|
The Social Credit proposals explained in 10 lessons Lesson 8: Social Credit is not a political party In the previous issue of "Michael" we published Lesson 6 on the compensated discount, and Lesson 7 on the history of the banking control in the United States, which showed, among other things, that even if you have honest politicians in office, they won’t be able to change the financial system unless they have the support of the population, which has to be educated on the subject. In this issue, we publish Lesson 8, which explains that there is no need to create a new political party to have the Social Credit principles applied into the laws of our countries, but simply to educate the people on the money issue.This is followed by the first pages of Louis Even’s booklet, A Sound and Effective Financial System, which is a recapitulation of what we have learned so far. To rely on a party is a delusion
The implementation of Social Credit would institute true democracy: economic democracy by making each consumer capable of obtaining the basic necessities of life from the country’s production; political democracy insofar as the people can make known to their elected representatives and to their governments what they expect of them and to demand results. (Demos, people; kratein, to reign. — Democracy: the people’s sovereignty.) Any Social Crediter who is even slightly informed knows very well that today supreme power is not exercised by the people or their governments, but by a financial clique. Statesmen like Gladstone, Wilson, and others said this explicitly. Mackenzie King said in 1935 that the greatest battle of all times was "between the financial powers and the people." A battle in which he did not engage, no doubt because he considered the financial powers too strong and the people too weak. The people are weak indeed; and it is understandable that they are weak when first, they know nothing about public matters and what goes on behind the scenes; and second, when instead of teaching them about these things those who are ruling the country divide them into political factions that are fighting against each other. It is not more factions that will create unity, they will instead create division. It is division and many factions that serve merely to increase weakness in the country.
In his booklet What is Social Credit?, Geoffrey Dobbs wrote: "The social credit (without capital letters) is the It is a man of genius named C. H. Douglas who discovered the great truth of Social Credit; it is he who founded the Social Credit school. He most certainly knew better what Social Credit meant as far as democracy is concerned than those little fellows of our homeland who would like to make Social Credit into the instrument of their race to power, or at least a platform for their ambitions in search for a seat in Parliament. Douglas said in a lecture given in Newcastle-upon-Tyne on March 19, 1937, that there are in England two major obstacles to true democracy and the first of these obstacles is the system of parties. The same goes for Canada and the solution to the problem does not consist in feeding the system of parties, but in weakening it. That is to say to neutralize or disband the parties in existence and not creating another division within the people, but by uniting the citizens, all the citizens of the country, without party distinctions to allow them express their common will to their Members of Parliament, whoever these Members of Parliament are, and whatever their political colours. To put the focus on what happens between elections, when the fate of the citizens is at stake, more than during elections when it is the politicians who are battling each other. We need to unite the citizens. And we can begin by making them understand that they all want the same fundamental things, then we can convince them that by thus putting pressure together to get what they all want, they would inevitably obtain their goal. It is Major Douglas who on another occasion in Liverpool, October 30, 1936, said, "The people’s sovereignty, i.e., their effective ability to give orders, would increase with their unanimity, and if people all wanted a uniform result there could be no possibility of parties, and there could be no resistance to their demand." That is a very good line of conduct, perfectly in keeping with common sense. You will never be able to get everybody in agreement around a ballot box. But you could very well get them in agreement on the results to be demanded from politics, if you make it a point to set these results in the order of their universality and urgency: economic security, a sufficient amount of goods today and guaranteed for tomorrow, the freedom for each one to choose his occupation and lifestyle. Everybody wants these things; and, as Douglas points out, even those who do not want them for others, would want them for themselves. Why then bring attention towards the ballot box, towards the thing that divides instead of applying oneself to