SIR.-As Secretary of the Social Credit Association I would like to take Dr. Leo Bray up on a number of points in his letter. "Social Credit and Gold".
He appears to advocate a return to the gold standard despite the disastrous results
which followed such a return in 1844 and 1925. The results were so bad after 1844 that for a number of years the mortality rate equalled the high birth rate that then prevailed : this was a measure of the hardship caused. It was only relieved by the cheque system making money somewhat more plentiful.
In the 1925 return to the Gold Standard the suffering was such that a more lenient government rescinded the measure when its consequences were fully apparent. But it may be asked "Why must this necessarily lead to such results?" I have before me some figures published by the Bank of England, January 1961. regarding that institution's financial position: its holdings of gold for the issue department are put at the value £365,695, whereas the fiduciary issue is put at £2.350,000,000. The total issue of credit and other forms of money must be several times this amount: it would be difficult to imagine how we could relate these gold holdings to the issue of credit and money in such a way as to proclaim that we are on the gold standard.
It is well known that the total world gold holdings amount in value to only a very small fraction of the monetary requirements of the world, and that the value of gold is kept low in price by the cost of production of gold. not rising much above the price of new gold, and moreover that the production of gold per annum bears no relationship to the production of other goods: these factors make a return to the gold standard impractical.
Finally the purpose of money is not the purchase and sale of goods hut to act as an instrument for the distribution of goods, services and entertainments, and so it should be issued to enable what can be produced to be fully distributed. It should not be a question of too little money curtailing distribution and thereby limiting production : it should rather foster distribution, and encourage production so as most nearly to meet the real want. This requirement does not subsist today: on the contrary, though people want, productive enterprise is always somewhat of a hazard because purchasing power is never fully adequate, and is subject to periodic reductions known today as depressions : were it not for this, producers could plan ahead with confidence to greatly increase production knowing full well that they could sell what they could produce: nothing would encourage
production to such an extent as a system which would place adequate purchasing power in the hands of the public: and this is the aim of Social Credit, As Dr. Bray points out, the methods used in the U.S.A. are very ineffective. It is certainly time that they put into practice the Three Demands of Social Credit. Namely : to institute a National Credit Office to gather the data for the correct issue of money: the Scientific Price Adjustment to prevent inflation: and the National Dividend to prevent underconsumptiore
A. J. W. Chavasse, Secretary of the
Social Credit Association hc Social Credit Centre, 243 Gray's Inn Road; London, W.C.I.