On January 18th Mr. James Coyne, Governor of the Bank of Canada, addressed the Canadian Club in Winnipeg. One of the significant points of Mr. Coyne's talk was his statement that Canadians were living beyond their means.
"Put more bluntly, we have for at least five years, been living beyond our means on a grand scale."
Mr. Coyne complained that we were creating not only too much productive enterprise, but were introducing too many creature comforts into our way of life. And what especially irked Mr. Coyne was the fact that much of this was being financed by borrowing from other countries.
Mr. Coyne's statement that we are, and have been "living-beyond our means" is a very interesting one and should be considered carefully.
To what "means" is Mr. Coyne referring? The means of producing all these comforts which Mr. Coyne deplores from the bottom of his soul? Obviously not. Even Mr. Coyne would not venture to claim that Canadians are unable to produce the goods and services which Canadians are enjoying even at the expense of going head over heels into debt because of the financial system under which we labour.
Let's face it — the wealth of this country in terms of natural resources has never been meassured and is not likely to be gauged for a long, long time to come.
Its wealth in terms of human beings is limited only by the size of the population. But then the needs for goods and services and the desire for comforts are likewise limited by the number of people living in the country. There is no lack of willing hands and capable minds. There is no good reason why such minds should not be trained in all the scientific techniques, whereby all that is necessary to fill human needs and desires can be drawn from our natural resources.
We've got the raw material. We've got the people to turn this raw material, not only into productive enterprises (factories for producing and commerce for distributing) but into creature comforts for the individual citizen as well.
Consequently, when Mr. Coyne says that Canadians are living beyond their means, he does not mean that Canadians haven't the wherewithal to produce this manner of life, what he means is that we can't afford them in terms of money. That in order to coddle ourselves with all these extra and costly comforts, we have had to borrow heavily, especially from foreign countries so that we now owe considerable money abroad. (Mr. Coyne has a special prejudice against owing money abroad. He would much prefer that Canadians owe this money to the financiers here at home.)
What Mr. Coyne says is quite true, if you accept the financial system as it exists today.
In the financial system under which we live, money is considered to be a commodity like refrigerators, shoes, clothing, cabbages, automobiles, et., etc. We speak of the grain market, the automobile market, the textile market. Well, financiers speak of the "money market" (the buying and selling, as it were, of money) and talk freely of dear money, and cheap money. Money is a good to be trafficked in like any other goods. A coal merchant deals in coal, the wheat merchant in wheat and the seller of shoes deals in shoes. The financier deals in money. Money is the means of distributing all the fruits of our productive system and the financier controls it just as surely as the railway company that carries coal from Alberta to Winnipeg or apples from Nova Scotia to Montreal, controls the men and equipment which form the company.
Here is what Mr James Muir, Chairman and President of the Royal Bank of Canada, had to say about money in this address of January 14th 1960, to the annual meeting of the bank's shareholders:
"...the course of monetary control would run much smoother if the chartered banks were enabled always to implement Bank of Canada policy by allowing their lending rates to reflect changes in market rates.
It is absurd, therefore for bank lending rates to be subject to price control while other rates by other lenders are allowed to reflect market conditions."
"What Mr. Muir is advocating is the right for chartered banks to allow the interest rates they charge on loan's to fluctuate according to the law of supply and demand. If refrigerators are scarce and the demand heavy then the cost of refrigerators goes up. The chartered banks want money to be considered as a like commodity. If money is scarce (tight money) then it should cost more thigher interest rates), depending upon the demands and the competition among would be borrowers to get a share of the available credit. At the present time the chartered banks interest rate is limited to 6% by the Bank Act. As Mr. Muir remarked in the same address:
"The over-all-restriction of the money supply resulted in a rise in the market rates of interest that is, the price of credit rose, just as the price of any commodity will rise as demand increases relative to supply."
Is money, in fact, a commodity to be dealt in like wheat, coal washing machines, refrigerators, etc.? Well, let us examine the nature of money by considering its purpose in life.
