Here are large excerpts from the speeches and lectures given by Mr. Henry Raynel of New Zealand at our International Congress and study week held in Rougemont in September, 2005. Mr. Raynel has been acquainted with the Social Credit philosophy for over 50 years, and is presently in charge (in association with Mr. Vic Bridger of Australia) of the Social Credit School of Studies in New Zealand, a non-political organization loyal to Douglas and Louis Even's principles, which gives diplomas to students of the Social Credit philosophy. In February, 2005, two of our full-time Pilgrims of Rougemont, Pierre Marchildon and Jacek Morawa, paid a visit to him. Now it was his turn, upon our request, to come to our Congress and address our apostles:
by Henry Raynel
It is my great pleasure to be able to talk to a concerned group of people whom I believe have a better understanding of society's social problems than I do. I thank the Louis Even Institute for Social Justice for the invitation. I am indebted to C.H. Douglas and his distinguished disciple, Louis Even, and other disciples, for my understanding of Social Credit.
We are all indebted to this incredibly wonderful Louis Even Institute for Social Justice for the wonderful work you are doing to evolve the Social Credit new economics vision for the future of mankind.
You know that our task is formidable, yet you face the task undoubtingly with determination. It was a privilege to get a visit (of two of your Pilgrims) last February. The special wording of your invitation has made me already feel part of our work helping humanity. I made very little progress without you. Fifty years ago I had great hope, but time proved I was travelling the wrong road for success, and hope was fading. I am now on the correct road with you. Proudly I state that hope has returned, hope for humanity. I thank the Louis Even Institute for this. (...)
The following are the words of Mr. William Stone that express my feelings so well that I must proudly share them with you today.
"But if we clothe the skeleton of economics with living flesh, if we humanize it, make it what it should be an examination of the circumstances of our daily lives — the reason why we are rich or poor, employed or workless, well fed or undernourished, free to choose, or regimented to serve; armed for war, or stripped for peace; in short, the why or wherefor of how we live and move and have our being, then economics becomes one of the most vital and engrossing studies that can occupy our minds and give direction to our activities.
"It is the humanistic and realistic approach that makes the new economics of Social Credit so attractive. The great fact about it is that it is something you can fervently believe in, something you can subscribe to with all your heart and mind. To embrace Social Credit is a personal economic conversion that marks the beginning of a new life.
"Tom Jones and Bill Smith are unaware that they have to put up with many things that should be unnecessary, things like uncertainty of employment, low standards of living, fear of the future, bad housing, inferior food and clothing, the recurring threat of depressions and wars, lack of holidays, recreation, education and culture for themselves and their family.
"All these ills are due to an economic system that is not functioning properly. They are not inevitable, and they can be prevented, and they can be cured. Orthodox economists deny this, and assert that the trouble of Tom Jones and Bill Smith are due to economic laws that cannot be changed, this contention cannot be upheld; there are no such things as immutable economic laws.
"What are so-called conventions and practices are being constantly outmoded by the march of events and the tempo of progress."
Again I quote from William Stone:
"It is too many-sided a subject to define in a phrase, and perhaps we can arrive at a clearer meaning of Social Credit if we listen to Major Douglas's own statement of the objective that he and his followers are striving to reach. He says:
"What are we aiming at? What are we trying to get? We are endeavouring to bring to birth a new civilization. We are doing something that really extends far beyond the confines of a change in the existing financial system. We are hoping, by various means, chiefly financial, to enable the human community to step out of one type of civilization into another type of civilization, and the first and basic requirement, as we see it, of that is absolute economic security."
William Stone says: "This statement of Douglas emphasizes three things:
"If we are to obtain an adequate conception of Social Credit, I think we should just look at it from the aspects indicated in this statement. Firstly, it is a philosophy, viewed from the angle of economics, if you like, but still a philosophy. Secondly, it is a sweeping reform aiming at a new civilization. And thirdly, it is a policy, 'a policy of a philosophy' involving a technique, to make this objective."
The correctness of the philosophy of Social Credit will determine the correctness of the objectives and the action taken under the heading of policy. Policy must be constantly checked against philosophy.
