Arthur Kitson

A F T E R W O R D.

The Unemployment Controversy

The publication of these articles in the “ Times Trade Supplement” created such widespread interest that many columns of letters from all classes of readers appeared in that journal, some favouring and some opposing the author’s proposals.  Of the majority of these letters, little need be said in reply.  Most of the questions raised have been fully dealt with either in these articles or in those already published in the volume entitled “ Money Problems.”

The letter which apparently aroused the greatest interest was signed “ S.O.S.”, the writer of which seeks to revive the old exploded Malthusian theory of the pressure of population against subsistence.  He thinks these islands cannot continue to maintain its present population indefinitely.  The same thing was said more than a century ago when the inhabitants numbered several millions less than they do now.  But unfortunately for this theory we find that in practically all industrial countries the standard of living has grown proportionally with the increase of population.  Compare the wages and standard of living of, say, 1920 with those of 1820 or 1720 !

Of course, everything depends upon the economic methods prevalent.  If we were to attempt to revive the methods practised during the 18th century more than one-half of our population would probably die off.  In his work entitled “Fields, Farms and Factories,” the late Prince Peter Kropotkin stated that with the proper cultivation of all its soil Great Britain could grow sufficient food to feed the whole of its present inhabitants, and by adopting the intensive methods common in France and Belgium it could produce enough to feed 75,000,000.  It is hardly correct to say as “ S.O.S.” does that “we remained the greatest and most prosperous nation until Germany destroyed the peace of the world, etc.”  Both the United States and Germany had overtaken and beaten us so far as industry, trade and commerce were concerned before the war started.  People who make such statements base them wholly upon the Board of Trade figures relating to foreign trade, which are very misleading.  The export trade of this and all other countries is by far the smaller proportion of the world’s trade.  Every nation whose trade policy is based upon the well-being of its own people regards its home trade and its home markets as by far the more important and seeks to cultivate these first. Its foreign trade comes second.  But thanks to our free-trade fanaticism, our Economists and Statesmen seem to consider the welfare of foreign countries and foreign markets their chief object.  Hence they try to make the very existence of this country dependent upon our export trade and the goodwill of foreigners !  So long as this is the case there is no doubt a limit—which we may possibly have reached—to the number of mouths this country can feed.  But thickly populated as we may appear to be, we have not yet reached the density of Belgium, which manages to pursue its way without fear or anxiety.

It is also contrary to facts to say that “we emerged from the war far less wealthy than when we entered it.”  According to at least one well-known statistician, Mr. Edgar Crammond, whose statements were corroborated by the Editor of the “Times Engineering Supplement,” our capital productive resources were 50 per cent. greater in 1919 than in 1914 !  “Taking in each other’s washing” is a favourite expression of the free-traders who seek to deride the idea of the British people seeking to cultivate their home markets.  They believe it is good policy to spend millions in trying to secure the markets of a country with a population of 20,000,000 niggers, but they denounce any and all proposals for preventing the Germans or Americans from capturing the markets of Great Britain.  Moreover, trade between Argentina or Egypt or Germany and Great Britain involves the “ taking in each other’s washing ” just as much as the trade between Northampton and Witney or between Manchester and Huddersfield.  Surely the exchange of boots and shoes for blankets or cotton goods for woollen commodities is as necessary, as useful, and as beneficial as the exchange of coals for corn, or tools for coffee, or linen for dyes.  The laundryman who would sacrifice the laundrywork of his own countrymen and townsmen for the sake of securing that of the inhabitants of Timbuctoo or even Pekin would be regarded as an idiot.  But it is mainly to the cultivation of their home markets and industries that both our great trade rivals have outgrown us and achieved such wonderful and rapid success.  And it is chiefly because our people are taught to pay more attention to the demands of foreign markets than to those of their own people that politicians like the Prime Minister and writers like “ S.O.S. ” talk of emigration as the only remedy for unemployment.

Mr. J. Ellis Barker thinks it strange that so many people “ live under the delusion that the wealth of a nation and the employment of the workers can be greatly improved by the manipulation of credits and of the currency !”  It is far stranger that any intelligent man should attempt to deny it.  To deny it is to deny a truth that confronts one every day.  Do not prices affect trade and employment ?  And are not prices the result of “ the manipulation of currency and credit ”?  Every company prospectus inviting subscriptions for trade and industrial enterprises proclaims the truth that only by “ the manipulation of credit and currency ” can new enterprises be started and older ones continued.  Every advertisement enticing people to visit certain country places, hotels, restaurants, and to patronise certain shops, exhibitions, etc., testifies to the same thing.  What is the use of the international conferences for supplying credit to Austria and other central European countries unless “ the manipulation of credits ” is essential to revive their prewar industries ?  And what sense is there in even discussing the evils or advantages of currency inflation or deflation if “ the manipulation of currency ” has no effect upon employment or the wealth of nations ?  “Dear coal,” says Mr. Barker, “ not finance is the crux of the position.”  Is it ?  Then how came we to have over 10,000,000 people on the borders of starvation prior to the war in spite of the cheapness of coal ?  And does not the high bank rate add to the costs of production ?  And could not this rate have been very greatly reduced by the “ manipulation of credit and currency ?”  Was it not “ the manipulation of credit and currency ” that saved all our banks and the country from wholesale bankruptcy in August, 1914, and reduced the bank rate from 10 to 5 per cent.?  Mr. Ellis Barker has evidently not thought this subject out sufficiently.

