Clifford Hugh Douglas
the origin of Social Credit, there is one name, the name of a man of
genius, a Scot: Clifford Hugh Douglas, born in 1879, son of Hugh Douglas
and Louisa Horfdern. Graduated from Cambridge University, with an honour
degree in mathematics, Douglas chose to be an engineer by profession.
was a brilliant engineer, who was entrusted with important projects. He
was, in India, Chief Engineer and Manager for the British Westinghouse
Company; in South America, Deputy Chief Electrical Engineer for the
Buenos Aires and Pacific Railway; back in England, he was employed on
the construction of the London Post Office Tube Railway; then, 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, in which he was helped by Mrs. Douglas, who was
herself an engineer.
was also an expert in cost price accounting. It is for this expertise
that the British Government asked him to go to Farnborough in 1916 to
sort out “a certain amount of muddle” in the Aircraft Factory's
never bore the title of economist; he would have considered this as an
insult anyway because of the monument of errors, based on false
premises, in economic teaching in universities. Yet, Douglas was
actually the greatest economist of all times, with his diagnosis of the
major flaw in today's economics, and with the proposals he formulated to
his career as an engineer, Douglas had to tackle problems of physical
nature and solve them. But he gradually noticed that, if the solving of
physical problems was always possible, many entreprises were stopped
because of purely financial problems. That led him to study the
financial question with the spirit of an engineer.
briefly related himself, in an address to members of the Canadian Club
in Ottawa, in 1923, how he came to take 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.
said that his first experience with financial hindrances stopping
physical possibilities, dated back about fifteen years earlier, around
1908. At that time, he was in India, in charge of the Westinghouse
interests. He had to conduct a survey, at the insistence of the
Government of India, of a large district with considerable water power.
He found a large amount of exploitable water power, went back to
Calcutta and Simla to report it, and asked what was going to be done
about it. The answer was: “Well, we have got no money.”
found that decision deplorable. For this was at a time when the
manufacturers in Great Britain were finding it hard to obtain orders,
and the prices for machinery were very low. As for India, it badly
needed electric power. But “they had got no money”, and Douglas
could only accept it, while pigeonholing in his mind this case of a
beautiful physical possibility that was paralyzed by a financial
about that time, he said, he dined frequently with J. C. E. Branson, the
Controller General in India. This 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 been pigeonholed in
before World War I, Douglas was employed by the British Government to
build a railway for the Post Office from Paddington to White Chapel.
There was no physical difficulty at all with the entreprise. He was
ordered to get on with the job. Suddenly, he got the order to suspend
work and pay off the men. Always for the same reason: no money.
time after that, during the war, he was sent to the Farnborough Royal
Aircraft Works, to sort out a muddle which the books of that institution
had gotten into. It was not long before that he had remarked that, each
week, the cost prices of the goods produced were greater than the income
distributed in the form of wages and salaries. Prices were not in
accordance with purchasing power.
that drew his attention, and a study of the cases of many companies
showed him that it was so in every factory. How could, in those
conditions, the money distributed to consumers buy the products? Douglas
also remarked that once the war came, there was no more a question of a
lack of money. So there was nothing sacred with money. Money could
appear all of a sudden, and all that was physically possible could be
made financially possible, as it was the case during the war.
also faced other experiences. He decided to locate and bring up-to-date
the defects of the financial system; then, as an engineer, to seek,
discover, and formulate principles to put finance in keeping with
realities at all times. This is what has been called since Social
first published his conclusion in an article in the English Review for
December of 1918 under the heading “The Delusion of
Super-Production”, and then a series of articles of A. R. Orage's
weekly review, the
New Age. Those articles were reprinted in 1920 as Economic
Democracy, Douglas's first book. The same year appeared
and Democracy, then Social
Credit in 1923, Control and Distribution of Production and
Monopoly of Credit, both in 1931, and Warning
Democracy and The Alberta Experiment, both in
from these books, Douglas also travelled the world to give lectures on
Social Credit — to 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.
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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