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A brief outline of Social Credit

Written by Victor J. Bridger on Sunday, 01 August 2004. Posted in Social Credit


What is Social Credit about ?

Social Credit comprises interlocking concepts of economics and politics which deal with the just relationship between man and the Society in which he lives.


It is based upon a philosophy of Christian principles, and encompasses:

1. The supreme importance of the individual.

This regards institutions as subservient to man and exist for service to man, and not the other way around.

This position can only be sustained by:

  1. Economic freedom through the sanction of sufficient purchasing power;
  2. Political freedom through the sanction of the responsible vote.
  3. Maintaining the correct relationship between the individual and the group (institutions).

2. The individual in society

  1. The cultural heritage.

    All social production originates in a common cultural inheritance of past inventions and the accumulation of technological innovations and is increased by the increment of association. The cultural heritage plus unearned increment of association (i.e. the benefit gained by working together), requires a national dividend to distribute benefits gained. (Christian doctrine of grace). Thus economic organisation (industry, commerce, finance) should be at the service of consumers through consumer control of production through the money vote.

  2. Political freedom.
    This should provide for the ability to contract in or contract out by making political organisations at the service of groups through voters' control over representatives.

  3. Economic security

    This means that individuals in society must have sufficient purchasing power to provide effective demand in order to consume what they produce.

    Both 2 (B) and (C) together represent a maximum decentralisation of policy.

3. The philosophy is incarnated through the policy.


The policy involves a change in the financial accounting system to reflect the truth and reality in the economic system. At the same time, a change is required in the political process to reduce and reverse the increase towards centralisation which increases control over the individual in society. Details may be obtained through available literature. Study courses are available from The Social Credit School of Studies Inc.


Social Credit stands for optimum economic and political freedom for each individual by ensuring (a) consumer control over production — i.e. economic democracy; (b) voter control over policy — i.e. political democracy. Social Credit stands against the political party system, the existing financial system, and the concentration of power over individuals, whether economic or political, or in any other form.


Many times Social Crediters, when discussing some aspect on Social Credit, have been confronted with a question such as, “Can you give it to me in a nutshell?”

Obviously, to compress into a very brief statement something that, although not difficult to understand, runs counter to many of the accepted ideas that people have about economics, politics and social problems, is fraught with danger. The purpose of this very brief silhouette against a background of a very large canvas should be sufficient to show a picture which can be understood by those who are quite unfamiliar to the thoughts expressed.

To begin with, it will be seen that to comprehend Social Credit that, although there is one main stream, there are tributaries that flow from it. To commence with, there is the philosophy of Social Credit, and following this, is the policy of Social Credit. The philosophy contains those beliefs that are considered to be a part of reality, those things that are considered to be beyond question if we are to accept the existence of certain natural laws, and that those laws are absolutes in that they cannot be broken by man.

The policy of Social Credit contains the positive lines of action that must be taken to achieve the results or obtaining the objectives bound up in the philosophy. Douglas referred to Social Credit as The Policy of a Philosophy and as being “something based on which you profoundly believe — to be a portion of reality.” To explain this requires certain definitions and some explanation of these.

Definition of Social Credit

Sometimes the words Social Credit have provided confusion to people who have not considered their meaning. It has been said that it sounds like some form of socialism, and in fact has been termed by some unknowingly as Socialist Credit. Of course nothing could be further from the truth as it will be shown that Social Credit is the very antithesis to socialism. The derivation of the word “social” comes from the Latin “socius” meaning sharing, and is basis of the meaning of the word association. “Credit” has its origin  in “Credo — I believe”.

Some Social Crediters have expressed a meaning to Social Credit that it is “the belief inherent in society that its individual members in association can produce the results they want if the results are physically possible.” Note that a key phrase has entered here — “physically possible.” That places a limitation upon the results that may be produced.

Dr. Tudor Jones, onetime Chairman of The Social Credit Secretariat defined Social Credit as: “The efficiency, measured in terms of human satisfaction of human beings in association.” He further defined “efficiency” with its correct meaning as “the power to produce an intended result,” and went on to point out that it had to be decided upon by anyone wishing to understand Social Credit, whether or not people had such a power. In other words, is it true that individuals associating together to produce a result they want was possible or not. If it was not accepted, then there was no point in investigating Social Credit any further. If, however, it was agreed that people working together could achieve a desired result, it could then be stated that people working together could achieve more than working on an individual basis. This brings us to one part of the philosophy which is expressed in the term, the increment of association.