Money in its simplest terms, is nothing more or nothing less than tickets with which an effective demand can be made upon the goods and services placed on the public market for purchase:
"The conception of money as tickets or counters is perhaps best of all. It need not surprise us, since we are already familiar with other kinds of tickets, such as "railway tickets", "pawn tickets" and "theatre tickets". Money tickets differ from these only in one respect; namely, whereas a railway ticket is only acceptable in exchange for a railway journey; a theatre ticket for a theatre seat; etc.; a money ticket is exchangeable for a railway journey or a theatre seat ar any of a thousand and one goods and services offering themselves. Money tickets enable the holder to take his or her choice. Other kinds of tickets don't and so may be regarded as "money tickets limited to one thing." (The Meaning of Social Credit, . pp. 120-121, Maurice Colbourne.).
Money is the means whereby the individuals who make up a society are enabled to exchange the goods or services they have to offer, for the goods and services offered by others. In our complex society, it is no longer practical to effect this exchange by barter or trade. We need money, the tickets whereby we can effectively make a demand upon the goods and services of others and with which others can demand our goods and services and get them.
Obviously, such a system of tickets is vital to the welfare of society — as vital as the army for the administration of defense or the courts of law for the administration of justice. No one would dream of treating the defense forces or the courts of law as commodities to be sold by groups of private individuals as their property, to the populace of a community. Yet that is precisely how the financial system is treated; financial credit (which makes up the vast bulk of the money used today, in industry and commerce) is considered as their property to be sold on the "money market" at rates governed by the demand for their product and the quantity of this product which they may decide to "produce".
The financial system, responsible for producing financial credit, should be under the direction of some national monetary organization which in turn should be responsible to the peoples' representatives in parliament. It should be obliged to furnish new credits whensoever the productive machinery of the country was in a position to furnish new products and services to meet the needs of the people. The people would determine what and how much of goods and services should be produced, by their demand for goods and services. This financial credit would be based upon the real credit of the country that is, on its belief in its ability to produce, distribute and consume the goods and services its members want, when and where and as they want them.
It is one of the greatest injustices, one of the greatest crimes in the history of mankind that this so vital element of society should have become a tool owned by the financiers and used by them to augment their own wealth and seize power over their fellow men.
These men, these financiers, who control credit and make enormous profits and come to dictate to their fellow men, are the real power behind the scenes in the world of industry and commerce and above all in the world of politics, national and international.
This power must be broken. This can only be accomplished through a reform of the financial system. The philosophy which has become known as Social Credit: (for Social Credit is really a philosophy rather than a strict financial system) advocates placing the power of creating financial credit into the hands of the people through a national monetary organization controled by parliament.
Social Credit advocates the theory whereby new credits would be issued free of interest charges whensoever new production was necessary to meet the real needs and desires of the people — such credit to be destroyed as soon as the production which it fostered had been consumed.
Furthermore, Social Credit advocates the method of distributing purchasing power through the dividend, distributed periodically to each and every citizen. This dividend is not a dole or a form of relief. It is the right and just share of every citizen in the products of the country, which production is the fruit of everyone's labor, as well as the result of the cultural inheritance which is the sum total of the scientific advances and the perfecting of techniques in production which have been developed and handed down by one generation after another. Such cultural inheritance is not the property of any one individual or any group of individuals, hence it cannot be seized upon by any group of individuals as their sole property.
In this way, there would be no more nonsense about the "money market", the "tightness of money"; "the shortage of the money supply", that leave interest rates free to adjust to the demand and supply of money. In other words, money (credit) would cease to be a commodity traded in by bankers like James Muir, considered their property, created by them, used by them to hold the people in everlasting debt, in everlasting bondage to the financial system.
Economically and financially free, man would ultimately become spiritually and intellectually free, and free from the curse of want and hunger and the ever present anxiety about what tomorrow might bring.