬂuence right throughout the English-speaking world. It is signiﬁcant that the Rothschilds and other international ﬁnanciers contributed substantial sums of money to establish the London School of Economics. Lord Haldane explained why he persuaded the international ﬁnancier Sir Ernest Cassel to contribute a large sum: “Our object is to make this institution a place to raise and train the bureaucracy of the future Socialist State.” This close relationship between Big Finance and Socialist planning was demonstrated during the Great Depression of the thirties, when Sir Otto Niemeyer of the Bank of England visited Australia to impose a restrictive ﬁnancial policy which ruined many Australian farmers and inﬂicted great hardships on others. Niemeyer was “advised” by his travelling companion, Professor Theodor Emmanuel Guggenheimer Gregory of the London School of Economics.
The notorious Professor Harold Laski symbolised the world-wide inﬂuence of the Fabian Socialists through the London School of Economics. Laski visited Stalin in 1946 and said that while the British Socialist Government of that time and the Soviet were travelling on different roads, they had the same objective. In his Appreciation of the Communist Manifesto for the Labour Party (1948), Laski wrote: “. . . who, remembering that these (policies of high taxation and centralisation of credit) were the demands of the Manifesto, can doubt our common inspiration.” Here again can be seen the importance of knowing the pedigree of ideas.
A Programme Of Monopoly
Early in the Great Depression the Fabians developed their conspiratorial tactics still further by the creation of an organisation known as Political and Economic Planning (P.E.P.). The severely restrictive credit policy of the time was eliminating large numbers of smaller and medium-sized primary and secondary producers. This was welcomed by P.E.P., which stated in one broadsheet that “The wastes involved in . . . retail shops . . . cannot be allowed . . .” This not only reﬂected the philosophy of the Socialists and Communists, but the philosophy of Mr. Israel Moses Sieff, a prominent ﬁgure in P.E.P., and also head of the Marks and Spencer, the big chain store combine in Britain. The major feature of Socialism is the will-to-power, but this will-to-power also manifests itself in the striving for centralised economic monopoly. The result is that the Communists have some strange bed fellows in the Western world, business monopolists who believe that they can do business with the Communists.
In a P.E.P. broadsheet issued on April 25, 1933, the following statement was made: “Whether we like it or not - and many will dislike it intensely - the individualistic manufacturer and farmer will be forced by events to submit to far-reaching changes in outlook and methods. What is required . . . is the transfer of ownership of large blocks of land - not necessarily of all the land in the country, but certainly a large proportion of it - into the hands of the proposed Statutory corporations and public utility bodies and of land trusts.” It was signiﬁcant that chain-store monopolist Israel Moses Sieff said concerning P.E.P. that “The only rival world political and economic system which puts forward a comparable claim is that of the Union of Soviet Republics.”
It has been said that “ideas have wings”. And so 35 years after P.E.P. said that farmers would be “forced by events to submit to far reaching changes”, a prominent Australian made the following comment during a panel discussion by the Institute of Directors in N.S.W. on April 1, 1968: “The wool industry is hurt by the economic policies that the governments have decided to follow. I have no desire to criticise nor support the present policies, except that, it is interesting to note that the Opposition doesn’t really take much trouble to criticise basic economic policies. So I think it is reasonable to assume that even if there is a change of government, the basic economic policies that are now being followed will be followed by another form of govermnent and, therefore, these are facts we will have to learn to deal with . . . There is no alternative but to approach the problems of the wool industry in the same way in which the problems of the dairy industry are proposed to be approached. That, I think, is to reconstruct the industry, which involves the government putting up sufficient funds to buy out un-economic units from those who are willing to dispose of them, and then enable those who are prepared to stay in the industry to buy back those lmits and add to what they have got, so that we would end up increasing the size of the unit . . . If we can make units large enough so that they are economical, pliable units, then we will have less complaining wool growers.”