Since the beginning of man there has been a gradual increase in the discovery of tools and materials, and ways of using them for mutual benefit. This has proceeded to the present day, and the increase in technology and the handing down of the knowledge of how to use it is referred to as the cultural inheritance. It is something that belongs to no one particular individual, but all mankind.

The objective of Social Credit

Clifford Hugh DouglasClifford Hugh Douglas, The founder of Social Credit

When asked to define the objective of Social Credit, he replied: "What are we aiming at? What are we trying to get? We are endeavouring to bring to birth a new civilisation! We are doing something that really extends far beyond the confines of a change in the existing financial system. We are hoping, by various means, chiefly financial, to enable the human community to step out of one type of civilisation into another type of civilisation, and the first and basic requirement, as we see it of that, is absolute economic security."

This quotation from Douglas, together with the definitions we have given, gives us a clear idea of the concept of Social Credit.  The statement that we are endeavouring to bring to birth a new civilisation establishes three important points:

  1. That Social Credit is an evolutionary, not a revolutionary Movement. It does not destroy to create anew; it brings in natural sequence a new birth from the old.
  2. That it is a reform of the existing national financial accounting system — a reform that will enable a new civilisation to come into being.
  3. Two objectives of this reformation are the provision of economic security and political security.

A survey of these points confirms the view that, on the practical side, Social Credit is described as a policy of a philosophy, and this presupposes four things:

  1. A belief to work from — i.e. A philosophy;
  2. An objective to work to — A policy;
  3. A knowledge of the wrong in the thing to be reformed — incorporating both philosophy and policy;
  4. A means of righting the wrong so as to attain the objective. The technical knowledge for implementing a policy.

The philosophy of Social Credit

Major Douglas has stated that “Social Credit is the policy of a philosophy.” This philosophy is represented by the beliefs we hold  and the implementation of the policy to reach the objective. This policy embraces the examination of the system we wish to correct and the action we take towards our conscious and recognised objective.

What, then, are the beliefs which form the basis of Social Credit philosophy?

Briefly, we can say that it is founded on a belief in the supreme value of human personality, and that the self-development of the individual to his highest possible perfection is the main reason and aim of all social organisation.

It believes that systems are made for men, and not men for systems, and that no worthwhile civilisation can be developed that does not provide for the fullest measure of freedom for the individual.

Whilst it emphasises the self-development and importance of the individual, it also encourages the fullest measure of co-operation. But it must be the free and willing "co-operation of reasoned assent;" the co-operation of inducement, not the enforced co-operation of regimentation or legal or economic compulsion.

Summed up, it is the belief in the self-development of diversified individuals in freedom and security, with security as the basis of freedom. It embraces all the fundamental freedoms — freedom from want and fear; freedom of choice, of action, of speech, of worship.

The beliefs we have mentioned also indicate the objective of Social Credit. That objective is a new civilisation. a civilisation based on economic security, a civilisation in which all the fundamental freedoms are realities, a civilisation of prosperity, culture, happiness and peace.

It is the civilisation visualised by the prophet Micah 2,000 years ago. "They shall beat their swords into ploughshares and their spears into pruning hooks; nation shall not rise up against nation, neither shall they learn war any more; but they shall sit, every man under his own vine and under his own fig-tree, and none shall make them afraid."

The policy of Social Credit

Let us now turn to the policy that arises from this philosophy of Social Credit, remembering always that policy is action directed towards a conscious and recognised objective.

When we quoted Douglas as saying that the first and basic requirement of a new civilisation was absolute economic security, it must be evident to us, that in demanding a new civilisation, we must be profoundly dissatisfied with the present one, and that, in stating its basic requirement as "absolute economic security," we must be experiencing economic insecurity.

As we are convinced that we do not have economic security, we have to ask WHY?  And so we must commence from this point.  This immediately puts us into the realm of economics, and gives direction to our policy to achieve our ends.

What, then, is economic security? It is the possession, or the means to possession, at all times for all people, of adequate food, clothing, shelter and the amenities of modern civilisation. Without this, there is no economic security and only a restricted freedom.

The CAPACITY to give absolute economic security resides in the immense powers of production made possible by science and invention. The TITLE to absolute economic security resides in the possession of a sufficient income at all times to buy the goods and services that make it possible.

