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From Parable to Reality

Written by Louis Even on Sunday, 01 January 1939. Posted in Social Credit

A system of debt-money

The system of debt-money that Oliver established on Salvation Island made the little community sink into financial debt at the rate at which the island developed and enriched itself through the work of its inhabitants.

The exact same thing goes on in our civilized countries. Does it not?

Canada, is certainly richer today, in real wealth, than it was 50 years ago, 100 years ago, or in the pioneers' days. Yet compare today's national debt, i,e. the total of all public debts owed in Canada today, to what the total was 50 years ago, 100 years ago or three centuries ago!

Yet it is the Canadian people who have created this enrichment by their labor and know-how. Why then should they be kept in debt for what has resulted from their work?

For example, consider the schools, the municipal aqueducts, the bridges, the roads and other public works. Who builds them? The country's builders. Who supplies the materials they need? The country's manufacturers. And how can these people be employed at public works? It is because there are other workers who produce food, clothing, shoes, or who supply the services and materials required by the builders and manufacturers.

Thus it is the Canadian population as a whole, by its different kinds of work that produces all this wealth. If goods are brought in from other countries, it is in exchange for products that we have made here.

But what do we see instead? Everywhere, citizens are being taxed to pay for schools, hospitals, bridges, roads and other public works. The population is collectively made to pay for what it has produced collectively by its own efforts.

More than double the price

But there is worst: The population is made to pay more than the cost of what it has produced. Its own production, an increase in real wealth, becomes a debt to which interests are added. With time, the interests add up and can equal or even exceed the amount of the debt imposed by the system. At times, the people are made to pay double, triple the price for a production it has itself made.

On top of the public debts, there are industrial debts, also loaded with interests. These compel the manufacturers and contractors to increase their prices beyond the cost of production, in order to reimburse the capital and the interests, so as to avoid bankruptcy. .

Both public and industrial debts plus the added interests must be paid by the people, to the financial system, Public debts are paid for by taxes; industrial debts are paid for through prices. Prices go up while our pocketbooks are being flattened by taxes.

A tyrannical system

These and many other facts are indicative of a monetary system, a financial system, that controls instead of being a servant; a system that keeps the population under its dominance — the way Oliver controlled the men on the Island before they rebelled.

And what happens when the money controllers refuse to lend, or when they add conditions that neither public bodies nor manufacturers can bear? At times, public bodies have to put off projects, no matter how urgent they may be. Manufacturers give up on plans for the development or production of goods that would have answered true needs. And this causes unemployment. And to save the unemployed from starvation, taxes must be levied on those who still own something, or on those who still earn a salary.

Can you imagine a greater tyranny, which evils can be felt by the whole population?

An obstacle to distribution

And there is more. Not satisfied with turning the production it finances into debts, or with paralyzing the part of production it refuses to finance, the monetary system is a poor financial instrument for the distribution of products.

Even though the stores and warehouses are full, and though there exists all that is needed for an even greater production, the distribution of available goods is rationed.

You can only obtain what you can pay for. In front of an abundant production, there should be an abundance of purchasing power in our wallets. Such is not the case. The system always adds more prices to the products than it delivers money into the pocketbooks of the people who need these products.

The capacity to pay is not equal to the capacity to produce. Finance does not reflect reality. Reality means having an abundance of goods that are easily made. Finance equates to money being rationed and hard to obtain.

The present monetary system is truly a system that punishes when it ought to be a system that serves. This does not mean that we must do away with it, but changes must be made to it. This is what the principles of Social Credit are meant to do.

Not a Political Party

The first thing that comes to mind when people hear the words Social Credit, are political parties. But no, Social Credit is not a party although there have been parties bearing that name. Social Credit is no more a party than Christianity is a party, even if, in some countries, you find political parties with such names as Christian Democrats, Christian Party, etc. Political parties exist for the purpose of seizing power, to be or to strive to be the group that rules the country.

Social Credit works in the very opposite way. Social Credit will set the individual free; it will allow the individual to rule over his own life. Social Credit will thus distribute power to individuals, not the power to rule over their neighbours, but the power to order from their country's production capacity, the goods they want.

Money in keeping with reality

Oliver's money, on Salvation Island, would have had no value had there been no products on the island. Even if his barrel had really been full of gold, what could this gold have purchased on an island that had no products? Gold, dollar bills or entries in Oliver's books could not have fed anyone if there had been no food. The same applies to clothing and to everything else.

