Owner or vassal?If the owner of a house could not enter or leave it without first asking and then paying for permission from a private agency to do so, would he, in fact, be the owner of his house? If he could not till his fields, sow or reap, without first obtaining and paying for permission to do so from this same agency, his title of ownership of his property would mean nothing. He would not be a property owner but the vassal of this private agency.
In the previous article, “The Mobilization of Credit for Production”, we demonstrated how the productive capacity of a country is a national good, a community wealth. Douglas called this real credit, for it is the basis of confidence that the country can support life.
This real credit is as great as is the country’s capacity to furnish promptly, efficiently and completely, all that is necessary to meet the private and public needs of the population.
However, this productive capacity, which is the fruit of life in society, something which is a composite of present-day achievement and the tremendous heritage of knowledge and perfecting of techniques which has been handed down to us from previous generations, cannot be turned to the benefit of society unless a very complex and diversified system of activities is set in motion. And the instrument which sets these activities in motion is money. Money, or financial credit, might be called the control lever which sets in motion and guides production.
Now, the people of the country are not the masters of this control lever. The people are obliged to leave the machinery of production running at only a fraction of its capacity, and this in the face of great and growing want — or they must go to a private agency and pay for permission to use this productive machinery to meet their needs and wants. This is very much the case of the home owner we mentioned above, or the farmer cultivating his fields. The people are vassals to a private agency, that is to the banking system which is made up of private companies, because money takes it origin from the banking system and cannot be had without plunging into debt those to whom it is given for purposes of production.
The means of production can be owned by the individual, by a co-operative, by a company, by a public body, or by any other ‘legal body’, but regardless of the type of ownership, it remains sterile if it cannot count on the aid of other forms of production. Modern production is essentially a co-operative affair. Its effectiveness depends upon life in community, upon the coordinated work of people engaged in specialized activities, upon the existence of consumers, without whom production has no fruitful purpose.
Now, it is this aspect pertaining to community which makes of real credit a truly social credit, which should give to the community the means to mobilize its productive capacity to meet the needs of the community. Moreover, the community is not just an abstraction; it is made up of all individual citizens. Accordingly, they should be able to tell the productive machinery of their country what they need and want, and all should be able to obtain some share of its fruit.
As Pius XII said in a radio message, June 1,1941: “The national economy, which is the fruit of men working together in common, tends to no other end than to insure, without interruption, those material conditions under which the individual life of each citizen can most fully be developed.”
Who should control credit?Since financial credit, money, is the accepted instrument for commanding production, money should belong to the community and its members just as does the productive capacity of the country.
Who should possess this instrument for passing to production the necessary commands? Logically, those who have wants and needs, since the purpose of the productive system is to fill needs and wants.
There exist both public and private wants. The command to fill private wants should come from individuals, from families. It is not the business of government or of any other public body to decide what the individual should ask for in respect to food, clothing and lodging. It is the individuals themselves who know best their needs. For public needs, the orders should come from public bodies ordained for this purpose, each within its own field of jurisdiction.
The productive capacity of a country, since it is common property, should somehow or other be placed at the service of all, and not be monopolized by any particular individuals or special interest groups. It is the work of society to establish an orderly system to this end, including a monetary system, since money is the means whereby the productive system is controlled.
This is another way of saying that every citizen, as a member of society, should be permanently endowed with a certain sum of money which will make it possible for him to order from the productive system that which he needs. The productive system will furnish it to him, and so each individual will contribute to directing the country’s production towards the satisfaction of the needs of all who live therein.
But how much should each individual get? In a country like Canada, capable of satisfying more than just the essential needs of its people, the amount set for each one should be sufficient at least to obtain what is essential. In fact, it could even be more, to the end that he might more effectively develop fully his individual life.
And it is for the individual to use according to his own desires, this guaranteed revenue, which certain economists call “basic income”, and which Social Crediters call “the national dividend”, because it is the claim to a legitimate share for each one, since each is a co-heir in a great common heritage of capital which has become the preponderant factor in production today.
As for public needs, public bodies will get the credits they need to draw on the country’s capacity to produce because they are the elected bodies of the people. Evidently, what is used by public bodies cannot supply the wants of individuals. For this reason, the citizens must be able to decide through their representatives what share is to go to public bodies. This decision must be based, not on taxes or borrowing, but on the basis of the urgency of a particular work and on the availability of the know-how, material and manpower to carry out this work.
Now the objection will be raised: “This is all very nice, but where is the money to come from, money for those dividends and for public spending, so that production can be mobilized?”
The reply: “From a national monetary office which will work according to the country’s capacity for production.”
The total of all small, medium and large productive organizations furnishes the goods. The monetary organization furnishes the money with which to finance the production and distribution of the goods, to full capacity when necessary.
In order to create these conditions, the prevailing falsehoods with regard to money crreation must be corrected.
The money system, up to now, has been one that commands instead of serving. It has been considered as something sacred before which all must genuflect; in reality, it should be nothing more than a system of accounting which is supposed to reflect faithfully the realities of production and consumption.
We have all mistakenly come to consider money as wealth, whereas, in fact, it is nothing in itself. All the money in the country could be burnt today without diminishing by one iota the real wealth of the country, but if you burn down a forest, you destroy real wealth. A simple decision can restore the burnt money, but it takes from sixty to a hundred years to replace the forest. Money is simply a title or claim to wealth, a title or claim to goods with which to satisfy our needs. Since each person has this right from birth, why is it so absolutely necessary that this “money” be earned? A right which is possessed does not have to be earned. This is acknowledged in the case of the capitalist who bequeaths his money to another; the heir has a right to the dividends from this money which he has in no way earned. Why then deny this same right to all the coheirs to that tremendous wealth which has been handed down to men from generations of progress?
He who works directly in the exploitation and further development of this common heritage has a right to compensation for these efforts. He and others, apart from this right, also have the right from birth to a share in the revenues from this common heritage.
The monetary system should not in itself be a system of rewards and punishments, but merely a system of service, a system to make possible the mobilization of our productive capacity and to distribute the products thereof.
This monetary system, to remain in harmony with the productive system, must follow closely the rhythm of the productive system; new credits (money) must be issued for new production, and money must be recalled as products are consumed or depreciated.
This is why the Social Crediters of MICHAEL ask that the Bank of Canada — a national organism set up for this purpose – advance new credits without interest for new production such as developments for provinces, municipalities, school commissions, etc. There would be repayment spread out over a period of years, as is the custom at present, but without the addition of interest rates which increase the amount to be paid very considerably, sometimes doubling it or worse.
The same method of financing should also be applied to the production of goods for private needs. The producer should automatically be supplied with the credits he needs in order to produce what is needed by the private consumer, and which he is physically capable of producing. Then the consumer should be financed so that he may be able to acquire the goods which are available and which he needs. The money should then be returned to the source from which it came.
With money thus adjusted to production and consumption, inflation and depression would be things of the past. It is the existing system which produces inflation of prices when, in fact, these prices should decrease along with easier and more rapid production. It is the existing financial system which creates unemployment when there are still so many private and public wants to be met.
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