As we live in a monetary economy (and there is no need to change this), economic security resolves itself into the possession of sufficient money incomes for everybody at all times, irrespective of employment.

This being so, we have next to ask —where do incomes come from? The answer is quite simple. All incomes as purchasing power are distributed into the hands of consumers through the operations of industry.  All purchasing power arises in production.

It takes the form of wages, salaries and dividends paid directly to individuals engaged in industry or indirectly from them, through services and taxation, to those not so engaged. There is no other form of purchasing power in the community than this.

Industry and banking

Now let us go a step further. If industry distributes all incomes as purchasing power, where does industry, in its turn, get the money to do this? A brief examination will show that industry is financed from savings or from loans or overdrafts from the banking system.

But as savings, which are really unused purchasing power, had their origin from previous bank loans to industry in other cycles of production, it is correct to say that industry functions almost entirely on loans from the banking system.

It must be remembered that the banks have discretionary powers to call in loans and overdrafts even before the goods they brought into existence have been sold, and they sometimes exercise this power with disastrous effects on the community.

The banks only lend money as a repayable interest-bearing debt, with number one priority over the assets of the borrower, so it is clear that the banks entirely control production in this way.

We have already seen that the money flowing through industry is the only source of purchasing power, so it is also clear that the banks, in controlling production, automatically control consumption as well.

That is to say, the whole economic system is dominated by the banks and, consequently, they dominate the lives and destinies of the people, and dictate the policies of governments. History proves this conclusively.

Now let us go still another step further and ask where do the banks get the money they lend to industry, and which gives them control of the community.

The answer is again quite simple: THEY CREATE IT. In the terse phrase of the English economist, Hawtrey, “They create the means of payment out of nothing." The money so created is called bank credit.

Banks do not lend the money deposited with them by their clients as most people suppose. Every bank loan or overdraft is an absolute creation of new credit and this credit functions as money.

When cheques are drawn against this credit, they come back into the banking system and form deposits. Practically all deposits are created in this way. Instead of deposits being used bv the banks to create loans, as is generally believed, the loans make the deposits.

The actual creation of bank credit is an almost costless operation as it consists merely of written entries in bank ledgers or computers, and made effective by written entries in cheque books, or credit cards. Banking, is mostly bookkeeping. Finance is mostly accountancy, and money is mostly figures.

Though bank credit is supposed to be issued against the security of the borrower, it is really issued againat the productive capacity and the real or "social" credit created by the community as a whole.

The banks, however, treat this community credit as though they are the sole owners, and are thus in the unique position of being able to lend something they do not own, and of being well paid for it.

As banks have the sole privilege of creating and issuing money in this way, they thus constitute a monopoly of credit that functions as money which keeps the whole community, to whom the credit rightly belongs, in subjection through debt. This monopoly of credit or money creation is the greatest power ever vested in any institution in the history of the world.

Effects of the monopoly of credit

Let us now examine the effects of this monopoly of credit on Industry and the community. We find that industry performs three functions:

  1. It produces goods and services.
  2. It distributes the purchasing power to buy its products.
  3. It establishes the prices at which its products are sold.

Industry, to be successful, must get back from the public in the prices of its goods more than it pays out to the public in the course of their manufacture. Otherwise, it could not make a profit.

Now prices consist of all money costs of production, plus the percentage loaded on as profits. Amongst these costs are such items as interest paid to the banks on overdrafts, and money set aside as depreciation on plants and buildings.

Though these costs, representing profits, interest and depreciation, are all loaded into prices, the money to liquidate them is not distributed to the public neither as wages, salaries, nor dividends.

Therefore, prices are, and must always be, greater than the money available to buy them. In other words, there is always a disparity between the flow in the generation of purchasing power and the generation of prices in any one productive period. As can be seen, this is due to accounting all costs into prices without making provision for liquidating all of them.

This is the flaw in the finance-economic system, and is the main cause of all the economic troubles in the world. It is directly traceable to the use of debt for money and to the policies and practices of the monopoly of credit. Under the present financial system, there is no sound means of bridging the gap between purchasing power and prices.

The disparity between purchasing power and prices is further accentuated by SAVINGS. If money distributed as purchasing power is not so used, but is saved and re-invested to produce more goods, its function as purchasing power is lost; it becomes capital.

The disparity thus becomes greater than ever, and this disparity is represented by goods unsold, or goods that have to be sold by another form of purchasing power than that released in their production.