The above views were those of Sir William Gunn as chairman of the Australian Wool Board. Sir William says that it is Government policy that is hurting the wool-grower, that he does not propose to challenge this policy, and that the policy will continue irrespective of the label of the government. Therefore, as P.E.P. put it, the wool-grower, and other primary producers, will be “forced by events to submit to far-reaching changes” - towards collectivisation in all spheres of primary production. Sir William’s ideas are, therefore, not original, and it is fair to ask how many of them came to him through his long association with Dr. H. C. Coombs as a member of the Commonwealth Bank Board. For years Dr. Coombs played a major role in shaping the ﬁnancial policies which Sir William Gunn says are not going to change. Before being made Chairman of the Commonwealth Bank Board, Dr. Coombs was well known as a top Socialist planner in the Federal bureaucracy. At the Melbourne University on June ll, 1944, Dr. Coombs said that “People could not expect complete freedom after the war . . . It would be necessary for some individual to be given the right to say what was best for the community.” Dr. Coombs was at this time supporting Dr. H. V. Evatt’s drive to use the war situation to tear up the Federal Constitution that Socialist planning could be advanced.
Inﬂation Oﬁsets Greater Economic Eﬂiciency
Professor Harold Laski took a vital interest in Dr. Evatt’s campaign. Evatt said he had been greatly inﬂuenced and inspired by Laski. But Dr. Coombs, son of a radical father in Western Australia, had, according to Laski, been one of his most “brilliant” students at the London School of Economics. There is nothing “inevitable” about the ﬁnancial policies which are destroying the basis of the genuine free-enterprise system all over the world, and forcing amalgamations both in secondary and primary industries. Constant propaganda about “un-economic units” obscures realities. Every primary producer knows that he has substantially increased his efficiency, whether measured in terms of production per acre or man hours worked. Since 1953-54 Australian farmers have increased production by 44%. This has been achieved during a period of three severe droughts and a reduction in the number of workers on Australian farms.
The basic question which the primary producer must ask himself is: “If a farmer was economic ten years ago, and has substantially increased his production in this period, why is he now said to be uneconomic?” The answer is of course, not simply that in some cases prices for his production have fallen, but that his ﬁnancial costs have increased. A progressive increase in ﬁnancial costs have offset increased production and greater eﬂiciency. Now if all ﬁnancial costs are to continue increasing, and no less an authority than the present Federal Treasurer, Mr. W. McMahon, has said that he has no alternative to increasing inﬂation, then it is elementary that the elimination of farmers described as uneconomic today will solve nothing because in a few years the amalgamated units will then also be “uneconomic”. And so present financial policies, of which inﬂation is a major feature, mean that progressive centralisation, ultimately leading to the elimination of traditional farming, must continue. Karl Marx and the Fabians are being proved correct.
The steps they recommended are, as predicted, necessitating “further inroads upon the old social order.” The well-known Fabian Socialist John Strachey, one-time Communist Party member, said something similar in his Programme for Progress. He explained that inﬂationary credit expansion policies were “an indispensable step in the right direction” because “the policy will lead on to further measures. The very fact that no stability, no permanently workable solution can be found within the limits of this policy will ensure that once a community has been driven to tackle its problems in this way, it cannot halt at the ﬁrst stage, but must of necessity push on to more thorough going measures of re-organisation.”
A Campaign For Collectivism
As Minister for Primary Industry, Mr. D. Anthony has been active in conducting a campaign to convince Australian farmers that they have got to face up to some “thorough going measures of re-organisation”. And like Sir William Gunn, Mr. Anthony promotes the Fabian argument that it is “inevitable events” which are making amalgamation necessary. At a meeting at Warragul, Victoria, in 1968, Mr. Anthony said that “It hurts me to have to say that farms should get bigger if our farmers are to make a decent living in today’s situation.” But in a statement issued on November 6, 1968, Mr. Anthony said that it was “inevitable” that “the size of farms would tend to increase. Farming would become more mechanised, would require more capital, and demand a higher degree of skill in management. This may lead to an increase in the number of company-owned farms . . .”
The South Australian Farmer and Grazier of September 20, 1968, reports an address given by Mr. Anthony to a group of prominent South Australian citizens at the 1968 oﬂicial luncheon of the Royal Agricultural and Horticultural Society. He said that “he feared amalgamation of small farmers in Australia might be necessary to increase eﬂiciency. Many of our properties are too small and they must be increased in size to permit the use of larger, more modern machinery.”
Mr. Anthony then referred to collective farming in Soviet Russia. He hastened to say that this “is something I abhor”, but then went on to say, “yet they are getting results from larger holdings, through being able to use bigger machines for all types of operation, and better use of farm advisers. They are tending to become more efficient.”