effectively uniting all people around the issues over which everybody can be in agreement? Never was an important reform obtained by the formation of a new political party. Most of the time if a party is established with the goal of major reform, it dies because of electoral failure; and if by chance it comes to power, it comes up against so many obstacles that it becomes paralyzed and has no further objective than to stay in power without doing any more than the traditional parties. To overcome obstacles, it lacked strength: which is that of a people sufficiently informed in the political field. Besides, a reform cannot come out of an election. A reform results from a natural and democratic process, from the maturation of a well-cultivated idea; it results from its acceptance and demand by a sufficient number of people to create a general will which can be expressed without falling victim to the hazards of electoral results. Social Credit will enter into the country’s legislation when it will have become the object of a general will or demand, which will encourage all political parties to welcome it into their programs. To confine it into a political party is to link its fate to the same electoral fate of that party. And it can mean moving backward instead of forward. A new idea is spread through propaganda and it takes roots through study. The newer the idea and the greater its repercussions, the more its propagation and implantation call for effort, time, and perseverance. The cause that propagates this idea has much more need of apostles than members of parliament. The instigators of new parties no doubt consider that the people’s political education would take too much time, if they ever even thought about it. A quick vote seems to be a more usual method and a faster one to them. The result of this is tombstones, which are not even visited by those who supported these defunct parties. A fair number of these gentlemen have since contentedly settled down under the wings of traditional parties that they had previously eloquently denounced. The people’s strength must be built up so that their pressure on governments exceeds the strength of the financial powers. It is not in a parliament that people can build up their strength. It is where the people are — which is outside of parliaments. And that is the place of a true Social Credit Movement. Douglas and electioneering The Social Credit Secretariat, an organization founded by Major Douglas himself has republished an address given by the founder of Social Credit on March 7, 1936. That day, Douglas was not speaking to the general public, but to Social Crediters. In that address, Douglas recommends a policy of pressure and strongly condemns the formation of political parties, especially that of a "Social Credit" party. He condemns this kind of effort, not only because it is doomed to failure before it starts, but also because it imprisons and obscures the beautiful philosophy that Social Credit is, in putting it into politics and the ballot box. Douglas goes so far as to say: "If you elect a Social Credit party, supposing you could, I may say that I regard the election of a Social Credit party in this country as one of the greatest catastrophes that could happen." The proper function of a Member of Parliament, explained Douglas, is to receive and pass on to the government the expression of the legitimate will of its constituents. The proper function of a government is to receive this demand and order the experts to follow it up (the experts meaning the financiers for financial matters, etc). One must not tell these experts how to go about it, but point out the result to be achieved and demand this result. And the role of the people is to become aware of objectives that they commonly want and to express this will to their representatives. It is where it must begin, from where it must be launched, with the voters. Therefore, instead of giving the importance to the elected representative, we must give it to the voters. In Douglas’s words: "If you agree that the object of sending a set of men to Parliament is to get what you want, then why elect a special set of men, or a special party at all? The men who are there should get you what you want — that is their business. It is not their business to say how the goal is to be reached. How things are done is the responsibility of the expert." The experts must be told what the citizens want and this demand must come from the citizens themselves. Electioneering has perverted democracy. The only thing political parties can achieve is to divide people, weaken their strength and lead them to disappointments, so to add a new party can only add another disappointment under another name. A disappointment all the more disastrous if the adventure drags with it the name of an excellent cause like that of Social Credit. Louis Even (You may also read the introduction to Louis Even's book “In This Age of Plenty”: Social Credit: not Socialism, not a political party.)
