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About Clifford Hugh Douglas

Written by Louis Even on Thursday, 14 November 1940. Posted in Clifford Hugh Douglas

The Genius who Discovered Social Credit

Clifford Hugh DouglasClifford Hugh Douglas
1879-1952

At the origin of Social Credit, there is one name, the name of a man of genius, a Scot, Clifford Hugh Douglas. He was born on January 20, 1879, the son of Hugh Douglas and Louisa Horfdern. He graduated with honors from Cambridge University, with a degree in electrical and mecanical engineering and a certificate in accounting.

He was a brilliant engineer, who was entrusted with important projects. In India, he was Chief Engineer and Manager for the Westinghouse Company; in South America, Deputy Chief Electrical Engineer for the Buenos Aires and Pacific Railway; back in England, he worked on the construction of London’s Post Office Tube Railway. During World War I, he was Assistant Superintendent at the Royal Aircraft Factory in Farnborough, England. After the war, he ran a small yacht-building yard, where he was helped by Mrs. Douglas, who was herself an engineer.

Douglas never bore the title of economist. He would have considered this an insult owing to the falsehoods that are taught in university faculties. Yet, Douglas was the greatest economist of all times, by the diagnosis he made of the major flaws he found in today's economics, and through the proposals he formulated to solve them.

Throughout his career as an engineer, Douglas had to tackle problems of a physical nature and had to solve them. But he gradually noticed that, if the solving of physical problems was always possible, many undertakings were stopped because of purely financial reasons.

In a speech that he gave to members of the Canadian Club, in Ottawa, in 1923, he explained how he came to take an interest in the question of finance and credit. The report of this address was published in the April 15, 1923 issue of the Ottawa Citizen.

Douglas told his audience that the first time he had encountered financial setbacks that had prevented a project from being realized, dated back about fifteen years, around 1908. At that time, he was in India, in charge of the Westinghouse interests. He had to conduct a survey, at the request of the Government of India, of a large district that held much potential for hydroelectric power. He found a large number of exploitable rivers and went back to Calcutta to deliver his report. He then asked what they intended to do about it. They answered: “Well, we have no money.”

Douglas found that decision deplorable. For this was at a time when the manufacturers in Great Britain were finding it hard to obtain orders which caused the price of machinery to go down. As for India, it badly needed electric power. But “they had no money”, and Douglas had no other choice than to accept this, but forget he would not: a project that was physically possible had been rendered financially impossible.

Around the same time, he would dine frequently with J. C. E. Branson, the Controller General in India. Branson used to bore him considerably by discussing something he called “credit”. Treasury officials in India and Britain persisted in melting down and recoining rupees (India's coins), having regard to what they called the “quantity theory of money”. Yet, insisted Branson, silver and gold had nothing to do with the situation; it nearly entirely depended upon credit. Douglas subsequently remarked that had he be given a short lecture on Mesopotamia, it would have been, at that time, just as unintelligible. But, nevertheless, Branson's repeated words had also found their way into Douglas's mind.

Just before World War I, Douglas was employed by the British Government to build a railway for the Post Office from Paddington to White Chapel. The undertaking offered no physical difficulty. He was ordered to go ahead with the project.  Suddenly, he got the order to stop the project and to pay off the men. Again for the same reason: There was no money.

Douglas was also an expert in cost-price accounting. It is for this reason that the British Government sent him to Farnborough, in 1916, to sort out “a certain amount of muddle” in the Aircraft Factory's accounts.

This is where he discovered that there exists a deficit between incomes that are distributed during production and the price of the finished goods. In other words, the money distributed to the consumers does not suffice to buy all of production.  

He then turned his attention to other companies: They experienced the same problem.   Under such condition, how could the consumers buy their own production? Douglas also noticed that once War was declared, there was no lack of money. So there was nothing sacred about money. It could be made to appear all of a sudden. And all that was physically possible could be made financially possible, as was the case during the war.

Douglas also took part in other experiments. He set out to determine what the defects of the financial system were and, as an engineer, to seek and to formulate principles that would make finance agree with reality. These principles are now known as Social Credit.

Douglas first published his conclusions in an article printed in the English Review, in December of 1918 under the heading “The Delusion of Super-Production”, and then in a series of articles published in A. R. Orage's weekly review, the New Age. The latter were reprinted in 1920, in Economic Democracy, Douglas's first book. During the same year, there appeared Douglas's Credit-Power and Democracy. The book Social Credit was released in 1923. Control and Distribution of Production and The Monopoly of Credit  were both published in 1931. Warning Democracy and The Alberta Experiment followed in 1937.

Apart from writing, Douglas travelled the world to give lectures on Social Credit — in Canada, Australia, New Zealand, Japan, and Norway. In 1923, he gave evidence before the Canadian Banking Inquiry, and in 1930 before the MacMillan Committee on Finance and Industry, in England.

Douglas died in his home in Fearnan, Scotland, on September 29, 1952 — the feast of Saint Michael the Archangel. He was 73.

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