Mr. Frank Morris is the first and I think the only correspondent who has really attempted to grapple with the fundamental proposals made in my articles as a remedy for our present troubles.  He denies that “ the price of the plant and machinery or capital goods is added to the selling price of the consumption goods.”  But he offers no evidence whatever in support of his denial.  Mr. Morris ought to have consulted some cost clerk before denying such a well-known truth.  Every industrial firm’s balance sheet contains an item for depreciation of plant and machinery.  The percentage allowed—which varies according to character of the plant and the nature of the work performed—is for replacing such machinery and plant after its efficiency is destroyed.  In many engineering works 10 per cent. is allowed.  Supposing a machine costs 500, then 50 is written off for the first year and the machine is credited as worth 450.  At the end of the second year 45 is written off, and so on, until the machine stands as worth no more than the price of its weight as old metal.  I know of works where machines are still worth in the aggregate thousands of pounds which are credited in the balance sheets as worth only a few hundreds.  Again, in many works all tools which have to be replaced are charged to running expenses.  And all such charges necessarily enter into the prices of the products made and sold.  In addition to all this, a certain percentage of interest on capital is also allowed.  Indeed if all such charges were omitted, and were not added as a part of costs there would be no profits.  Hence it is literally true that the costs of plant and machinery form a part of the selling prices of consumption goods.

The real credit of every industrial nation consists of its productive resources and facilities which comprise not merely its machinery, tools, plant, etc., etc., but also the skill, education and even the moral character of its people, its climate, natural resources, its forests, minerals, rivers, water supplies, its geographical position, its Government, and even its religion.  These are not the creation of any one man or of any one class nor of any one age.  They are the gift of nature and of generations of past ages.  Every British citizen should be entitled to a share in what is clearly the inheritance of the whole nation.

I hesitate, to disagree with so sane a writer as Mr. W.W. Faine, who has given elsewhere some sound advice on financial and industrial matters.  But it seems to me that he also is under the delusion that we “ became vastly impoverished by the cataclysm through which we have passed.”  Outside of the precious lives we lost and the debt we incurred to the United States, where can one find any evidence of our impoverishment ?  We suffered no invasion, none of our cities or towns were destroyed as in France and Belgium.  Not one of our coal mines, railways or docks was even seriously endangered.  On the contrary, we were able to develop our industries, to enlarge nearly all our factories and to build hundreds of new ones, so that our industrial capacity at the end of the war far exceeded that at the beginning.

As for our National Debt—which a more intelligent Government might have avoided—is concerned, since we owe this to ourselves we cannot regard this altogether as a sign of impoverishment.  The desire of the masses to lead more comfortable lives ought to be regarded as a healthy sign.  Necessarily the labour essential to enable them to do so must be, performed.  But surely the more goods a nation consumes the greater must be the demand for such goods and therefore the greater the opportunities for employment.  But to arrive at these results, the goods must be produced and the wages, salaries and dividends distributed must be sufficient to enable the people to buy what they produce.  If not, the goods must either go abroad or the home markets will soon be glutted.  And then follows under-consumption, unemployment and industrial stagnation.  The world’s greatest market is the United States of America.  Its greatness is due to the so-called extravagant scale of living on the part of the American public, and to the high rates of wages and salaries paid.  By reducing wages, you reduce the home market for goods by curtailing the purchasing power of the public—unless prices fall proportionally and simultaneously—which seldom, if ever, takes place.

Although the correspondence shows how very important it is that some solution of the problem should be found, it is disappointing to notice an entire absence of anything approaching intelligent criticism of the proposals submitted.  No one has attempted to deny the fundamental truths upon which the proposals are based, viz.:——

1.  Opportunities for employment are created by and are proportional to the effective demand for goods.

2.  The effective demand for goods is dependent upon and proportional to the amount of purchasing power (currency and credit) in the hands of the public.

3.  Purchasing power is distributed in the form of wages, salaries and dividends in the process of making and producing commodities.