A sound and effective financial system
At the root of evil — Why criticize and denounce the present financial system? Because it does not fulfill its purpose. — What is the purpose of a financial system? The purpose of a financial system is to finance. To finance the production of goods which answer the needs, and to finance the production of these goods so they will meet these needs. If the financial system does this, it fulfills its role. If it does not, it does not fulfill its role. If it does something else, it goes beyond its role. — Why do you say that the present financial system does not fulfill its role? Because there are goods – public goods and private goods – that are required by the population and that are most certainly physically feasible but that stay in nothingness because the financial system does not finance their production. Moreover, there are goods offered to a population that is in need of them, but which some individuals or families cannot obtain because the financial system does not finance consumption. These are undeniable facts. — What is production or consumption financed with? With means of payment (cash credits). These means of payment (cash credits) can be made up of coins, paper money, or checks drawn on bank accounts. All these means of payment (cash credits) can be included under the term "financial credit", because everybody accepts them with confidence. The word credit implies confidence. You accept four quarters or a one dollar note from the Bank of Canada with the same confidence as a one-dollar check from any bank where the maker of the check has a bank account. You know that with either of these three means of payment (cash credits), you can pay for labor or materials for the value of one dollar if you are a producer, or consumer goods for the value of one dollar if you are a consumer. — Where does this "financial credit", these means of payment (cash credits) draw their value from? Financial credit draws its value from "real credit". That is to say, from the country’s production capacity. A dollar, in any form, has value only because the countries production can supply goods to match it. You can call this production capacity "real credit" because it is the real factor of confidence. It is a country’s real credit, its production capacity, which causes you to have confidence in being able to live in that country. — To whom does this "real credit" belong? It is a product, which is a benefit of society. There is no doubt that individual and group efforts of all kinds contribute to this. But without the existence of the natural resources that are a gift from Providence, and not the result of individual competence, organized society which allows the division of labor, and services such as schools, roads, transportation, etc; the global production capacity would be very weak. This is why we speak of national production and national economy, which does not mean State-controlled production at all. It is in this global production capacity that the citizens, each citizen, must be able to find a base of confidence for the satisfaction of his material needs. Pius XII said in his Whitsunday Broadcast in 1941: "The national economy, the fruit from the activities of men who work together in the national community, tends towards no other thing than securing, without interruption, the material conditions in which the individual life of the citizens will be able to fully develop." — To whom does "financial credit" belong? From its beginning financial credit belongs to the community in the same way as real credit from which it draws its value. It is a product of the community from which it must benefit in one way or another, all the members of the community. Like "real credit", financial credit is by its very nature a social credit, meaning it belongs to all the members of society. The use of this community product must not be subjected to conditions which hinder the production capacity, nor which divert production from its proper purpose which is to serve human needs: needs of a private and public nature, in their order of urgency; the satisfaction of the basic needs of all before the luxury requests of a few; before the splendour and the paranoiac plans of the public administrators who are greedy for fame. — Is it possible to make the general economy conform to this hierarchy of needs, without a dictatorship that plans everything, imposes production programs, and administers the distribution of goods? It is certainly possible, with a financial system that guarantees to each individual a share of the financial credit of the community. A sufficient share so that the individual can demand from the country enough production to satisfy at least his basic needs. Such a financial system would not be a dictatorship. Production would plan its programs from the orders coming in from consumers, as far as private goods are concerned; and it would plan them from the orders coming in from public administrations as far as public goods are concerned. The financial system would thus serve, on the one hand, to express the consumers’ will; and on the other hand, it would act in the producers’ service to mobilize the country’s production capacity to be in step with the demands of private and public consumers. For this it is necessary to have a financial system that conforms to reality and not one that does violence to it. A financial system that reflects facts and not one that is at variance with it. A financial system that distributes and not one that rations, a financial system that serves man and not one that degrades him. — Is such a financial system conceivable? Yes. Its outline was given by Clifford Hugh Douglas, the master and