But there were products on the island. These products came from natural resources and from the work of the small community. This real wealth, that which gave money its value, was the property of the island's inhabitants, and not the exclusive property of Oliver, the banker.

Oliver put them in debt for something that they owned. They understood this when they learned about Social Credit. They understood that all money, all financial credit is based on society's credit, and not upon the banker's operations. This money should have been theirs from the moment it was created; and should have been handed to them, divided amongst them, later to be used for their exchanges as products went from one person to another.

For them, the question of money became what it really is in essence: a matter of accounting.

The first thing required of accounting, is for it to be exact, that it be in keeping with what it is meant to express. Money must be in keeping with the production and with the destruction of wealth. It must follow the flow of wealth: Abundant wealth, abundant money; easy production, easy money; automated production, automated money; free production, free money.

Money to finance production

Money must be made available to producers at the rate at which they need it to mobilize the means of production. This can be done since it was done overnight, as soon as war was declared in 1939. Money that had been lacking for the previous ten years appeared all of a sudden; and during the six years the war lasted, there were no more money problems to finance all of the production that was needed and required.

Therefore, money can be, and must be, at the service of public and private production, as faithfully as it was at the service of war production. All that is physically possible, to answer the legitimate needs of the population, must be made financially possible.

This would put an end to the nightmares of public authorities. It would also mean the end of unemployment and of its hardships, as long as there remain things to be done to answer the needs of the population, both public and private.

Everyone a capitalist - To each a dividend

Social Credit moves that a periodical dividend be distributed to each and every person: An amount given each month to each individual, regardless of whether he is employed or not; the same way dividends are distributed to investors, even when they do not personally take part in any work.

It is widely recognized that a capitalist, someone who invests money in an enterprise, has the right to draw a benifit from his investment, an income which is called a dividend. Other individuals will set his capital to work, and they in turn are rewarded for doing so, through their salary. But the capitalist draws an income simply from his money being invested in the enterprise. If he also works there, he will then draw two incomes: a salary for his work and a dividend for his capital.

Social Credit considers that all members of society are capitalists. Together they own a real capital that contributes considerably more to production than the investor's money-capital or the employees' labor.

What is this social capital made of?

First, there are the country's natural resources that were not made by anyone. They are a gift from God to those who inhabit the country.

Then, there is the total of all the knowledge, the inventions and discoveries, the improvements made to production processes; the total of all the progress acquired, accumulated, increased and passed on from one generation to the next. This is a common inheritance, earned by past generations, used and increased by our generation before it is passed on to the next generation. It is not anyone's exclusive property but a communal property "par excellence".

And this is by far the greatest factor in modern production. If the motive force derived from steam, electricity and oil - all inventions of the last three centuries - were taken away, what would be left of the total production, even if you were to increase the amount of labor and the number of hours worked by all of the country's workforce?

No doubt, producers are still needed to set to work this capital, and they are rewarded for doing so by their salaries. But this capital must earn dividends to its owners and therefore to all the citizens since they are all, equally, coheirs of past generations.

Since this social capital is the most important factor in modern production, the dividend should at least cover everyone's basic needs. And as the part of production due to mecanization and automation increases, while human work decreases, the part of production distributed by social dividends must increase.

This way of understanding the distribution of wealth is quite different from today's. Instead of leaving individuals and families in dire poverty, or instead of taxing those who work to help those who are no longer needed for production, everyone would be guaranteed a basic income through a dividend.

This would be a means, well adapted to our modern productive capabiities, to carry out in practice the right held by all individuals to the use of material goods. This right is derived from one's very existence. A fundamental and inalienable right as expressed by Pius XII in his radio message of June 1, 1941:

"Material goods have been created by God to meet the needs of all men, and must be at the disposal of all of them, as justice and charity require.

"Every man indeed, as a reason gifted being, has, from nature, the fundamental right to make use of the material goods of the earth...

"Such an individual right cannot, by any means, be suppressed, even by the exercise of other unquestionable and recognized rights over natural goods."

A dividend to each and everyone: This is the most brilliant social and economic formula that was ever offered to a world whose problem is no longer to produce goods, but to distribute them.

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