Credit Without Interest by The Bank of Canada

We wish to build a school. Now, we know that it is going to cost whatever goes into its actual construction: materials whose costs are indicated on the bills; labor, whose cost is indicated by the hourly wage; management, represented by the contractor's profit; power, charged to the builders by those furnishing it. Let us say that the whole cost will be $125,000. This is the cost of actually erecting the school.

Now, it is only right that the people, who are going to benefit from the school, should pay at least the $125,000. But actually they will end up paying considerably more — something like $200,000 spread out over 20 years. Yes, you'll say, but that's the interest. But we didn't use any interest in building the school. It only cost $125,000 to build. $200,000 is $75,000 too much. The same thing happens to other municipal projects and to private undertakings. And why?

Because in our system of production one man does not do everything. A great many elements must be mobilized and this takes money. But all our money takes its origin in the banking system. It is born as sums of money credited to the accounts of public institutions and private companies who have borrowed it from the bank. The bank requires that, at a specified time, all this money be returned to this, its source, along with additional amounts called interest. In other words, more money is required back than was originally issued.

It is these interest rates, affixed to money the moment it comes into existence, which vitiates our economic system and places the country's capacity for production at the mercy of the money-makers, who do not permit it to function unless the people go into debt to the financiers, debt which can never be paid back. So, under the form of taxes for public production, and of prices for private, production, we have to pay for a thing one and a half times over — and even more. This is the one single factor which is the chief cause of inflation and the high cost of living.

So, you either accept these condition of fold your arms and do without the goods and services which are physically possible and often urgently needed. However, there does exist a bank which belongs to the Canadian people — the Bank of Canada. Its capital shares have been paid for by Canadians; its governor, appointed by the government, is in the employ of the Canadian people who pay his salary. This bank, our bank, should be made to serve us rather than allow us to be exploited. That is the reason for our demand that the Bank of Canada finance by the issuance of new money, free of interest rates, a new production by municipalities, school commissions and private enterprises, wherever this new production will meet legitimate needs, both public and private.