home of ... Douglas Social Credit
Thought for the Month:
"... In the immediate aftermath of the First World
War - the War to End All Wars - the question
permeating society in the U.K. was - how could
such events happen? And furthermore, how can
we ensure that world war never happens again?
In the columns of The New Age, the leading
left-wing literary weekly of the time, Clifford
Hugh Douglas and the editor, Alfred Richard
Orage, focused attention on the role of finance in
facilitating the enhanced production of armaments
necessary to conduct the devastation of the
Social Credit is an approach to understanding
the crucial role of finance in the formation of
policy decisions, not only in the economic sector,
but also in the spheres of politics and 'culture',
i.e., the arts, sciences, education and all types
of knowledge development.
- - Editorial, The Social Crediter Volume 86 No.1 Spring 2010
They Want Your Land: The Centralisers
by Eric D. Butler
A word of explanation.
The Australian League of Rights is a non-party political organization. The League is not motivated exclusively by opposition to Communism, and to other threats to individual freedom and dignity; it constantly holds up the vision of a world that could be: one of expanding freedom and security for all, in which every individual can participate freely in association with his fellows to build the finest Civilization yet created by man.
Forty years later Australians are finding that Eric's warnings have proved correct. Below is the background to Mr. Peter Spencer's experiences under draconian native vegetation laws. Read on:
SOS-News, in support for Mr. Spencer writes: Michael Duffy covered the story in 2005 when Peter Spencer was about have his livelihood taken away by Greens Law the puppet government had introduced. This terminated for ever Australia's production of the worlds finest wool from the Spencer farm.Five years on we now see food production being removed from farmers still by Green government and unworkable fictional vegetation laws. If this continues another five years there will only be family photo albums of farming in Australia.
"Farmers are Pushed Beyond Limit" by Michael Duffy - June 18, 2005 - Sydney Morning Herald
This week I heard grief at the end of the phone line. They're coming to take away Peter Spencer's sheep. Next week he will meet relatives to decide whether to walk off his farm, which is near Bredbo. Spencer is the latest victim of the drought, and also of the cruel green war against farmers that the State Government has been waging for the past decade.
Then Spencer set up a fine-wool breeding program, advised by scientists from the University of New England, in an attempt to make more profitable use of the small amount of cleared land on his property. The fires of 2003 in the national parks that ring the area pushed out hundreds of wild dogs, which have devastated farmers in the area. Spencer lost hundreds of sheep. His property is now home to thousands of kangaroos, which destroy pasture.
Then the big drought hit and Spencer suffered the final blow. The Federal Government refused to give him drought relief because his farm, deprived of 80 per cent of its earning potential, is considered economically unviable. In a way, this has been the cruellest cut of all. Some city people will tut-tut and say it's a good thing that "marginal" farmers leave the land. But if Spencer's farm is marginal (he'd argue not), it's because the State Government has destroyed its economic basis.
Since first writing about native vegetation laws I've heard from dozens of other farmers. Two are Peter and Darren Hepburn, a father and son in Bombala Shire, near the Victorian border. I've visited them and talked to Bruce Bashford of the Monaro Rural Financial Counselling Service, who tried unsuccessfully to help them fight another case of almost unbelievable injustice. The Hepburns bought a block of 500 hectares in 1994, intending to clear 303 hectares (which had been logged in the past) and sell the timber to repay their bank loan of $300,000. They needed to expand their existing farm to ensure it would be viable in the future. Bashford says Peter Hepburn is a "battling cockie who did everything right". He got written permission from all the relevant government authorities. And he had an understanding with a timber company to buy the logs. The purchase was a responsible business decision.
Then in 1995 an early native vegetation law, SEPP 46, came in and suddenly the Hepburns had to apply for permission to clear their land. This was refused.
This war on farmers reminds me of a less extreme version of the attacks on peasant farmers by the Soviet commissars after the Russian Revolution. There's the same appeal to ideology to justify an assault on an often disliked class of people. Back then the ideology was social, now it's environmental. It's just as unfair, and it's time we started talking about the morality of government appropriating private property without paying compensation.
They Want Your Land
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 efficiency". The talk about the necessity for "greater efficiency" 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 efficiency which it is being claimed results only from business? Long term policy is the elimination of indpendent producers: 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.
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.
The pedigree of Ideas: 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 course 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:
The Conspiratorial Role of the Fabians
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 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 government 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 uneconomic 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 units 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 AustralianWool 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.
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 efficiency. 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."
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.
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 official luncheon of the Royal Agricultural and Horticultural Society. He said that "he feared amalgamation of small farmers in Australia might be necessary to increase efficiency. 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 WA. farms with fewer than 3,000 sheep, 200 beef breeders or 70 milking cows." These are the views of Mr. G. D. Oliver, officer 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 Aus- tralia, 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...
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 bed 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 efficiency 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 the 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."
Peter Drucker observed in his book, "The Future of Industrial Man", that "Any society which cannot prevent the development of masses is irrevocably ruined."