genius who expounded to the world what is called Social Credit (not to be mixed up with the prostitution of political parties that invest themselves with this name). Douglas summarized in three propositions the basic principles of a system that would fulfill these goals and be flexible enough to follow the economy in all its developments, up to any degree of mechanization, motorization, or automation. Douglas’s three propositions — What are the three propositions of Douglas? Douglas publicly set forth these three propositions on three occasions: at Swanwick, in 1924; before the MacMillan Committee, in May 1930; and in a lecture given at Caxton Hall, London, in October 1930. And he reproduced them in some of his writings, among them, The Monopoly of Credit. The first of these propositions relates to the financing of consumption by an adjustment between purchasing power and prices: "The cash credits of the population of any country shall at any moment be collectively equal to the collective cash prices for consumable goods for sale in that country, and such cash credits shall be cancelled or depreciated only on the purchase or depreciation of goods for consumption." Douglas did not change anything in the terms of this proposition: they were the same in 1930 as in 1924. In this proposition, in mentioning the means of payment, meaning specie or scrip money in the consumers’ hands, Douglas uses the term "cash credits", while when he speaks about the financing of production he simply says "credits". The difference between the two is that the money in the consumers’ hands is theirs: for them it is purchasing power that they use as they please in obtaining products of their own choosing. While the credits to production are advances that the producer must pay back when his products have been sold. — What is the goal of this first proposition set forth by Douglas? The goal of this proposition is to achieve what can be called the perfect purchasing power by establishing an equilibrium between the prices to be paid by the buyers and the money in the buyers’ hands. Social Credit makes a distinction between the cost price and the price to be paid by the buyer (cash price). The buyer would not have to pay the full cost price but only the price reduced to a level corresponding to the means of payment (cash credits) in the population’s hands. The cost price must always be recovered by the producer if he wishes to remain in business. But the price to be paid must be at the level of the purchasing power in the consumers’ hands, if you want production to meet its purpose which is consumption. — How can this twofold condition be carried out? By a price-adjustment mechanism. An adjustment and not a fixing of prices: the set up of cost prices is a matter for the producers themselves; it is they who know what production costs them in expenses. The proposed adjustment would consist of a coefficient that would be applied to all retail prices. This coefficient would be periodically calculated (every three or six months, for example) according to the ratio between total consumption and total production during a given period. If, for example, during this given period total production was $40 billion and total consumption was $30 billion, you can conclude that whatever the accounting cost prices may be in reality, the production of $40 billion has cost the country $30 billion. Therefore $30 billion is the real cost of the total production of $40 billion. And if the producers must recover $40 billion, the consumers, for their part, must pay only $30 billion. The missing $10 billion must be provided to the producers through another source but not through the buyers. It is up to the monetary mechanism to see to the provision of it. In this case, a 3/4 coefficient will be applied to all retail prices: the cost prices will be multiplied by this coefficient, by 3/4 or 0.75. The buyer will therefore pay only 75 percent of the cost price. In other words, a general discount of 25 percent (the opposite of a sales tax) will be decreed on all retail prices for the length of the new term. At the end of each term, the general discount rate is thus calculated according to the statistics of consumption in relation with the statistics of production of the given period. Thus you get as close as possible to the perfect purchasing power. This operation is sometimes called a compensated price or a compensated discount, because the money the seller does not receive from the buyer is given to him afterwards by the National Credit Office. This compensation allows the seller to recover his full cost price. No one loses out. Everybody gains by the selling of goods made easier to meet needs. — And what is Douglas’s second proposition? Douglas’s second proposition relates to the financing of production. It was expressed as follows by its author at Swanwick and also before the MacMillan Committee: "The credits required to finance production shall be supplied not from savings but by new credits relating to new production." At Caxton Hall in October of 1930, Douglas thus changed the end of his statement: "new credits relating to production." He does not say "new production", but only "production", obviously both are synonymous. As production is made, it is a new production made to keep up the production flow where the consumer shops. Some have wrongly interpreted this proposition as applying only to an increase in the volume of production, which is most certainly not the case according to the context of the three propositions. Douglas adds: "And these credits shall be recalled only in ratio of general depreciation to general appreciation, general enrichment." Why finance production this way, with new