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C. H. Douglas and his work

on Sunday, 01 January 2006. Posted in Clifford Hugh Douglas

The origin of Social Credit

Social Credit, as it is known today — and it is known almost universally — had its origin in an article by Major Clifford Hugh Douglas which appeared in The English Review of December, 1918. The article was entitled, "The Illusion of Overproduction".

Obstacles purely financial

Major Douglas, who was both a civil engineer and an electrical engineer, had previously been employed by the Westinghouse Company in the Far East. He had just concluded the planning and estimate of a hydro-electric plant ordered by the Indian Government when he was advised that work could not be begun because of the lack of financial credit (money).

Douglas found that this conclusion was somehow contrary to the facts of reality. After all, the machinery was cheap, there was an abundance of labor and material, and certainly the people of India were in desperate need of this electricity.

He found, in other words, that while the work was physically possible, it was not so financially. And it was finance that was laying down the decision. This decision was to deprive human beings of a material good which they badly needed. This experience made a profound impression upon Douglas.

Later, the engineer was entrusted by the English Government with the construction of an electrical railroad. Again he was ordered to halt operations because of the lack of money. But then war was declared (1914). And immediately all the money needed was available.

Major defect in the price system

Somewhat later, Douglas was employed in an aircraft factory of the Royal Air Force at Farnborough in England. It was while there that he discovered a capital error lying at the very heart of our system of prices. He produced mathematical proof, which his critics have never been able to refute successfully, that industry creates prices at a faster rate than it creates revenue.

This means that our existing system does not finance itself. The money distributed during the course of production cannot liquidate the price of the products. (This is the idea which Douglas expressed in his famous formula known as the A + B theorem.)

With the banking and accounting methods commonly accepted today, no industry can continue without creating debt which cannot be liquidated without the creation of another and larger debt. To sustain such a system, perpetual inflation is inevitable, and such perpetual inflation is nothing other than perpetual fraud committed against the people.

The first book on Social Credit

Douglas tried to explain this situation to people occupying positions of responsibility. To his great astonishment, he met not only a wall of studied indifference, but outright and vehement hostility. This attitude intrigued him, so he decided to try and find the reason for it.

Douglas had proved that it was possible to stifle industry and commerce by closing the gates of credit — a prerogative which appertained to the private monopoly of banking. So it is that the permission to act, the license to produce, depends upon banking credit.

To explain this situation was the reason Douglas wrote his first book in 1919 entitled Economic Democracy. He shows therein how the operations of finance progressively centralizes the control, and concentrates, more and more, economic power into a few hands.

The monopoly of credit

In 1930, this monopoly put in place the keystone of control, a super-centralized bank — since then, the World Bank.

Douglas then wrote another volume: The Monopoly of Credit, showing how a few men had obtained possession of enormous power on a world-wide scale.

Simple chance, or the pursuit of a plan?

There were two ways of looking at this situation. Either the birth of the financial system and its growth into a vast monopoly was the issue of mere chance, and so it is the system as such, in itself, which must be attacked. Or this system was itself the result of a preconceived plan, pursued by certain groups which were avid for power and seeking to obtain control over the rest of society.

Douglas began by exposing the system itself — accusing it of being the cause of poverty and economic insecurity in the midst of abundance.

But this attack had the result of flushing forth from their hiding places those who profit from this system. They counter-attacked. All means possible were employed to banish Douglas and his ideas from the press and the radio. He and his followers were treated as charlatans who preached a lunatic system of finance. He was ridiculed mercilessly.

Nevertheless, Douglas had exposed the myth of money for what it was.

A policy of regimentation

Douglas carried the fight a step further. He demonstrated that groups of strangers — International Financiers by choice — used the financial system to impose their line of conduct upon the world, which meant that they were gradually undermining the foundations of individual liberty.

He recognized the deliberate attempt to destroy the British Empire where, up till then, it was a matter of pride to proclaim the liberty of the individual. Then he foresaw the institution of totalitarian measures in every country — the herding of people together into collectivism in the name of universal employment. Finally, he foresaw the political control of each and every country through decisions emanating from some international general headquarters.

A sure and steady vision

Douglas has defined Social Credit as "the policy of a philosophy", the word "policy" being used here to signify a line of conduct or action directed to the pursuit of an objective.

As for the philosophy which Douglas had in mind with regard to this policy, it was nothing other than the philosophy of Christianity itself, dedicated to economics and politics, with all of its emphasis on the dignity of the individual human being and that sacred institution, the family.

Contrary to the practice of most economists, Douglas has never at any time retracted one single word of his writings. His deductions have been based on a most careful and exact analysis, and they have been proved to be astonishingly exact.

In 1919, he furnished Lloyd George (Prime Minister of England during the First World War) with the elements of a lend-lease plan. A similar scheme of lend-lease was to be adopted by the allies during the Second World War.

In 1925, Douglas wrote that if the world persisted in following the path on which it was set, there would be a financial crisis by

1929. How more exact could he possibly have been?

In 1934, Douglas wrote that the pursuit of the line of conduct then prevalent would lead to another war within six years. The Second World War broke out five years later.

Douglas revealed a method of financing the war effort (war was being waged at that time) without debt and without inflation. There wasn't a government that would listen to him. (Of course, only the Financiers — and the Communists — profited from the war.)

An urgent duty

In the last of his works — the very last being The Brief for the Prosecution — Douglas exposed what lay in wait for the people of the world if they did not take the necessary steps to regain control of their governments.

He exhorted the people to make their representatives their servants, and to force these representatives to combat every step which might tend to deprive the individual of his liberty of choice.

Clifford Hugh Douglas died at Feaman, in Perthshire, Scotland, on September 29, 1952, the feast of Saint Michael the Archangel.

Not by a political party

While such a duty is the responsibility of each individual, it is clear that since there is a question of a result desired, fundamentally by everyone, action must be taken which is based on unity.

Douglas considered political parties as being little short of criminally absurd. His reason: they do nothing but divide the people on issues which are trivial at a time when everyone should be working together on matters which are vital to the life of the nation, as a free nation.

Today and tomorrow

The continuous preparations for global wars, which are increasingly more devastating, has led to a more widespread distribution of purchasing power. The consequence has been that interest among many in Social Credit has somewhat dimmed. But Douglas was well aware that such conditions, tied as they were to preparations for war, could not go on indefinitely. He knew that sooner or later, in order to escape the consequences of this debt system, the all-powerful groups which hold control would do their best to bring about the unleashing of a third world war.

Those who see with the eyes of Douglas — and there are many such clear minds in all parts of the world — are convinced that the peoples, in their desperate search for liberty with security, will be brought more and more to the study of the works of Douglas.

Then will the contributions of this great man be recognized.

A. H. Jukes

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