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 . . ."
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 inefficient 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 preparing 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."
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?"
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 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 per cent. 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 18 wages. Higher food prices would merely stimulate inflation, leading to an intensification of a vicious circle from 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 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 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 per cent. in N.S.W. since 1955. Victorian rates outside the City Municipalities increased by 1900 per cent. 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 efficiency 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:
Reversing The Inflalion 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 23 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:
Senator Keane, Minister for Trade and Customs, explained the need for subsidies as follows in 1943: "We must not look upon subsidies under the new plan as payments to which an industry is not entitled. They are not payments because the industry is inefficient in comparison with other industries, and they do not resemble doles. They are payments because the Government considers it more economical to meet increased costs through subsidies rather than through rising prices ." (vide The Sydney Morning Herald, April 14, 1943).
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.
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 decentralised, independently-minded rural community.
THE FORGOTTEN STORY OF CONSUMER SUBSIDIES
The Hon. D. Anthony, Minister for Primary Industries, has stated that he finds "'They Want Your Land' an appeal to emotion rather than reason," and that the policy of consumer subsidies "has long ago been rejected by the Government as being economically and politically impractical in the context of our National Policy aims, as well as being a very costly and inefficient means of attempting to help the rural producers."
In the nature of the present finance-economic system, a great expansion of new financial credits, much of it being devoted to capital production (war industries) has the effect of increasing the price level. An increased price level erodes the value of wages and salaries, this resulting in an increase in wages and salaries to offset this erosion. But increased wages and salaries, financed out of further expansions of credit by the banking system, must be costed into prices by employers, thus stimulating further what is often called the "price spiral". The threat of inflation to industrial stability during the Second World War was met by the introduction of selective price-subsidies on items used to compute the Basic Wage. Prices were reduced to the consumer without penalising the producer.
It is true that the subsidisation was directly fianced out of taxation. But the Government was only able to levy such heavy taxation because the great expansion of new financial credits had dramatically increased the supply of money in the pockets of the Australian people. The essential truth is that the price subsidisation program was financed out of portion of the new credits created to finance the war. Government price control and rationing were only necessary to prevent exploiters taking advantage of the shortage of goods brought about by war production. These controls would have been completely unnecessary with adequate consumer production, such as is the case at present. Price subsidisation demonstrated that even with an enormous expansion of new credit for an expanding economy, price stability is possible. The big increases in price rises started with the dismantling of the price subsidisation program after 1948. They have continued ever since.
Opposition leaders, including the then Mr. R. G. Menzies and the then Mr. Arthur Fadden, stressed that price increases were the result of dismantling the price subsidy program. By early 1949, these Opposition leaders were bluntly stating that if elected to office, they would immediately restore the price subsidy program. The Argus, Melbourne, on January 28, 1949, reported:
The Liberal Party had agreed completely with the Country Party on price subsidisation. In a supplementary Policy statement, Mr. Menzies said before the 1949 elections: "When, at the referendum of 1948, the people refused to give permanent price-fixing powers to the Commonwealth, the present government did two unpardonable things. First it threw price control to the States, hoping they would make a mess of it. Second it withdrew most subsidies which had been created to keep down the cost of living. While encouraging production to the full, we shall hold ourselves ready to pay price subsidies in appropriate cases - as for example on those items affect ing the basic wage earner's cost of living" (The Age, Melbourne. November 12, 1949).
Liberal and Country Party speakers attacked Socialist planners like Dr. Coombs, and campaigned strongly on their policy of "putting the shillings back into the pound" through restored price subsidies, reduced taxation and less bureaucracy. The electors voted for the policy. The Sun, Melbourne, January 26, 1950, reported:
By April 5, 1950, Prime Minister Menzies had formally capitulated to the "advisers" and planners. The Sun, Melbourne, of that date, reported as follows:
This forgotten story of consumer subsidies proves that the election of politicians pledged to a clear-cut policy, does not necessarily mean that that policy will be implemented if it meets with the disapproval of the entrenched bureaucracy. Early in 1950 it was demonstrated that the Liberal-Country Party coalition was unable to implement a policy strongly supported by the electors. In face of the facts, it is obvious that merely electing different politicians will, of itself, have no real bearing on the question of how power is to be decentralised into the hands of the people.
This means the applications of effective pressure on the electors' paid servants at Canberra, making it clear that they must either take up again the battle promised in 1949, or be removed in favour of men with the courage to do this. Mr. Anthony's claim that consumer subsidies are "impractical" is a repudiation of what was once a major Country Party* policy.
Comment: Remember "They Want Your Land" was written by Eric Butler in the early 1970s. The once strong Country Party, now known as The Nationals are 'on life support' struggling to survive because they betrayed their own principles and their natural constituencies, the rural communities. What remains of them are 'in coalition' with the Liberals. This comment was written in September 2010.
Further reading: all online in Library Section.