U N E M P L O Y M E N T

Arthur Kitson

REPLY TO CITY EDITOR'S CRITICISM.
(BY ARTHUR KITSON.)



I HAVE been engaged for a good portion of my life in political, economic, and scientific discussions, some of which have been of a highly contentious character, but I cannot remember ever having read any criticism so unfair or so misleading as that offered by my present opponent.  Let me give one or two examples.  Under a heading entitled “ Evading the Question ” my opponent says :  “ Mr. Kitson wonders why we should wait for foreigners to purchase our cotton goods and boots ;  he says we should sell them to the thousands of English people who have shabby boots and clothes.  Provide these people, he says, with bits of paper and they will be able to buy the boots and clothes and give employment to the cotton and boot operatives.  What use the pieces of paper would be to the latter when they want to buy wheat from Argentina, raw cotton from Virginia, and hides from India, Mr. Kitson wisely refrains from explaining.”

By the substitution of the terms “ bits of paper ” and “pieces of paper” (which I have never even mentioned) for Treasury notes my opponent seeks to arouse prejudice and to convey the impression that I am advocating the adoption of an entirely worthless currency.  Moreover, the question of buying goods from these countries has no bearing on the proposals made.  One has but to insert the words “ British Treasury notes” in place of “bits of paper” and the prejudice and difficulties raised by my critic vanish into thin air.  Everyone knows that our Treasury notes will purchase bank drafts upon Argentina, India and America without the slightest difficulty, and consequently their holders can readily purchase wheat, cotton, and hides from these countries.

[Is not the point rather that Treasury notes would not purchase drafts any more than Russian notes if they were indefinitely increased in number ?—ED.]

Treasury notes, Bank of England notes, Bills of Exchange —in short, over 90 per cent. of the assets of every bank—may be vulgarly classified as “ bits of paper,” but the City Editor had no intention of conveying this idea because by doing so he would destroy the prejudice he wishes to foster against this one particular form of currency which I have endorsed !


FOREIGN COMMERCE.


It will be remembered that in a footnote to my third article (March 19) the Editor of The Times Trade Supplement asked me to explain how the increased sale of goods in our home market would enable us to pay for the raw material such as cotton, which is not grown in these islands.  To this I replied in my next article in substance as follows :—Our control of our home markets would enable us to produce goods in much larger quantities than at present, and consequently at less cost, and since foreign trade is a system of indirect barter by which we exchange services and manufactured goods for imported raw material, we should naturally be in a better position with such control than otherwise.  And this is how the City Editor misinterprets it : — “ Requested to show how the making of cotton goods for Thomas, the sentimental poet, will enable the cotton-spinner to pay for the raw cotton, Mr. Kitson airily evades the issue by saying that we are quite capable of paying for the cotton.  He asserts that that is the answer to the question.  But he has still to answer if the public is to be induced to take his ideas seriously ” !

In the fourth, fifth, and sixth articles I outlined various remedies for industrial stagnation and unemployment.  In the fourth article under the heading “The Remedy,” I stated how immediate relief could be given to our trade and industries, whilst in the  last article I reproduced the entire scheme originally suggested by Major Douglas in his recent work entitled “ Credit Power and Democracy.”  The City Editor says :— “After studying with great care the six articles in which he promised to disclose his practical solution for the avoidance of poverty and unemployment, ` the most easily avoidable of evils,’ I am forced to confess that I have groped in vain for the promised solution among a wilderness of words and startling assertions masquerading as arguments.”


MAJOR DOUGLAS’S PLAN.


Not one single word in criticism of Major Douglas’s plan has the City Editor attempted to offer.  Evidently incapable of offering any intelligent criticism, he deliberately puts the telescope to his blind eye and brazenly asserts that I have offered no solution !  This Nelsonian touch may be advantageous at times in warfare, but it is very foolish when it is attempted in a discussion of this sort, the object of which is to arrive at the truth.

[Our City Editor was not called upon to deal with Major Douglas’s book but with Mr. Kitson’s remedy.—ED.]

