The following text is taken from Chapter 33 of Louis Even's book, In This Age of Plenty. In a question and answer format, Louis Even explores foreign trade. In this essay published in Vers Demain (the French-language version of MICHAEL) on March 15, 1944, he discusses two issues: all countries seek a favourable balance of trade, and that currencies vary in value between the time a trade deal is signed and payment is due, a situation that can result in the loss of purchasing power. Economic Democracy, also called Social Credit, solves both problems.
Mr. Even explains that countries with Social Credit economies would be coveted trading partners. Social Credit principles are hotly debated in society at this time; denounced by detractors and applauded by supporters. Published in a different issue of Vers Demain, J. Ernest Gregoire, professor and lawyer, wrote that Economic Democracy could provide an easy transition from a wartime to a peacetime economy for the 700,000 enlisted men who would return home and for the 1 million other Canadians working in weapons factories.
by Louis Even
It is not uncommon to hear the following objection against Social Credit: "How would foreign trade be affected using 'Social Credit money'? Would this money be accepted in other countries?"
A very simple answer is that Social Credit money would be exactly the same as today's money. It would look the same and its bookkeeping methods and mechanisms, for transferring debits and credits, would remain the same.
However, a discussion will demonstrate that, under a Social Credit system, foreign trade would be more straightforward than the present system even when Social Credit was in place on only one side of the border.
By definition, foreign trade consists of commercial trade which extends beyond a country's borders.
Purchasing coffee from Brazil, oranges from Florida or California, silk from Japan, cotton from the United States, wine from France, and cutlery from England are examples of commonly imported goods. This is foreign trade.
When Canada sells paper to New York, wheat to Europe, nickel to Germany, aluminum to Japan, fish to Italy, and bacon to England, we are engaging in foreign trade. These are examples of goods commonly exported from this country.
Foreign trade is a sound activity that is within the providential order. God gave man the whole earth and He put on earth all that is needed to meet the material needs of the whole of humanity, but not every resource is evenly distributed.
Some countries produce some goods easily and plentifully; other countries produce other things better and in greater quantity. It is thus logical and profitable for countries to trade their surpluses among themselves.
In foreign trade, goods go from one country to another, just as within a country goods go from rural to urban markets, and vice versa.
At your local grocery store, you can see products from urban markets beside products from rural areas.
At the same store, you will find merchandise that came from other countries. You will find rice from China, tea from Sri Lanka, coffee from Brazil, bananas from the West Indies, books from France, etc. It is as natural to see foreign goods in shops as it is to see potatoes from neighbouring farms.
Similarly, if one visited a foreign country, Canadian products would likely be found. One would see Canadian bacon in London, flour from Alberta in France's bakeries, fish from the Gaspe Peninsula on Rome's tables, and paper from the province of Quebec in New York State's large printing establishments.
Would you so easily find Chinese, Japanese, Turkish, French, Italian or other types of currencies in Canada's wallets and bank vaults?
No. Goods cross borders, but money does not.
This fact suggests that money has nothing to do with foreign tastes. It is tantalizing products that entice consumers around the world. One can buy rice from China or green tea from Japan without giving any thought to the Chinese yuan or the Japanese yen.
Products are universal but money is essentially a national matter. A country's monetary reform has nothing to do with tastes, ideas, or the governments of other countries.
We can conclude that money does not cross borders like goods do. In foreign trade, goods are paid for with other goods or services of equal value. If they are not paid for immediately, a debit is registered on one side, and a credit registered on the other.
Obviously, when a Canadian merchant orders rice from China, he does not ship an equivalent amount of wheat for its payment. Rather, he goes to his bank and pays the Chinese merchant in Canadian dollars. The banker in Canada will deliver a credit that will be exchanged for Chinese currency by the merchant in China.
Then, another Chinese merchant will buy wheat from another Canadian merchant and will go to his bank to make his payment in Chinese currency. The bank will send a bill of exchange to the Canadian seller who will be paid in Canadian dollars. In the final analysis, and in fact, the wheat shipped by one company pays for the rice imported by another.
The bills of exchange are handled by banks or brokerage houses, and they determine the rate of exchange between countries.
The trade between countries has nothing to do with what neighbouring countries currencies are made of.
The German who sells his merchandise to us, and who is paid at home in German marks, does not ponder if one pays for it here in paper money, or with a simple cheque drawn on a bank or a credit union.
