Each year governments draw up their annual budgets. It is a program that shows the revenue and expenditures anticipated for the next twelve months. Whether such a budget is forecasted for the federal, provincial, or municipal governments, or for school boards, there is invariably listed this item: servicing the debt.
Obviously there are expenditures: spending foreseen for different services and for administration; for the construction of bridges, canals, roads, public buildings; for social security, old-age pensions, family allowances, pensions for the disabled; in municipalities, for garbage disposal, street maintenance, fire and police departments; school boards, building and maintenance of schools, salaries of teachers, etc.
All of these various expenditures — all except one — are carefully examined by the representatives of the people in these various public bodies. Questions are asked, answers are supplied and sometimes amendments are made before such items are approved.
All save one item. Which one is this? The one we mentioned above, that of servicing the debt or the interest charges on the public debt. This subject is sacrosanct; untouchable; beyond question, privileged. There are no questions posed about it; no discussions.
Funds requested for charity can be crossed out. Aid to the needy can be set aside. Children and families can be left on the street. Public needs can be neglected. But the debt, servicing the debt, the annual interest charges which have to be paid on this debt — even if servicing the debt requires a quarter, a half, three-quarters of the budget; even if taxes have to be raised to such an extent that the citizens are despoiled of their wealth and property — there can be no argument or obstacle that stops the servicing of the public debt!
To whom, then, is it so important to pay these sums, this privileged part of the budget? Will they be turned over to people who are on the verge of starvation and who will perish if aid is not forthcoming? Not at all. They go to the Financiers. And normally, one does not find these gentlemen living in slums, lying on beds of straw or seated before empty plates.
But how does it happen that so many heavy debts lie upon the shoulders of our public bodies? Where do these debts come from, that the entire population must service through the payment of taxes, directly or indirectly; taxes which cut heavily into the citizen’s purchasing power, even when he does not have enough to meet his most essential needs?
Why do these debts exist? Because we submit, with almost mystical faith, to a financial system which in fact constitutes the greatest swindle ever perpetrated upon mankind; a swindle which robs the people with the very method that they use to produce real wealth.
To demonstrate this, it is only necessary to compare the situation of Canada today with the Canada of 50 or 100 years ago — a Canada of pioneers.
Farms, factories, roads, schools and hospitals did not exist when the first colonists came to settle in Canada. All of these things have come into existence since their arrival. They are progressive riches. Such wealth is immeasurably greater than it was 50 or 100 years ago. And yet compare the debt, the sum of all the public debts of Canada today, with the sum of the public debts in those days. Real wealth equals financial debt — that seems to be the equation. And who goes into debt? The people, since it is the people who make the payments necessary to service the debt.
And yet it was the people of the country who, throughout all these years, have produced the vast wealth of Canada.
Who built the schools, water supply systems, roads and other public utilities? Engineers and workers. Why were engineers and labourers able to devote themselves to the production of this wealth rather than to the production of goods only? The workers were producing food, clothes, shoes and a multitude of other goods and services which the builders needed.
In other words, it is the people, who by the work they have accomplished in exploiting the resources of the country — resources placed there by God for their use — the work they have done together, all across the land has provided, and continues to provide, the wealth for all these developments.
And yet, when a school has been finished, a water system, road, or any other type of public production, it is immediately set down as a cost in public debt to be paid by the people. And worse – the people are expected to pay this cost, this debt, not once but twice over or sometimes more, according to the time set down for the completion of payments.
Here then, is a very curious kind of accounting — doubly curious in that the bill for products is sent to the producers, and not only for the cost of production!
To be quite logical, it is not the producers who should have to pay the cost of production but the consumers. However they should only pay for what they consume.
lf I buy a loaf of bread, I will pay for it because I am going to consume it. I certainly will not pay twice the price, because I am not going to consume it twice. For sure the baker is not the one who will pay for my bread. The buyer is not the producer but the consumer.
And this should be the case with public production, the production of wealth and goods by the people.
The schools, water systems, roads — these things that the population has produced are going to be used by the people themselves. So it happens that the people who are the producers of this wealth now become the consumers of the goods. The population “consumes” its own public production. In the case of durable goods, this consumption takes place by degrees, as the goods are worn; this is called depreciation.
Very well, let’s bill the people for what they consume but not for what they produce. Don’t put the people in debt for producing a school, a water system or a road, but charge them for the gradual depreciation of this school, water system or road. This would be more in conformity with reality.
A building can not be “consumed” twice any more than a loaf of bread can. lt cannot be depreciated for more than its value.
Is it not strange that the people should submit to extortion on such a grand scale?
So far we have spoken only of public production. It is the same financial system which, directly or indirectly, finances private production, setting forth the conditions. Industrialists and businessmen are obliged to pay interest for the right to produce the goods necessary to meet the needs of the country. There again, it is definitely the people who pay that which is demanded by this system of extortion. In public production, the money is raised through taxation. In the case of private production, the levy is made through the price.
