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Municipal Finance and Social Credit

on Tuesday, 01 November 1955. Posted in Social Credit

The following is a loose translation of the major portions of a brief sent by the Institute of Political Action to mayors and councillors in convention at Pointe-au-Pic, Quebec, July 1, 1955. While it pertains particularly to conditions in Quebec Province, most of it is obviously equally applicable to the other nine provinces.

-Editor, S.C.

Problem of Finance

The newspapers have announced that the subject of the Convention of the Union of Municipalities this year would be "Property Assessment and Municipal Finances."

This is a clear proof that the problems that face our municipal councils are first and foremost problems of finance.

Financial difficulties are, moreover, the major (material) problem everywhere: in governments, in municipalities, in school boards, in all public bodies, in all institutions, and in all families.

The techniques for building, maintaining and improving are not lacking. Labour is everywhere available. But finance responds neither to the needs nor to the physical possibilities of satisfying these needs.

Taxes on Property

As for the municipalities, their principal source of revenue at present is the property tax. And to fill their empty treasuries, they face the following dilemma:

(1) Either, to continue dispossessing the owners by taxing them more and more, even risking the confiscation of their property; or

(2) To change completely the method of municipal financing, seeking sources of revenue elsehere than in the tax on property.

The first alternative — to continue dispossessing the owners — is absolutely inadmissible. The constant rise in property taxes has already produced the dire result of diminishing the number of owners, increasing the number of tenants, and creating an insoluble problem of lodging as long as the present financial system is maintained.

Paradoxically, one day we see municipal officers adopt plans for eliminating the hovels of their town and solving the problem of lodging, and the next day these same officers vote for increasing property taxes! Do they think that by taxing houses more, they are going to increase the number of owners and encourage present owners to repair and improve their dwellings?

Do they not see that we are moving rapidly towards a society of tenants, of dispossessed, similar in this respect to what is developing in communist-controlled countries?

It is more than time to put a brake on the increase of taxes on property. And we shall not bring any improvement to families by inventing new taxes. Since the problem of finance is everywhere, we shall not solve it by making it worse for others who are also suffering.

It is to another method of financing that we need to turn, a system of finance which furnishes the means of payment for all that the population is capable of producing.


The arguments against taxes hold true against loans to finance municipal developments. The loans are, in fact, only taxes deferred — taxes to come.

The municipality that borrows will have to pay back capital and interest, and the interest over a number of years quickly equals or exceeds the capital. The loans must be paid twice or more.

If one adds together the debts originating in loans — government debts, municipal debts, school debts, debts of institutions and corporations, one gets an idea of the extent to which the people are indebted for wealth that they themselves have produced. Is it not at the same time illogical, and, characteristic of a dictatorial financial system, in flagrant discord with realities?

Social Credit the Solution

No solution to the municipal financial problem will be found within the present financial system. The solution is in the financial policy offered by Social Credit (not a political party, but a conception of finance conforming to economic, realities).

Social Credit proposes the establishment of a provincial (or national) Credit Office, whose object would be at all times to adapt finance to facts, and not facts to finance. Municipal, as also provincial, decisions would be made in accordance with the needs and the possibilities of production, and not in accordance with arbitrary sums of money available.

This provincial (or national) credit office would have branches in all districts, just as does the banking system.

Developments and Services

Municipalities require finance for two things:

(1) For developments: water and sewage, streets, sidewalks, etc.

(2) For public services: administration, police, and so on.

The developments are a creation of new wealth. So that finance may conform to facts, all new production should be financed by new credit money; and this money should not be withdrawn except as the wealth is consumed.

The local branch of the Credit Office would, therefore, issue the means of payment to finance new construction as it is carried out. And it is with these issues that the municipality would pay the contractors to whom it entrusted the work.

As for the public services: we believe that a municipality ought not to burden itself with services that can be as efficiently rendered by private enterprise, in which competition figures, in which the citizen himself pays for the service obtained, such as transportation. There is no need to socialize these services. Social Credit policy would put the citizens at all times in the position where they would have enough purchasing power to claim and pay for all production public and private — offered them.

As for services essentially municipal in character, such as police and fire protection, it would be more simple and economic to finance them by an issue of credit, which would be reabsorbed automatically by the mechanism of the adjusted price, which is part of the financial technique of Social Credit.

The Price Adjustment

The branches of the Credit Office would issue all credits necessary to:

(1) Finance all new production, public or private.

(2) Distribute periodic dividends to all citizens.

(3) To finance a discount applying to all retail prices, permitting the lowering of prices paid by the consumer, while compensating the seller so that he may receive a reasonable price.

This discount would not be arbitrary, but would vary according to the relationship between total consumption (public and private) and total production (public and private).

It is evident that public services increase consumption. If production is not increased as much, this would lower the discount on retail sales and the buyer would pay more than if he had not had this public service. This conforms to reality.

By this mechanism of the adjusted and compensated price, one would pay at the same time for private and public consumption. But one, would have, at all times, the money it requires to pay for the two since the money for both would first have been distributed, as we have outlined above.

(The brief then stressed the point that under Social Credit financial policy, sufficient purchasing power would be distributed to enable the citizens to pay for both private and public production and services. Money would be issued as goods and services were produced, and withdrawn as they were consumed. This would be financing for use. It would eliminate all financial problems. Finance would conform to the physical facts of production and reflect reality, and would cease to be an instrument of control and dictatorship, and revert to its proper function — the facilitating of the production and distribution of goods and services.)

Attitude of Municipal Councils

Social Credit is the only proposal yet made to finance municipalities without harming families. As long as one does not accept this, as long as one remains in submission to the dictatorship and shackles of finance, one will continue to dispossess home owners and deprive families through taxation.

We cannot at the same time secure property and confiscate it! We cannot hope to retain ownership of our country by mortgaging it and passing it gradually into the hands of the financiers!

As representatives of their people, the municipal councils should do everything within their power to press for the introduction of the Social Credit financial policy, which would resolve their financial problems without sacrificing the interests of the home owners and families under their jurisdiction.

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