The West Australian (Perth) of February 28, carried the headline, “Economic policy must aim at deliberately removing W.A. farms with fewer than 3,000 sheep, 200 beef breeders or 70 milking cows.” These are the views of Mr. G. D. Oliver, oﬂicer in charge of the Agricultural Department’s rural, economic and marketing section.
The Queensland Countryman of November, 1968, quotes a Professor who put the matter more bluntly: “This problem of clearing the country of clodhoppers and hay-seeds is a human problem. We’re caught in forces which are international and enormous - if we stand up and try to stop them, they will overwhelm us, we have to soften the blow in economic and human terms. The people who remain on the farms are also going to be syndicated, corporations, companies, etc. What has happened to the broiler industry is setting the pattern for other industries.”
The above remarks are attributed to Professor Tribe when addressing the National Farmers’ Union in Hobart, Tasmania.
The collectivist philosophy underlying this type of comment is obvious. The Marxists of all types, including the Fabians, approve of it.
As countries like the U.S.A. and Canada are following the same type of ﬁnancial policy being imposed in Australia, it is not surprising that the same problems are affecting the farmers in those countries. There is nothing original in Mr. D. Anthony’s proposals for Governments to ﬁnance the further centralisation of farming. This concept has also been advanced in Canada. And the Communists are taking advantage of the developing situation. In an article in the Autumn, 1968 issue of Horizons, the Marxist Quarterly published in Canada, reference is made to the growing “militancy”'amongst farmers, that “Requirements for capital can no longer be met from within the Agricultural community itself . . . Relationships based on petty-bourgeois ownership are breaking up . . . The majority of farms have become unproﬁtable, not just the smallest ones. The entire group of medium-sized farms is in trouble.” Not surprisingly, it is stated that “The Communist Party has done some work in developing a farm programme.”
As Mr. Anthony is insistent that it is “inevitable” that the size of farms must get bigger, it is not surprising that after his visit to the Soviet Union in 1968, he returned to Australia and said that collectivised farming had some merits. Presumably Mr. Anthony was not shown the most signiﬁcant feature of Soviet farming, the vital contribution by the small private land plots to Soviet food production. The failures of the large-scale collectivised farming in spite of the mechanisation made possible by the State, forced the Marxist planners to allow the peasants to have small private plots. This has been a bitter blow to the planners, who have described them as the “breeding beds of capitalism”. Official Soviet ﬁgures reveal that 3 per cent. of the total land cultivated in the Soviet Union consists of peasants’ private plots, but that the State and collectivised farms produce only 10 per cent more than the peasants! The private sector of the economy actually produces 79 per cent of total egg production. The position is similar in Estonia and Lithuania where privately operated small plots produce more than 50 per cent of the total food supply.
It is true that large-scale farming can, like many other large-scale activities, look most impressive because of man’s great technological advances. Modern engineering skills certainly make it possible to create marvellous transport systems in an endeavour to overcome the trafﬁc problems of the big cities. But the use of large-scale equipment to make it possible to operate bigger cities, or bigger farms, does not prove that centralisation is more efﬁcient. Genuine eﬂiciency must also be measured in terms of human satisfaction. No doubt it can be proved that it would be much more economic to house the whole community in barracks with communal systems rather than the “wasteful” system of living in individual homes!
Aldous Huxley in Science, Liberty and Peace (1947) pointed out that “there is nothing in the results of disinterested scientiﬁc research which makes it inevitable that they should be applied for the beneﬁt of centralised ﬁnance, industry and government. If inventors and technicians so chose, they could just as well apply the results of pure science for the purpose of increasing economic self-sufﬁciency and consequently the political independence of small owners . . . The sabbath “was made for man, not man for the sabbath; and the same is true of applied science.”
The programme of increasing centralisation is not in the natural order of things, but is being imposed through an anti-social ﬁnancial policy. The very character of the Australian nation is under attack as the result of excessive centralisation. Peter Drucker observed in his book, The Future of Industrial Man, that “Any society which cannot prevent the development of masses is irrevocably ruined.” The great Thomas Jefferson said that "Corruption of morals in the mass of cultivators is a phenomenon of which no age or nation has provided an example . . . Generally speaking the proportion which the aggregate of the other classes of citizens in any State to that of its husbandmen, is the proportion of its unsound to its healthy parts, and it is a good enough barometer whereby to measure its degree of corruption.”