The City Editor puts to me this poser, which he says I must answer—viz.:—“ How the making of more goods when there are more goods than can be sold will produce buyers, and how the issue of bits of paper will enable the Indian planter to be paid for his tea ?”  His question is not quite complete, and I must first inquire whether the cause of such overproduction is due to the public having become surfeited with all these goods, or merely because a foolish financial system has so contracted the volume of purchasing power that there is not sufficient to enable those desiring such goods to buy with ?  Overproduction can occur for only one of two causes—viz., because the wants of all are satisfied, or because of an insufficiency of purchasing power in the pockets of the public.  Our present stagnation is due to under-consumption.  Or does the City Editor imagine that the present paralysis of trade is due to the fact that very few people are in need of goods ?  If some magician could present 10 legal pounds to every poor person in this realm, is it not certain that within a few days or weeks every factory would be running full time and every unemployed and employable person could be able to find a job ?  As to the Indian tea planter, so long as Treasury notes are convertible into rupees or drafts upon the banks of India, he need not worry about not being paid for his tea.  The exchanges would then gradually fall in India’s favour and enable trade to be resumed, which was destroyed by the politicians who have been tinkering with the currencies of both countries.

Again, in my first article I said :— “there are many obstacles to human progress arising from natural causes over which man has little or no control.  There are others which are by far the more numerous, and entirely the result of man’s stupidity, superstition, ignorance, prejudice, and greed.”  In spite of this distinction which I made between the uncontrollable forces of nature and those forces which are remedial, my critic says :—“ If Mr. Kitson wishes to avoid unemployment he must arrange that there will be no frosts, no parasites, no storms,” &c.

The City Editor also objects to my diagram of the oil engine, because he thinks it is not sufficiently comprehensive.  Here again my critic coolly ignores the object of the illustration, which was merely to show by analogy that continuous production (and therefore employment) depends upon continued consumption at a sufficiently rapid rate to avoid the condition known as over-production.  The extension of the public oil supply main in the diagram which he suggests would have added nothing whatever towards illustrating the above fact.


GOODS OR MONEY ?


My opponent says that there are “ three outstanding fallacies ” in my articles, the predominant one being that “ the real problem is to discover some method of selling goods as fast as they are produced.”  He says—“ The real problem is not to exchange goods for money, but to exchange them through the medium of money for other goods.”  My answer is that so long as I can exchange goods for money I can always buy the goods I need with the money.  I fail to see any “ problem ” in this.  [The experience of Russia seems to be against Mr. Kitson.—ED.]

Again he says :— “ Money is the medium of exchange ;  if the problem could be solved by merely printing money it could be solved here and now.”  A Daniel come to judgment !  This is my contention.  It was by printing Treasury notes that our banks, our industries, in fact our country was saved in August, 1914, just as we and other nations have been saved by a similar measure during similar crises.  And those who are now sneering at these so-called “bits of paper,” were the very first to acclaim them when everything was in the melting pot.  [Is not the point that this temporary expedient cannot be indefinitely continued ?—ED.]

I am admonished both by the City Editor and Mr. De Segundo that I am carrying on a dangerous propaganda by raising false hopes.  One would have supposed that the tragic events of the war and the failure of our pre-war economic methods would have taught our politicians and City Editors the folly of imagining that the world could be put back into the old ruts in which things moved prior to the great upheaval.  The real danger lies in the attempts to carry out such an insane policy.  These attempts are already responsible for most of the present unrest.

The attempt of the Treasury officials to put into force the preposterous proposals of the Cunliffe Currency Committee has cost the country already untold millions of wealth and has resulted in the closing of hundreds of factories and the discharge of hundreds of thousands of operatives.  “ The unemployment problem is a problem of exchange,” says our City Editor.  True, and “ exchange ” has developed into “ a problem ” merely because Governments have granted to a few individuals the monopoly of credit—the media of exchange.

There are numerous other points in my opponent’s reply to which exception might be taken, but I think I have said enough to show that his “ reply ” has very little bearing upon the proposals that I have made as a remedy for unemployment, which proposals he has deliberately ignored.

One word in reply to Mr. De Segundo.  “ By increasing our productive facilities we are decreasing the public power to purchase goods,” for the reason that these facilities tend to displace labour, and therefore reduce the amount of purchasing power (wages) distributed.  Suppose, for example, that machinery should ultimately displace all labour.  Then wages would cease, and unless a new system of wealth distribution were created, our working-class population would perish and the market for our goods dwindle to a fraction of what it now is.  Production is determined by and is proportional to effective demand, and effective demand is regulated by the prices of goods and the amount of purchasing power in circulation.

I am not seeking “to overthrow the present system,” but to improve it.  For unless it is improved its overthrow is certain.  My sole object in writing these articles is to open the eyes of the British public to the terrible dangers which are confronting us, and to endeavour to save my fellow-countrymen from the abyss towards which the arrogance, ignorance, and stupidity of our Government officials are hastening us.