4.  The amount of purchasing power so distributed in production is insufficient to buy more than a small proportion of the goods so produced.

5.  As a consequence our industrial prosperity is made dependent largely upon foreign buyers.

6.  Since other nations are in a somewhat similar condition through employing a similar financial system we are all competing for the same foreign markets.

7.  This international rivalry results in the congestion of the home markets, unemployment, industrial stagnation and finally—warfare !

8.  Until and unless the amount of purchasing power distributed to the buying public is increased sufficiently to enable them to buy the total volume of goods produced at the prices offered, these periods of trade stagnation will recur from time to time.  It will be observed that the representatives of the orthodox economic school admit that they can find no solution for this problem.  Why then do they refuse even to consider unorthodox proposals ?

In conclusion, may I add that the purpose for which I was induced to undertake the task of writing these articles has been fully achieved. They have aroused wide-spread interest and discussion and have led many to seek fresh knowledge of economic subjects from unorthodox sources, the only hope of mankind for economic deliverance.


To those desirous of studying the Financial question the following Books are worth reading :

“CREDIT-POWER AND DEMOCRACY” (Major C.H. Douglas, Second Edition, 7/6 net)—Cecil Palmer, London.

(Major C.H. Douglas, Second Edition, 6/- net)—Cecil Palmer, London.

(A. Kitson)—(New Edition out shortly).

(A. Kitson)—British Banking Reform League.

(A. Kitson)—British Banking Reform League.

(A. Kitson)—British Banking Reform League.  (Fully explains the Charter Act of 1844.)

(A. Kitson)—British Banking Reform League.

(A. Kitson)—British Banking Reform League.

(A. Kitson)—British Banking Reform League.

(Oswald Stoll)—Nash & Co., London.

(Walter Jones, J.P.)—F. Palmer, London.

“COMMUNAL CURRENCY” (J.T. Harris, B.A.)—P.S. King & Son, London.

(C.B. Phigson)—George Allen & Unwin, London.

(G.H. Stock)—W. Brendon & Son, Plymouth.

(Samuel Turner)—Nisbet & Co., Ltd.

(H. Meulen)—Richard J. James.

“ A CORNER IN GOLD ”—P.S. King & Son, London.

(W. Hill)—British Banking Reform League.

(Melrose)—Mitre Press Co., London.

(By A. Kitson, price 1/-)—British Banking Reform League.


The above may be obtained from


(New Edition out shortly.)

“ Here is a book which disturbs classifications, which is unorthodox, which sets aside some very widely-received opinion as of little worth, and which presents its own side of certain vital questions with a persistency and logical force from which it is hard for an unprejudiced reader to escape . . . The end and aim of Mr. Kitson’s whole argument is to build up a theory of money upon the lines of a purely mathematical induction.  He follows Prof. Jevons in the endeavour to show that all the terms with which Political Economy deals involve the consideration of QUANTITIES.  But he diverges from Jevons at the point where the latter becomes illogical ;  for indeed it is illogical to define value as a ” ratio of exchange,” and then to talk about a ‘standard unit of value.’  It is manifest that we cannot have a ‘standard unit ’ of a ‘ ratio.’  The notion that such a thing is possible is responsible for the theory that gold and silver can be at once a standard of value and a medium of exchange.  When economists get rid of that theory, the community will get rid of panics—not before.  ‘Values are ideal creations, and can only be properly expressed in terms of the ideal—numbers.’  Such is Mr. Kitson’s remarkable announcement, and it is one which entitles him to a front rank in Economic Discussion.”—

The Evening Bulletin, Philadelphia.

“ Mr. Arthur Kitson brings before the reader, in a clear and masterly way, the results of much reading and careful thought on the circulating medium.”—

Agnostic Journal, London.

“ This is a decidedly clever work.  We cordially appreciate his scholarly grasp of the financial problems of the day.”—

Reynolds’ Weekly, London.

“ I can say with much pleasure that the presentation of Political Economy in the first few chapters is masterly.  It is the best Economic book, the fullest, deepest, and truest I have ever seen.”—

ROBERT BLATCHFORD, Editor of Clarion.


A Fraudulent Standard.

The majority of financial books are closed to the average reader and are only intelligible to those with a knowledge of the higher mathematics.  The author has striven in this work to write a book that the average man can read and understand.  It is time monetary science was popularized and made intelligible to all because of its supreme importance.