As a matter of fact, the surplus represented by this disparity can only be sold by one means, and that is by mortgaging future purchasing power; in other words, by DEBT.

There are several ways of doing this.

  1. Increased borrowing from the banks for new production.
  2. Time payment, hire purchase, cash orders, bills, promissory notes and other similar devices.
  3. Spending by governments of loan monies on public works.

All these methods are based on debt to the banking system, and lead to intolerable burdens of public and private debt and ever-increasing taxation.  They must eventually culminate in the breakdown of the economic system and the moral of the community.

We agree with Douglas when he states: "There is no single cause operating in the world today which is of such importance and is so fraught with the possibility of world disaster, as is the disparity between purchasing power and prices."

Let us follow logically the results flowing from this disparity.  It must be evident at the outset that in every cycle of production a proportion of the goods must remain unsold.

As further cycles are completed, the unsold portions must pile up till it is useless and dangerous to produce more for the time being, so banks restrict credit, production slows down, and men are laid off.

When men are laid off, wages cease, purchasing power further diminishes, less goods are sold, credit is further restricted or called in and cancelled.  There is a rush to sell below cost and bankruptcies occur.

Standards of living now fall rapidly; there is further unemployment; dole conditions and acute depression appear; governments start relief works, and the banks readily lend them the credit they refuse to industry.  Debt and taxation grow apace.

Still much of the surplus goods remains unsold, and we have starvation and poverty in the midst of abundance.  Goods are wantonly destroyed by deliberate sabotage, and production is forcibly restricted. With mass unemployment everywhere, we are told to work harder, save more, and spend less.

Parallel with these manifestations is the struggle to find markets abroad for the goods that cannot be sold at home. As all nations are doing the same thing, and are in the same economic plight from the same cause, this leads to commercial hostility, international friction, and finally and inevitably, to WAR.

The sum of all these results of the disparity between purchasing power and prices culminating in war is the world disaster foreseen by Douglas. Only the accuracy of the Douglas analysis could make such a prophecy possible, and only the results could so confirm the analysis.

The Social Credit remedy

Having examined the system and discovered the flaw in it, what is the Social Credit remedy?  The remedy must be capable of application, and is based on the fact that the powers of production are now so efficient through science and mechanism that we have emerged into an age of potential plenty that will give a very high standard of living to all.

That is to say, it is physically possible to provide the things that will ensure absolute economic security to all.  This being so, the factors to be considered are as follows:

  1. That the power to produce must be balanced with the power to consume.
  2. That the monopoly of credit must be terminated, and the right to issue and control all money and credit be vested in a statutory body as representing the people.
  3. 3 That savings shall not be diverted from their proper function, i.e., purchasing power.
  4. That money and credit be a means of distribution only, and not a commodity to be bought and sold at interest.
  5. That provision of purchasing power must be made for those not employed or displaced from industry by labour-saving machinery.

With regard to the last factor, Social Credit is convinced that science and invention will continuously reduce employment. It welcomes this development because it ushers in an age of leisure that will stimulate culture and self-development.

To resolve these factors, Major Douglas has laid down three embracing principles of social and economic reconstruction having an universal application, and out of which can be evolved practical proposals suited to the needs, conditions, and social organisation of each country that decides to adopt them.

Broadly stated, they are:

  1. That there must be at all times an equation between purchasing power and prices, and that credit must be recalled only as goods are consumed.
  2. That industry must be financed by credits created for that purpose, and not by savings.
  3. That a social dividend shall progressively replace wages and salaries as men are progressively displaced from Industry.

The application of these principles

It will be seen that these principles cover the defects in the existing system, and that within them a solution is provided that is both preventive and remedial. How can we put this solution into practical effect?

The first step will be the establishment of a National Credit Authority to take complete control of the money system and put the affairs of the nation on a proper accountancy basis. This would restore money power to the people and do away with the monopoly of credit by private interests.

The National Credit Authority would then ascertain from all available sources the financial and economic position of the nation as a business concern, and draw up a correct Trading Account and Balance Sheet of the Nation.

As we are a progressive people, with national wealth continually increasing, there would be a considerable credit balance in every accounting period, representing the profit of national appreciation of wealth over national depreciation.

Credit would be issued against the profit balance to establish an equation between purchasing power and prices, pay a social dividend, or meet any commitment deemed necessary for the safety or welfare of the people of Australia.