There is not the least difficulty in foreign trade except in two areas:
1. A country hopes to export more than it imports; and
2. The value of each country's monetary unit varies over time.
A country may want to export $2 billion of goods. By using tariffs and other trade barriers, it will limit its imports to $1.5 billion. The goal, in this case, is to trade $500 million more in goods than is received. This is not a charitable act. A favourable balance of trade, $500 million in this case, allows the favored country's citizens to earn more wages than they would have earned otherwise.
Social Crediters disagree with favourable balance of trade policies and find them both illogical and unnatural. However, as long as the right to obtain goods is tied to wages, and as long as there is no increase in purchasing power through a Dividend, the only remaining remedy is to seek purchasing power through foreign trade. By exporting goods, we reduce the volume of products available to us. We should instead increase the amount of money and thereby possess the resources to buy these same products.
Currently, the rule is that the only source of purchasing power is through participation in the system of production.
All countries operate under this arbitrary rule and so attempt to export more than is imported. Inevitable political friction ensues which can sometimes escalate to war.
Social Credit, by putting into circulation all the money needed to buy all of a country's production, puts an end to this madness. A Social Credit country is willing to export its surpluses, but in return it only requests the same amount of surpluses from others. The population of a Social Credit country has the money to buy what is imported with the money that would have bought what was exported. This facilitates trade between countries.
With foreign trade, there is a time lag between when goods are ordered and when merchandise is shipped and paid for. The price is agreed upon at the time goods are ordered but payment is at another point in time.
For example, if a businessman from Paris sold me goods valued at 8,000 francs, and I agreed to pay him the equivalent amount of $200 in Canadian currency, but will pay him this amount when the goods are received 6 months hence, a problem can arise.
If, in 6 months time, the value of the dollar had increased, I would have deprived myself of purchasing power. For example, spending $200 in 6 months time may purchase the same volume of goods as spending $250 today. Foreign trade always carries a risk associated with the inflation and deflation of currencies.
Social Credit would maintain the supply of money equal to the volume of production and thereby create stability in the value of each monetary unit.
Foreign merchants could expect that the Social Credit dollar would have the same value over time. There would not be a change in value from the time of purchase and when payment was due.
Trading with a nation with a Social Credit economy would be highly desirable. Although some claim that foreign trade under Social Credit would be problematic, the opposite would be true. These negative claims are made by those who understand neither Social Credit economics nor foreign trade.
Louis Even
* * *
In an article published in Vers Demain on November 15, 1953, Louis Even answered the following question:
Given that International Financiers do not like Social Credit, or Economic Democracy, and given that they have a great deal of power over exchange mechanisms, could they not artificially depreciate the exchange value of the currency of the country trying to apply Economic Democracy by imposing controls?
They could certainly intervene, but it would work against them; it would produce the opposite effect to their financial policy. Suppose, for example, that Canada establishes an Economic Democracy system at home, at a time when the Canadian dollar is quoted at 400 French francs. Then, suppose that international brokers, acting under instructions, artificially lower this exchange rate to 300 French francs, so that they can tell the whole world that Economic Democracy has caused Canadian money to lose its value. What would happen?
Several things will happen that will rebound against the intervening power. First, in Canada, Canadian money will continue to buy more Canadian products, as Economic Democracy lowers prices through its compensated discount.
Then, as brokers lower the price of the Canadian dollar on the international market, other countries will pounce on it, because they can get it more cheaply and get more Canadian products for less money.
The result for Canada will be an extraordinary expansion of its exports. Its surpluses will flow more quickly onto foreign markets. It is true that, on the other hand, Canada will have to export more products to obtain foreign products. To cope with this, Canadian industry will endeavour to develop at home the production of products that are more difficult to import, and thus make Canada more independent of foreign production—which is completely contrary to the policy of the International Financiers. In this way, they will have dealt themselves a blow.
But that's not all. For foreign countries, which would benefit from the lower Canadian dollar on the foreign exchange market, it would mean increased imports of Canadian products. These countries would have to export less to obtain more. Hiring would fall at home. All this would still be contrary to financial policy, since this policy wants countries to export more than they import, and since it wants to impose full employment as a condition of the right to live.
Orthodox finance would thus lose its control over the domestic economies of countries that are not applying the principles of Economic Democracy. By wanting to punish a country applying Economic Democracy, it would lose the other countries.
Economic Democracy is therefore a formidable weapon. If just one country adopts it, it frees itself from financial dictatorship; and if International Financiers don't intervene, other countries will quickly follow suit and free themselves. Then, if the International Financiers intervene to try to punish the country applying Economic Democracy, the result is the emancipation of the economies of these other countries.
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