Wilhelm Ropke reveals in International Economic Disintegration how under Hitler’s National Socialism there was economic liquidation of the small, independent German farmer, a new phenomenon in Germany. Between 1933 and 1938 there was a net loss of no less than 650,000 farmers and their families, from the rural communities. Ropke comments that “It goes without saying that all this is a very natural development in a totalitarian country where the ultimate aim is to turn the entire population into an amorphous mass of proletarians”.
The programme for centralising still further the rural industries of Australia can only intensify the overall disastrous national movement towards centralisation throughout Australia. Population ﬁgures show how bigger percentages of the total population are being concentrated in capital cities. The chairman of the N.S.W. State planning authority, Mr. N. Ashton, told a conference of the regional development committees of Richmond-Tweed, Clarence and New England on February 13, 1969, that “Over the past 12 years 100,000 people from the country areas of N.S.W. had drifted to Sydney . . .” Mr. Ashton said that this development was “a parament problem which had to be surmounted.” But the problem is going to be aggravated by the programme of amalgamation now advocated as the solution to the problems of the rural industries.
Many years ago the American expert on centralisation, Lewis Mumford, showed in his work, The Culture of Cities, that once cities grow beyond a population of 500,000 they become increasingly ineﬁicient as a social organisation. The bigger cities require proportionately bigger police forces to deal with greater crime. The accident rate is much higher than in smaller centres. From all over the world come reports of the growing problems of the growing cities. And ﬁgures show the enormous disparity between the cost of servicing every individual who goes to a big city as compared with the cost in smaller rural cities and towns. Technological advancements make it possible to provide most impressive transport, water and other schemes in an endeavour to make the ever-growing cities work. But the cost is astromonical. All the Australian capital cities are pre paring various plans, including those for underground railways.
BRITISH AND EUROPEAN FARMERS UNDER PRESSURE
Queensland Country Life of February 13 reports the dropping of a bombshell on a conference of top British farmers by a “leading agricultural economist”, who stated that economically there were “too many people farming, too much capital involved and too much land in Britain devoted to farming.” The report states that he “put up a very good argument for accelerating the drift from the land and the continued release of farm land for social and other amenities.” Angry farmers asked whether it was not true if they increased British food production by £100 million, would this not mean lessening the necessity to export that amount to buy from abroad.
Farmers in the Common Market countries also have problems. In spite of a reduction in the number of farmers, the main problem is huge surpluses. Common Market agricultural regulations require that food shall be destroyed to keep prices stable. The Common Market has a special fund for this purpose. The latest ﬁgures show that the fund stands at £24 million sterling. Mountains of food have to be destroyed. Consumers are not allowed to buy this surplus cheap. In fact they are paying around £25 million (sterling) a year for produce that ends up on the rubbish tip. The logical question is: “If huge subsidies can be paid for destruction, why cannot they be paid for price reduction, thus stimulating demand?” But to use ﬁnancial policy for such a common sense purpose is not part of The Big Idea.
The “expert planners” use the situation to keep advocating still further a reduction in the number of farmers.
Eliminating American Farmers
The Land Newspaper of August 15, 1968 carried the heading, COST PRICE SQUEEZE FORCES OUT SMALL FARMER IN U.S. The article underneath said: “The United States is going through a painful transition . . . Farmers are reeling from the dual impact of inﬂation and high interest rates . . . Unlike businessmen who have a product for sale, farmers have not been able to pass on higher costs to buyers . . . At the same time inﬂation has been driving up the cost of virtually everything the farmer has to buy - from work gloves to diesel tractors. The result is a cost-squeeze that is clamping down on farmers like a steel vice. Farm debt is rising faster than at any time since the period during and just after World War I. Adding to the burden are the highest interest rates in a generation or more . . . ‘Either get big or get out’ - that’s the way you hear it explained on one farm after another.
Somewhere in America this year or next, when a farmer calls in an auctioneer and sells out, the total number of U.S. farms will fall below three million. In 1960 there were four million. Predictions are heard that the family farm is disappearing to be replaced by corporation-operated farms. The farm families ﬁght to hold on. In a surprising number you ﬁnd wives working in the ﬁelds to help cut expenses. There is a rising tide of bitterness among farmers . . . The outlook for mid-western farmers was summed up this way by Mr. Sayre of the Continental Minor’s Bank of Chicago: ‘The fellow who is thinly capitalised is in real trouble. Every year the marginal operators are chopped off the bottom until the fellow who was in the middle of things eight years ago may be pretty near the bottom now’.”