The opinions and conclusions expressed in this book have not been formed hastily.  On the contrary, they are the result of many years of study of various theories orthodox and heterodox—coupled with the practical experience of a very busy life in contact with financial and industrial affairs both at home and abroad.  In 1894 the author published his first book on this subject, entitled ‘ A Solution of the Money Problem.’  Further study and experience have served to strengthen the conviction therein expressed that the root of all our economic trouble is a false and fraudulent standard of value.  It should be pointed out that this subject is so far-reaching and extensive it would be impossible to deal with it exhaustively in one or even two volumes.  The author has, therefore, merely dealt with a few of the main problems in the hope that it may arouse general interest in a subject hitherto shrouded in mystery.

Demy 8vo. Cloth 10/6
Inland Postage 6d.

“ Money should be the servant of industry, and not its master. Hitherto these conditions have been reversed. Industry has become the slave of finance.”


By ARTHUR KITSON. Crown 8vo., Cloth - - 7/6.



LAND AND WATER.—“ The first chapter is on the psychological factor in war and the last on the psychology of the workshop, and intervening ones deal with capturing German trade, the inadequacy of our banking system, London’s gold market, etc.  Mr. Kitson brings to bear on these subjects exceptional experience, for he has been a manufacturer both in the United States and in England, has had important business connections on the Continent, is himself an inventor, and has experienced the difficulties of trade development under our banking system in the past.  Gifted with a fluent pen, he has been able to utilize his exceptional experiences to the advantage of manufacturers and traders who have had to face similar difficulties.”

TIMES.—“ This contains a series of articles which Mr. Kitson, the Managing Director of the Kitson Empire Lighting Company, and a man of extensive commercial and engineering experience on both sides of the Atlantic, has contributed during the past two years to “ Land and Water.” ... He advocates a complete reform of our system of banking, and the association of the State with the industry of the nation.”

SCOTSMAN.—“ Mr. Arthur Kitson has put forward a series of interesting suggestions for a reform of economic practice and theory.  With regard to finance he proposes the abolition of the gold standard, the reorganization of banking on national lines, and the supply of cheap credit facilities to manufacturers and traders.  In respect to the organization of industry he advocates State control on the analogy of the controlled munition establishments, and the payment of higher wages to labour. ... He also deals with the subject of tariffs in the course of an indictment of the laissez faire attitude.  The book is brightened by many apt illustrations drawn from contemporary conditions and from the writer’s personal experience, as a manufacturer, of German trading methods and commercial laws.”

SHEFFIELD TELEGRAPH.—“ Mr. Kitson is worth studying.  He writes of trade and finance, not from the standpoint of the professional theorist but as a manufacturer and employer of labour ;  and his views have the merit of being healthily new and robust.  He has studied the political economists, but he has also used his own reasoning faculties in association with his experience.  As a result, he writes with a freshness of outlook that will help to focus the ideas of men on new methods of meeting the new problems ahead.”

GLASGOW HERALD.—“ Contains the views of one of the most thoughtful, broad-minded, and stimulating economic writers of our day on the financial, banking, and sociological industrial problems which have arisen out of the war or which the war has forced into prominence.”

OXFORD CHRONICLE.—“ Mr. Kitson, a recognized authority on such matters, sets himself the task of exposing various fallacies which interfere with commercial prosperity in this country and to suggest remedies and what he has to say is well worth the serious attention of business men.”

FINANCIER AND BULLIONIST.—“ A careful perusal of this volume compels agreement with Mr. Francis Stopford’s expression in the Preface, that ‘ those who are satisfied with British currency and banking, and that her trading and industrial conditions are all that they should be, will be well advised to forswear this volume, for their prepossessions will be shocked.’  A shock would, however, do a great deal of good to many, and we advise such to read the book.”

NOTTINGHAM GUARDIAN.—“ Mr. Kitson, like many others economists of to-day, is an out-and-out advocate of the nationalization of our banking system, so that banking facilities may be brought within easier reach of all classes for the stimulation of industrial enterprise, and his chapters on the financial factor in business and the fetish we make of the gold standard well repay close and attentive perusal.  To the financial expert the ground covered and the arguments used will be familiar, but to the reader who has not made a study of these matters they offer a clear and well informed statement, in which the case from opposite points of view is impartially presented ;  his general conclusion being very strongly in favour of a thorough reform.”

HARDWARE TRADE JOURNAL.—“ There is much that is of burning interest in this thoughtful collection of essays, but that which makes the strongest appeal to the writer by reason of its novelty is the concluding chapter on the psychology of the workshop. ... Readers who are thinking out these problems will find much in this volume that is at once stimulating and instructive.”

SUNDAY CHRONICLE.—“ The author draws a most serious indictment against what he terms ‘our medæval banking methods.’  He holds the Bank Charter Act as the chief obstacle to our industrial progress.”

ABERDEEN JOURNAL.—“ Trade Fallacies ” deserves careful study by employers and workers, and by all who, have been giving serious thought to the industrial problems which will arise after the war.”