credits and not with savings? Because savings come from money that has been distributed in step with a realized production, and now all this money has gone into the cost price of the realized production. If this money is not used to buy production, the gap between the means of payment and prices will increase. You can say that the savings used to finance a new production flow through investments or other means, and come back into circulation as purchasing power. It is true but it is as expenses are made by the producer that there is a new price created. Now the same amount of money cannot serve to pay the corresponding price of the former production simultaneously with the corresponding price of the new production. Each time saved money comes back to the consumers, it is by creating a new price without having paid a former price left without corresponding purchasing power when this money becomes savings. — And what about Douglas’s third financial proposition? The third proposition introduces a new element into purchasing power: the distribution of a dividend to all, employed or not, in production. It is therefore a component factor of purchasing power which leaves no individual without a means of payment. It is the recognition of the right of all to a share in production, as co-capitalists, coheirs of the biggest modern production factor: acquired progress, enlarged and transmitted from one generation to the next and also as co-owners of the natural resources that are a free gift from God. It is also the way to maintain a flow of purchasing power in relation to the flow of production, even though production would increasingly do without the use of employees. Therefore, it would be the solution to the biggest present headache, which makes economists knock their heads against the wall and which dumbfounds governments in face of their unsuccessful full-employment policy. The pursuit of full employment is nonsense, difficult to justify on the part of intelligent beings while progress inexorably applies itself to freeing workmen, increasingly eliminating the need for employees. Here is how Douglas puts it: "The distribution of cash to individuals shall be progressively less dependent upon employment. That is to say that the dividend shall progressively displace the wage and salary." Progressively — as Douglas says it elsewhere — as productivity increases per man-hour. This is perfectly in keeping with the role taken by work and progress in the production flow. Progress — a collective good — becomes more and more important as a production factor and human labor, less and less so. This reality must be reflected in the distribution of incomes through dividends to all and through reward for employment. — But is this not turning everything upside down in the financing of production and in the distribution of the claims on production? Simply put, it is just a change in philosophy and in the conception of the role of the economic and financial systems, bringing them back to their proper purposes and to serving the people by the appropriate means available. It is time the ends and the means returned to their proper place. It is time perversion gave way to rectification. — But all this seems to imply that money or financial credit can come like this to finance production and consumption! Certainly, because the monetary system is essentially an accounting system. Are the accountants short of figures to count, add, subtract, multiply, divide, make rules of three, and express percentages? Moreover, the facts are there to show that money is a matter of figures: figures that the monopolizers of the system can cause to appear or disappear according to their whims without any more concrete items than a book, a pen, and a few drops of ink. In a lecture given at Westminster on March 7, 1936, C .H. Douglas said to his audience — a Social Credit audience: "We, Social Crediters, say that the monetary system at present does not reflect facts. The opposition says it does. Well, I put it to your common-sense. How was it that a world which was apparently almost feverishly prosperous in 1929 — or alleged to be so, judged by orthodox standards — and certainly capable of producing tremendous quantities of goods and services and distributing a considerable proportion of them, could be so impoverished by 1930, and so changed fundamentally, that conditions were reversed and the world was wretchedly poor? Is it reasonable to suppose that between a single date in October, 1929, and a few months later, the world would change from a rich one to a poor one? Of course it is not." Douglas made this remark three and a half years before World War II broke out. Once it was declared, everybody could ask themselves the same question as Douglas did, but in reverse: How is it that after ten years in which more was scarce all of a sudden they found all the money that was needed overnight for a war that lasted six years and which cost billions? The same answer applies to both cases: The monetary system is only a question of accounting and requires only figures bearing a legal seal. Therefore, if there is no money to oil the wheels of great production facilities that can satisfy normal human needs, and if money suddenly becomes plentiful when the producers and means of production are requisitioned for battlefields and the production of war engines, it is because the present monetary system imposes decisions instead of faithfully reflecting the facts resulting from free acts carried out by free producers and free consumers. Louis Even
Lesson 9: Social Credit and the Social Doctrine of the Church (Part I) Back to the Michael's homepage
|
(The
following text is taken from Louis Even’s brochure 
(