The consequence of this is that we cannot profit from the tremendous fruits of progress. We are crushed under an ever-growing weight of taxes, while the immense productive capacity of modern production should make it possible for public needs to be satisfied without in any way forcing private needs to go unfulfilled. We lament the ever-increasing prices of goods and services when, in fact, the extraordinary facility with which production can be accomplished should result in ever-decreasing cost prices.
All of this has come about because our financial system is the master instead of the servant, and as such robs the people of the fruits of their labour, the real wealth of the country.
But how did this giant swindle start? — It started in that first act of theft: the appropriation of the credit of society by those who make and destroy the means of payment by those who control the stream of financial credit.
This publication has many times explained, in diverse ways, in what modern money consists, how it is created and where, what conditions are placed upon it, how long it remains in existence and how it is destroyed.
Let us note that money, no matter what form it takes, does not derive its value from the material of which it is made — gold, silver, nickel, aluminium, bronze, paper, or figures set down in a ledger. No. It draws its value from the goods and services which correspond to it. Without goods and products, all the money in the country would be worthless.
Goods and services are provided by people who exploit their natural resources, using their intelligence, their arms, machines, inventions, and all the techniques of a highly developed society. All of these factors make up real wealth, real capital. lt is this production capacity which gives birth to the confidence in being able to live off a country. This is a country’s real credit (credit: confidence).
It is above all a social credit which goes far beyond the sum of the individual capacities of individual citizens. Total production would have be immeasurably smaller, even if each individual put forth great efforts, were it not for the fact that life in society made it possible to conserve, add and pass on, from one generation to another, the heritage of knowledge and skills acquired during the course of many generations. Also, that life in society has made possible the division of labour and the various activities that supply the community market.
But if this great production capacity is to be mobilized and put at the service of the community’s needs, it is necessary that we have this thing that we call “money,” or as it is more commonly called today, financial credit.
The only value financial credit has, comes from real credit. It is, in essence, nothing more than the monetary expression, the expression in figures of real credit. Hence it too is a good which is common to the community, and not the property of those who monetize real credit or set it down in terms of figures which exercise the same function as money.
This operation takes place in the banking system.
It is too generally assumed that banks are establishments set up to receive savings and to lend out these savings in order to make a profit. The truth is quite different. What the banks lend, what they give to the borrower, is not the savings brought in by depositors. What they lend — and the bankers know this very well — is financial credit which the banker creates by inscribing the amount of the loan to the credit of the borrower.
And since this financial credit, this new money loaned by the banker, is based upon the real credit of society, it is society itself, through the intermediary of the banks, which lends this new credit to the borrower. However, the banker treats this new credit as if it were strictly and solely the property of the bank. He lends it out, charging a rate of interest which must be paid to the bank, along with the original loan. The borrower must try and extract this additional money, the interest, from the public through his prices. So it is that society, the true owner of this credit, must pay for the permission to realize wealth, which in fact belongs to society.
Since this credit is essentially a social good, even though it is thus lent through the intermediary of the bank, it should be the people who derive benefit and profit from it, instead of having to be charged for it. We admit that the banks are rightly entitled to a just remuneration for their accounting. But the amount of accounting relative to, let us say, a school, cannot be worth the cost of two to three times the worth of a school.
To carry our analysis a little further, if we consider this whole matter in terms of reality and facts, setting aside all the vocabulary of financial terminology, any production in the final analysis really costs what it was necessary to consume in order to produce it.
Everything that has been consumed in one year constitutes the real cost of all production during that year.
If our financial system were to reflect, faithfully, this set of facts, there could not be a collective debt such as we have, for we could not consume more than we could produce.
Instead we would have the expression of a financial surplus, which would be the expression of a surplus of total production over total consumption.
But the financial system gives no such an expression of facts because it is false and fraudulent.
It is almost 100 years since the full details of this vast swindle were exposed and explained by a genius, Scottish engineer C. H. Douglas. He also demonstrated how this system of robbery, extortion and tyranny could be turned into a system of service: into a system which would put financial credit at the service of producers so that they might produce, and put adequate purchasing power in the hands of the consumers so that they might procure these products. This was to be done through the application of principles which have come to be known as Social Credit. (Note: principles, not parties.)
Public debts would then be changed into public assets. Instead of taxes, which deprive people of goods when there is abundance offered for consumption, there would be a dividend for each individual which would obviate anyone having to live in dire poverty. There would be true social security, without humiliating inquisitions or taxation, based upon the great productive capacity of the country.
The financial dictatorship has corrupted our whole economic life. It has given rise to an economy of wolves. It has perverted the true end of all economic activity by making this end the pursuit of money. It has given rise to a universal scourge which we call the cult of money. It is something that is truly diabolical.
It is nonsense to speak about bringing an end to such power through election fights. In fact, it cannot be vanquished by any method or by a merely human force. It is absolutely necessary that the help of Heaven be invoked. Then men must replace the cult of money by the cult of service, division by unity, egoism by self-dedication.
Today the men and women formed by our four publications and our Movement, the Pilgrims of Saint Michael, are seeking to do just this. Day after day they go among the people, carrying the message of Social Credit, inviting individuals to shoulder their responsibilities and to work together to a common end, which is the welfare of each person with freedom for all.