The Debt Burden
If Australian farmers are to save themselves from ﬁnancial liquidation, and set an example to the rest of a community also suffering under increasing centralisation, they have got to face the fact that the present policy of credit creation and issue, high taxation and progressive inﬂation, is the basic cause of their problem of mounting financial costs.
The increasing indebtedness of Australian farmers tells its own story. In the seven years from 1960 to June 1967, the net indebtedness of farmers increased by 820% from $76 million to $629 million. The major factor responsible for this growing indebtedness is increased ﬁnancial costs stemming from a ﬁnancial policy which is imposing increasingly greater debt and taxation burdens, reﬂected in increasing price rises, upon the whole community. Even if farmers could pass on their higher financial costs in higher prices, this is no more a solution to the basic problem than is the progressive increase in wages. Higher food prices would merely stimulate inflation, leading to an intensiﬁcation of a vicious circle which there are no real beneﬁts. What is required is a challenge to the basic ﬁnancial policy afflicting all.
Debt Burden Crushing State and Local Government
The increasing pressure of the debt structure on the State Governments is shown by the following ﬁgures: At the end of June, 1950, the Commonwealth debt was $3,730 million. Total State debts were $2,367 million. By the end of June, 1956, the Commonwealth debt had made a small increase to $4,030 million, but the State debts had nearly doubled to $4,211 million. Eleven years later, at the end of June, 1967, the Commonwealth debt had been reduced to $3,275 million, while the State debts now stood at the staggering ﬁgure of $7,934 million.
Speaking in the New South Wales State Assembly on November 10, 1968, Country Party Member Mr. L. Punch predicted that the entire State Budget in New South Wales may shortly be needed to meet loan repayments and interest charges. “Startling as this may sound, it is clearly borne out by the ﬁgures,” he said. All the States are in a serious ﬁnancial situation, primarily as a result of the Federal Government’s ﬁnancial policies, and its monopoly of taxing power. The Federal Government has become rapacious in its ﬁnancial relations with the States. The Sun, Melbourne, of January 29, 1969, quotes the Victorian Minister for Education, Mr. Lindsay Thompson, “saying that if the present Commonwealth-States ﬁnancial set-up continued, it will “kill” Victoria and other States.” Mr. Thompson provided an example of what happens when the Commonwealth loans back to a State, at interest, some of the taxes which have, of course, been originally collected from the people of that State.
If the Commonwealth in the Australian Capital Territory uses $1 million of tax revenue to build a high school, the ﬁnal cost is $1 million. But if the Commonwealth loans the States $1 million to build the same high school, by the time the States have repaid the loan and the interest charges, the school costs $2.5 million! This is but one example of the inﬂationary policies being imposed by the Commonwealth.
The pressure of the total debt structure on the States must inevitably destroy them as sovereign governments. The Fabian Socialists make no secret of the fact that they want to have the States abolished as self-governing entities and to turn them into mere administrative instruments for one Centralized Government. Every step in this direction inevitably increases the already swollen bureaucracy. Like the smaller-sized primary producers, the States are being told that they are no longer economic units, and large numbers who describe themselves as anti-Socialists bleat like sheep that “It is unfortunate but it is inevitable. It is the trend.” In their desperate efforts to survive their growing ﬁnancial burdens, the States are resorting to various types of new taxes. But these ultimately feed the inﬂation ﬁre, which takes increasing toll of the rural industries. State Governments plead that as much as they would like to take direct taxes off the primary producer, the best they can do in some cases is to alleviate the burden.
The plight of Municipal Government is like that of the States, perhaps even worse. There has been an astronomical increase in total Municipal debt over the past 20 years, with a corresponding increase in rates to meet interest bills and repayment charges. Mr. K. P. Baxter, Research Ofﬁcer for the Graziers’ Association in N.S.W., has estimated that Shire rates, those which affect primary producers, have increased 732% in N.S.W. since 1955. Victorian rates outside the City Municipalities increased by 1900% between 1947 and 1966. Similar ﬁgures could be quoted from every State. Increased rates are a direct ﬁnancial cost to the primary producer. Needless to say, the “solution” to the ﬁnancial problems of the Municipalities is - to start amalgamating them! They, are also “uneconomic”, although it can easily be shown that measured realistically, both Municipal Government and State Government provides the individual with far greater elﬁciency than does the Central Government. Apart from this, the closer government is to the people, the easier it is to control. But the centralizers push ruthlessly ahead to further their programme of centralizing power, economic, financial and political.
