The Monopoly of Credit

on Wednesday, 28 December 2016. Posted in From Debt to Prosperity (book)

From debt to prosperity - Chapter V

Any attempt to portray the facts of our monetary system would be incomplete without some specific mention of the monopolistic nature of the control over Money. Let it be said plainly that we are dealing only with facts as we find them. There is much disgruntled “bank-baiting” today, and we must never let ourselves engage in that stupid sport. Above all our attitude must be open-minded. But we can­not appreciate the need for a 20th century scientific money system without knowing where the faults lie in the broken-down financial failure that now impoverishes us.

We have seen how the banks, in the process of their bookkeeping, create and destroy the money underlying our use of cheques. And we have seen how more and greater debt is the necessary consequence of this bookkeeping process. We may justifiably conclude that “The power of the banking system, through its functions of creating, ex­panding and contracting, regulating and destroying money, is incalcu­lable, unparalleled and sinister.”1

“...over 97 per cent of the total money owned by the individu­als of the nation is privately issued, and by far the larger part of it has no tangible existence whatever. It represents a debt owed to the indi­viduals who own it, by the nation, enforceable by the law, which has, without the sanction of any national authority, been quietly added to the burdens of the nation by methods that resemble the tricks of the conjurer.”2

President Wilson, speaking in 1916, pointed out that, “A great industrial nation is controlled by its system of credit — our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men who ... chill and check and destroy genuine economic freedom.”

Taxation and The Money Monopoly

“If you investigate the facts as to the ownership of these world debts and war loans you will find them preponderatingly held by large financial institutions. You have at once a very good business reason for large quantities of taxation if half of it goes to the service of national loans which are held by large financial institutions: that, as an ordinary business proposition is obvious. It is still more obvious when you consider that these debts were actually created in the first place by financial institutions, by the lending of that money to governments, and the receiving in return of large blocks of national securities which the financial institutions receive for nothing.”3

Borrowing Our Own Credit

We read a great deal in the newspapers about “government fin­ancing” and the National Debt. What is the meaning of these terms?

A personal experience can best explain them. “Some years ago I happened to be in conference with the President when the Secretary of the Treasury came in, and, with tears in his eyes, expressed doubt that a necessary loan could be floated. Then the thought came to me, what an astounding situation it is for the Government to borrow money from banks that the banks do not have, and then, by redeposit­ing the money, loan the same money back to the banks and pay them interest on it.”

“The Treasury of the United States, because of the so-called “na­tional debt” has been largely under the control of the great banking houses of the country ever since the Civil War. The national debt now amounts to something over $26,000,000,000. The interest payments on the national debt amount to about $750,000,000 a year.”

“Now, the total capital, surplus and undivided profits in all the banks of the United States is less than $7,000,000,000. The total amount of private loans borrowed from all banks is about $34,000,000,000 or $27,000,000,000 more money than the banks have to loan. In addition to that, of this $26,000,000,000 of Government debt, the banks hold $13,000,000,000. You understand they only have less than $7,000,000,000 to loan. They have loaned to private enterprise $34, 000,000,000 or $27,000,000,000 more than they have, and then they are loaning to the Government $13,000,000,000 of nothing in God’s world but blue sky.”4

Responsibility and Where it Rests

Surely a great responsibility is assumed by any group of men who exercise dictatorship and control over the monetary policies of a nation. And more than that, when this dictatorship involves a monopoly over the creation and supply of money, then the administration of this power, which affects the lives of millions, is a task requiring little less than superhuman wisdom. The life of every citizen rests in the hands of those who control money. “Control of the money system means the control of civilized humanity.”5 Rothschild’s remark: “Permit me to is­sue the money of a nation and I care not who makes its laws” is filled with human importance.

Since money is the medium of exchange for goods, the control of money means in practice the control of Wealth itself. Moreover this control of money involves a parallel power of command over politics and business, influencing the economic destinies of producers and con­sumers alike.

“Being now in a position to realize the extent to which a modern industrial community depends for its well-being on a wise and disin­terested money policy, we see that the real rulers of any country are those who hold the power of money issue and money restriction.”6 There is an old axiom in banking and investment circles: “It takes money to make money.” The inevitable result of the monopoly of money is the concentration of Wealth and Power in the hands of those who own and operate the monopoly. “The monopoly of the control of the money system is the greatest over-riding monopoly of the world as it is worked at the present time.”7

The Attitude of Common Sense

The monopoly over money is controlled by private individuals. This fact deserves careful consideration. That the private banking sys­tem has the power to create and destroy the credit-money which constitutes the greatest part of our money supply has been publicly ac­knowledged, but the shopping public generally does not realize how its pocketbook is thus pinched. Yet this is the plain fact and we must be guided by common sense in our attitude towards it. As Mr. Maurice Colbourne says “ ... criticism is not directed against the creation of money, but against the monopoly of the power to create it, a monopoly held by the banks.”8

Right here we must understand a very important point. We are not in any sense criticizing bankers as individual business men. Above all let us keep malice out of our attitude toward this question. Knowing the facts we must appraise them wisely, in order to reach a true estimate of their consequence. Let us agree therefore that bankers as individuals are by no means so inhuman as to desire the evil effects of the system in which they work. We all know many of them, honest capable men. They are clearly not the subject of our criticism. They are the unwilling victims of the system in which they work. And the debt formulas of the goldsmiths govern the system.9

It is the peculiar defects in the banking system itself that com­mand our attention. In these defects and their consequences, through which the money-power controls every phase of our economic life, lie the main causes of our present privation and suffering. And these de­fects must be repaired before money can accomplish the purpose for which it is designed.

 


 

1) Maurice Colbourne, Economic Nationalism, p. 151.

2) Prof. Frederick Soddy, Money versus Man, p. 19-20.

3) C. H. Douglas, Oslo, Norway, February 1935.

4) Hon. T. Alan Goldsborough, Representative from Maryland, Speech in House of Representatives, January 7, 1935.

5) C. H. Douglas, Social Credit, p. 132.

6) G. H. Hattersley, The Age of Plenty, p. 110.

7) C. H. Douglas, Oslo, Norway, Feb. 1935. 

8) Maurice Colbourne, Economic Nationalism, p. 141.

9) “It is not necessary to assume that the bankers set out deliberately to will bad trade, unemployment, poverty, revolution, or war. They are probably in their way, humane men, good husbands and fathers, and hate these things quite genuinely. Never­theless, they will the policy that brings them about, and must, therefore, accept responsi­bility for them. At present they have power, supreme power, without responsibility; and the blame for the evil results of their policy is successfully thrown on the Govern­ment, or the employers, or the workers, or the Communists, or on foreign competitors — on everybody in fact, but those on whom it properly lies: themselves. The truth is, their operations are so hidden from view that the bulk of the people, not being given to the practice of hunting for ultimate causes, do not connect them with their own misfortunes. But if the bankers persist in disclaiming responsibility they must make way for men who are prepared to accept it.”

H. M. M.— An Outline of Social Credit, p. 51.