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To finance municipalities, school boards and other public bodies

Written by Louis Even on Saturday, 01 March 1958. Posted in Social Credit

This article, written by Louis Even in 1958, gave the figures of 1958. The Federal Government who, in 1958, "sponged $5 billion" by taxes, sponges $187 billion in 2004. The system has not improved — far from it! It is because our statesmen are less and less at the service of the common good, and more and more at their own personal service, and consequently, they have sold themselves to the Financiers who are more and more robbing us of our goods, our freedoms, and of our personal and family rights. It is the Babylon of the Apocalypse that is on the throne, and who rules all of the peoples.


 

A general complaint

Across the country, in the ten Canadian provinces, the municipal administrations are complaining, not of having too many local functions, but of the lack of financial means to fulfill them appropriately.

This is not surprising. When the Federal Government, by direct or indirect taxes, has sponged $5 billion of the taxpayers' money, and when the provincial governments have drawn another sizeable slice (half a billion in Quebec), there remains very little to be extracted from the citizens by the local, school, and municipal administrations. Families hang on fiercely to the little that is left to them; taxpayers, not without reason, cry out against any rise in property tax, water tax, sales tax, etc. And local public bodies are left with their tongues hanging.

But why could we not finance smoothly ALL that the country can supply in required goods and services — whether public or private — in the sector, at the level, and at the site where production takes place?

We have not yet heard that municipalities have found themselves incapable of constructing water systems, sewers, or sidewalks because too many arms were employed in tilling the soil, in making clothes, or in building houses, or because the provincial government employs too many on its road construction, or the Federal on its airports or arms factories.

No, nobody is complaining about these things. But, by a strange deformation of a system, though invented to serve, we are not able to pay for all that we are able to produce, because we have gotten into debt collectively. And, the deformation still existing, we cannot dream of doing new developments without contracting new debts.

A monstrosity

Also, ironically enough, the weaker a public body is, the harder are the financial conditions imposed upon it. The interest rates charged on loans are higher for local administrations than for higher governments — so that, in all humanism and fairness, the contrary should take place. Why demand more of the small than of the big?

In a past issue of our journal, we had mentioned a loan project of the city of Hull, on which the homeowners demanded a referendum. In order to finance works evaluated at $375,000, the city had to first promise to pay the Financiers $700,000. Why be condemned to pay $700,000 for what costs $375,000?

This is nothing new, not even for the city of Hull itself. The year before, it wanted to borrow $745,000 for the construction of a tank. A loan was given for 40 years, because the city was too poor to reimburse sooner, and because it was too poor to reimburse it quickly. The Financiers made, as a condition, not only a reimbursement of $745,000 but, over and above, $1,111,907 in interest. Therefore, because of its poverty, it had to pay $1,856,907 for what would have cost $745,000. The taxpayers refused to give the city permission to contract this loan, and so, they had no tank — although the execution of the project was possible. The tank would have been built if the money would have been there... One is always obliged to choose between paralysis and indebtedness!

How can a civilized country accept the burden of such a financial regime?

Realities that serve, falsities that rob

How can we free ourselves from such a monstrosity? Simply by forcing the financial regime to fulfill its own function, at the same rate and with the same ease as the productive regime fulfills its function.

The function of the productive system is obviously to produce, not to destroy. And it carries it out: it produces; it produces efficiently and well. The function of the financial system is to finance, not to rob. So, the present system finances wrongly, and it robs producers and consumers.

Let us go back to the last example cited, in the case of Hull: There is nothing wrong with the city taking 40 years to repay a loan made for the construction of a tank. It is quite normal, because the tank should last at least 40 years.

To have the financial system in accordance with realities, credits must be issued in keeping with the volume and rate of production, and cancelled with the volume and rate of consumption. Immediate production of a wealth of $745,000: immediate issuance of credits totaling $745,000. Gradual wear of produced wealth: gradual withdrawal of credits corresponding to the wear (to consumption when consumer goods are concerned).

What is not in conformity with reality is to withdraw $1,856,907 from circulation. This cannot correspond to the wear (or depreciation, or consumption). There cannot be more wealth consumed than what was put into existence. There cannot be a consumption of $1,856,907 for a production of $745,000. Two bricks cannot disintegrate where there was only one laid.

This is not only discord, falsehood; this is also theft. To demand $1,856,907 for something that costs only $745,000 is to rob, and to rob on a large scale.

Demand for money at low interest rates

At one of its national congresses, the Federation of Mayors and Municipalities of Canada called for an urgent reform in the domain of credits to municipalities. It asked that the authorities constitute a special fund where towns and cities could obtain money at low interest rates.

It is an orientation, still timid and imprecise, towards at least an alleviation of financial charges weighing on municipalities. (Alas! It is not only municipalities who suffer from the system.)

But the Federation did not specify what authorities should constitute these funds, nor by whom the funds should be supplied.

If it is simply a question of funds constituted from taxes, federal or provincial, to loan to municipalities at low interest rates, this could lighten the task of the town councils, but not of the taxpayers. The same taxpayers would still pay to two or three places. And if they cannot supply money to the municipality directly, how could they better supply it by a detour?

If the funds in question come from loans made by a higher government, which assumes a part of the interest and which imposes only the remainder of the rates on the municipalities, this does not correct anything either: the taxpayer will pay the two slices; one to his town council, the other to the higher government.

The suggestion worthy of consideration would be for the account in question to be supplied through credits issued by the Bank of Canada, and then be administered by the funds. These credits, based upon the available production capacity of the country, are in reality a good of society. To open up channels of circulation for these to serve and channels of circulation for these to return, after having served, costs nothing but the expense of writing and administration. These expenses could amount to a quarter, or at the most, a half percent. It is the only charge that such a fund, not established for profits but for public service, should demand from a public body which puts its credits into action for the good of the community.

This still would not be Social Credit. In a Social Credit financial system, the credit withdrawals would be made only in proportion with the total of all kinds of consumption to the total of all kinds of production. And if, in the course of their circulation, these financial credits give rise to more production than consumption, the reimbursements would be less than the amounts put into circulation — for the good reason that while some production is not consumed, the means of payment must remain available to pay as the production is consumed.

But without yet being out of the system, the establishment and utilization of the suggested funds would already free the municipal administrations from the detestable role of being a servant to a regime of robbery that is imposed on them today. There would be no need for them to extort from their taxpayers $1,856,907 to pay for what costs only $745,000.

The same organism — the Bank of Canada, or a mechanism attached to it — could also allow school boards and other public bodies, greater or smaller, to use the production capacity of the country, without these public bodies having to tax their subjects one-and-a-half times or twice the price.

The taxpayers, that is, the families, would profit. It would already be a beginning, while awaiting a financial system entirely in keeping with realities, at the service of the community and of all the members, without exception, such as is advocated by Social Credit.

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