The Money Creators
The mounting debt burden, manifesting itself in so many destructive ways, is the direct result of the present method of creating and issuing money. How many primary producers stop to think how the money equivalent of their production is created? The following authorities clearly outline how the modern money supply, mostly financial credit, is created:
As far back as 1882, Professor H. D. McLeod, lecturer on political economy at the University of Cambridge, and the most outstanding authority on banking in Britain at that time, gave his famous lectures on Credit and Banking to the Institute of Bankers of Scotland. The following extracts from the lectures outline the process of credit creation with great clarity:
“The way a Banker trades is this: He sees that £1,000 in cash is sufficient to support £10,000 of liabilities in Credit; consequently he argues that £10,000 in cash will bear liabilities to several times that amount in credit . . . Thus we see that the essential and distinctive feature of a Bank and a Banker is to create and issue Credit payable upon demand; and this Credit is intended to be put into circulation and serve all the purposes of money. A bank, therefore, is not an office for borrowing and lending money, but it is a manufactory of credit.” (Emphasis added.)
In his book Elements of Banking Professor McLeod wrote: “When it is said that a great London Joint Stock bank has perhaps £25,000,000 of deposits, it is almost universally believed that it had £25,000,000 of actual money to ‘lend out’ as it is erroneously called . . . It is a complete and entire delusion. These ‘deposits’ are not deposits in cash at all . . . They are nothing but an enormous superstructure of credit.”
The Rt. Hon. Reginald McKenna, one-time British Chancellor of the Exchequer, and Chairman of the Midland Bank, addressed a meeting of shareholders of the Bank on January 25, 1924, and said, as recorded in his book Post-War Banking: “I am afraid the ordinary citizen will not like to be told that the banks can, and do, create and destroy money. The amount of ﬁnance in existence varies only with the action of the banks in increasing or decreasing deposits and bank purchases. We know how this is effected. Every loan, overdraft or bank purchase creates a deposit, and every repayment of a loan, overdraft or bank sale destroys a deposit.”
In 1939 the Canadian Government’s Committee on Banking and Commerce exhaustively questioned Mr. Graham F. Towers, at that time Governor of the Central Bank of Canada, on banking practices. The following are extracts from the Minutes of Proceedings and Evidence Respecting the Bank of Canada:
The following are further statements by Governor Towers:
Mr. Towers then made the following important point:
Reversing The Inﬂation Policy
All present methods of expanding ﬁnancial credit result in increased ﬁnancial costs which are charged into higher prices. It is false, typical Socialist and Communist propaganda to claim that industry as a whole can pay increased wages out of proﬁts when ordered to do so by the Arbitration Court. Representing Australian employers at the 1967 National Wages Case, Mr. J. Robinson suggested to the Court that it was time that it “dropped its notion that a wage booster by the Commission will assist the economy. As I said to you Mr. Commissioner Winter, you tried it twice within six months and that increase represented $435 million per annum.” Mr. Robinson went on to say that this big wage increase had been of no beneﬁt to anyone. It has merely increased prices.
Every new wage increase forces employers to borrow from the banking system, which creates the new credit in the manner already explained and loans it as an interest bearing debt. Employers must attempt to recover the loan for the increased wages, plus interest, through increased prices. The overall result therefore of every wage increase is an expansion of new ﬁnancial credit which further inflates prices, thus making still further wage increases necessary.
Mr. Robinson made a suggestion in the 1967 wages case which points the direction in which the Federal Government should move. He said: “We say to the Commission, and it is our very serious submission to this tribunal; why don’t you leave the problem of stimulating consumer demand to the Commonwealth Government who have the means of stimulating without a balancing cost impact?” It is elementary that if hundreds of millions of pounds of new credits can be created in a manner which merely increases prices, then the new credits could be applied in such a way that they were a genuine beneﬁt to the economy by using them to reduce prices. Reduced prices are a permanent beneﬁt. How might such a policy be applied?