Once we have established the control of our national credit, the power to do things would no longer be determined by money conditions. Under Social Credit, "what is physically possible is financially possible."

Now let us indicate more definitely how this credit will he used.  It is essential that it must be used to prevent inflation, and that it will be applied in the spirit of co-operation. Douglas made certain suggestions for implementing a Social Credit policy, and whilst these are shown here, there may be other ways of accomplishing it.

To ensure this co-operation, businesses would be invited to register with the National Credit Authority to trade on mutually agreed margins of profit according to the nature of the business concerned.  The profit would be high enough to encourage ample production, but not high enough to permit exploitation.

This arrangement would control prices in a more scientific way than the present method of price fixing, but, in addition, the technique of Social Credit provides a regulating factor that makes price control absolutely effective.

This factor would ensure that the money or credit issued against the profit balance in the nation's books would not only increase purchasing power, but, at the same time, reduce prices.

An example will illustrate how this could be done.  Supposing the price of an article was $8, and the purchasing power available was $5. The disparity is $3. Credit could be issued to reduce the price by $1.50 and to increase the purchasing power by $1.50.  Purchasing power and prices would then be $6.50, and the required equation would be made.

The money to reduce prices would be in the form of a discount known as the Just Price or Retail Discount (like a sales tax or GST in reverse), and the money to increase purchasing power would be in the form of a social dividend to individuals and paid irrespective of employment. Both would come from the national profit already mentioned, and would provide the means of economic security.

The Just Price or Retail Discount would apply only to ultimate consumable goods sold by retailers.  At every accounting period, the National Credit Authority would publish the discount rate, and retailers, after charging all their costs into prices, would then sell their goods, less the amount of the discount.  They would actually sell them at less than their established selling price.

The retailers would then present their authorised vouchers to their local banks which could credit them with the discounts allowed. The banks, in their turn, would be reimbursed by the National Credit Authority out of the national profit.  The banks would be adequately compensated for the services rendered.

A portion only of the national profit would be used in this way; the balance would be used to pay the social dividend and any other services considered expedient.

By this method of selling below the normal selling price ,the consumer's money would have increased its buying power, and all goods could be sold without loss to the producers.  Inflation would be impossible, and all the economic uncertainties of boom and slump incidental to the present "trade cycle" would disappear, The economic system would be stabilised.

Under Social Credit, borrowing for national purposes would be unnecessary; public works could be constructed without debt.  The national debt could be gradually paid off,  and taxation, as a means of revenue, eliminated.

The most effective "planning" in the world is adequate money in the hands of consumers. Having effective demand in this way, they could give the necessary orders, and industry would be enabled to function to the limit of producer capacity or to the limit of consumer demand, whichever occurred first.  The standard of living would thus rise to untold heights.

With economic security assured, the struggle for markets abroad and the conditions that lead to depressions at home would be ended, and the new civilisation of freedom, peace and prosperity would be, at long last, brought to birth.


The application of science and technology to production now enables mankind to ensure a reasonable sufficiency of material needs to all, without continuing economic servitude. But the existing financial system is fundamentally flawed. It is endangering the planet through ruthless exploitation of its limited resources in pursuit of financial profit and the will for power.

Competition between ever-growing trade blocks backed by military might threatens global destruction. At the heart of this complexity of interrelated problems lies the monopoly of credit creation by the international banking system.

The prerequisite to resolution of these problems is the elimination of this monopoly of financial power, and its control by national governments through a properly constituted statutory authority, a National Credit Authority, answerable to parliament but immune from political manipulation. This Authority would maintain the national accounts of production and consumption in both physical and monetary terms (as is already done by the Bureau of Statistics in calculating gross Domestic Product and Gross National Product), and regulating the issue of credit in accordance with the performance of the economy. It would operate in the interests of the citizens, and with compatible arrangements for mutually complementary international trading.

The means to that end are known and available. There is growing international recognition that such change is necessary.

About the Author

Victor J. Bridger

Victor J. Bridger

Mr. Victor J. Bridger, a long-standing Social Crediter of Australia, who came to our Congress in Rougemont in September, 2004. Mr. Bridger — an excellent teacher to popularize Social Credit — has been involved with the Social Credit idea for over 50 years. After having seen the enthusiasm and determination of the participants at our Congress, he said: “I think that this is the first time in my life that I can foresee the implementation of Social Credit.”

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