The answer was provided during the Second World War in Great Britain, Australia, New Zealand, Canada and the U.S.A., when the possibility of inﬂation resulting from the enormous expansion of new credit for the war was averted by a price-subsidisation technique which, by subsidising food, clothing and other items, held wage costs stable. The Commonwealth Year Book of 1946-47, page 461, in the chapter “Control of Prices” explains under heading 9, Treatment of Costs and Subsidies, how this was done: “When increased costs could not be absorbed within the process by production or distribution they were met generally at the source by payment of subsidies and thus prevented from disturbing the whole price structure.”
Senator Keane, Minister for Trade and Customs, explained the need for subsidies as follows in 1943:
Crude and unscientiﬁc as they were, the price subsidy system during and immediately after the Second World War were a success in stabilising prices in every country where they were applied.
As soon as possible after the war, the Fabian Socialist economic “advisers” started working for the dismantling of the consumer subsidy system. Before the 1949 Federal Election in Australia, when the then Mr. Robert Menzies promised “to put the shillings back into the pound”, Country Parly leader Arthur Fadden, Federal Treasurer in the Menzies Government, advocated the restoration of the price-subsidy mechanism. But this was never done, and eventually the Menzies Government resigned itself to “controlled inﬂation”. The permanent planners had proved too strong for the politicians. When the eminent Australian constitutional expert, Professor F. A. Bland was a Liberal Member of the Commonwealth Parliament, and Chairman of the Public Accounts Committee, he said that the permanent bureaucracy was all-powerful and that it did not really matter whether Harold Holt (the late Prime Minister was Treasurer at the time) was Federal Treasurer or Tom Mix; real policy making resided with the permanent officials of the Treasury Department.
As it is common sense that a credit policy could easily be implemented which would progressively reduce ﬁnancial costs in accordance with the tremendous increase in real efficiency in industry, both primary and secondary, the conclusion is inescapable that those imposing the present policy are conscious of what they are about. They are the “guilty men” who make it appear “inevitable” that farmers must be ﬁnancially liquidated and centralisation accepted as a natural phenomenon. Only an enlightened and aroused electorate, demanding that political representatives insist that present Fabian Socialist ﬁnancial policies be reversed, will force the “guilty men” to produce alternative policies or lose their jobs! Australian primary producers can demonstrate their traditional resourcefulness and love of independence by giving a forthright lead.
A start could be made by making use of machinery already in existence for the purpose of implementing Sales Tax. At present when the consumer asks for certain items at the retail counter, the retailer is compelled by the Government to immediately increase the price of the items by the amount of the Sales Tax, which is a most inflationary tax. The retailer keeps a record of the Sales Tax he collects, periodically sends it to a Government Department and receives a receipt in exchange. The Government should abolish all Sales Tax, and replace it with a discount system to be ﬁnanced by the Government through a draft on the nation’s credit in the manner explained by the banking authorities already quoted. The result would be that when the consumer indicated at the retail counter that he wanted certain items, food, or woollen articles, the price would be automatically reduced by the discount ﬁxed by the Government. The retailer would keep a record of the discounts in the same way that he now keeps a record of Sales Tax, and instead of sending money to a Government Department, would now present claims for payment for the discounts. Consumer control of free enterprise would operate, discounts, or subsidies, call them what we will, only be paid on production freely indicated at the retail counter. A reduction in retail prices for primary production would stimulate demand, be a permanent increase in the community’s purchasing power, and bring an end to the present wage increases ﬁnanced through inﬂationary credit expansion.
A Government policy of reducing ﬁnancial costs would immediately reverse present centralist policies. All primary producers would beneﬁt, with the smaller economic units able to continue making their contribution to the national economy in the form of real wealth. If Australia is to be saved from some form of totalitarianism, the present ﬁnancial policy fostering centralisation has got to be replaced with one actively fostering decentralisation in every sphere. But such a reversal of the present disastrous policies will be strenuously resisted by those centralisers who wish to attempt to plan production by drastically reducing the number of producers, who can then be more effectively controlled. The battle for Australia’s future will be fought primarily in Australia’s rural areas. The centralisers not only want the primary producers land, they seek to deprive Australia of the backbone of the nation - its decentraised, independently-minded rural community.
|© Published by the Australian League of Rights, P.O. Box 27 Happy Valley, SA 5159|