This week, I plan to present three lectures:
1. Change the ownership of money. We can bring to birth a new civilization with absolute economic security for every individual.
2. Flow and cancellation of the money supply will substantially progress discussion beyond money creation. How money functions in industry.
3. Naturally follows lecture 2: The present economic fault! Societies present system of banking and economics is generating total prices faster than it is generating total incomes.
Today I want to speak to you about the change of ownership of money. I want to concentrate on that area, confining myself to ownership and on how that ownership has a serious effect on society and on industry and commerce, Government-social spending, etc. Our goal then in changing the ownership of money is to bring to birth this new civilization with absolute economic security for every individual.
All governments at present are thwarted from implementing their policies by an all-embracing wall of financial restraints. They are bound by a money system which will inevitably dictate restraints upon their best endeavours. But the most significant thing that may be said of that powerful and restrictive money system is that it was devised by man, and it can be modernized, changed, by man.
This address deals with the root cause of our economic problems, the cause of poverty and the numerous social problems in the world (inflation, debt, interest rates). This paper advocates a very simple reform of our financial system — a small step that will result in a fairer society where goals will be achievable.
All campaigners for social justice must campaign to demand the Government to change the ownership of money, to take away the delegated right of private-banking financiers to be the creators, owners, and managers of the nation's money supply, to remove that right by simple legislation, and to grant that right to an independent national monetary authority, independent of both politicians and private-banking financiers, thereby conferring the right of creation, ownership, and management of the money supply to the nation, Government, and the people of our nation.
Here is the key, the secret to improving social services for health, education, familylife improvement, for old-age pensioners, etc. etc. Here lies the key to lowering interest costs charged on family homes, interest costs on our production and distribution sectors, on all goods and services. By attacking the problem at its source – the birthplace and creation of our nation's money supply - by applying controls at the beginning of the pipeline, we can eliminate internal inflation and debt-servicing problems.
Most people believe that a government authority is the creator of our money supply. It should be, but that is not the case! To illustrate the validity of this statement, I refer you to the accompanying booklet entitled "Money Facts", an official printing of the Government of the United States, compiled by a sub-committee on domestic finance, a committee on banking and currency, House of Representatives, 88th Congress, 2nd Session, September 21, 1964. This is my authority!
Question 1 and 2 on page 1 deals with the right and delegation of that right to create money. Question 3 deals with the importance of that right. I will quote the first two questions.
Question 1: "Who has the right to create money in the United States?" Answer: - "Under the Constitution, it is the right and duty of Congress to create money. It is left entirely to Congress."
Question 2: "To whom has Congress delegated this money-creating right?" Answer: "To the banking system, that is, to the Federal Reserve System and the commercial banks of the country."
As the banking system of all the Western World money systems are identical with that of the United States, except in nomenclature, i.e. central banks — USA (Federal Reserve System); New Zealand (Reserve Bank); United Kingdom (Bank of England); Canada (Bank of Canada), it is appropriate to substitute local terms into the text of "Money Facts".
Moving to question 33 on page 6, we find the unequivocal statement that private banks do create the money they supply in the process of making loans and buying securities.
Question: "Do private banks issue money today?"
Answer: "Yes! Although banks no longer have the right to issue notes, they can create money in the form of bank deposits when they lend money to businesses or buy securities. The important thing to remember is that when banks lend money, they do not necessarily take it from anyone else to lend. Thus they create it."
Question 41 on page 8 gives the historical development of the present system with the point being made that all money is debt, interest-bearing debt.
When money is created, it costs nothing to create. A classic example of this is Government stock (bonds and treasury bills) bought by banks. The Government prints bills and bonds, which are pieces of paper. The lenders use these Government stocks as security for Government borrowing. Banks and financial institutions tender for those stocks. The strangest thing then happens. Our Government actually volunteers to transfer ownership of those stocks — just very important pieces of paper — in exchange for loans from the bankers at the interest rates that the bankers and financiers nominated.
Again, I say that it is the bankers who dictate the price of interest for money which they create out of nothing. It seems incredible! It could make your blood run cold! It seems incredible that, in this manner, private bankers have the right to create and issue our nation's money supply out of nothing and to charge it up to us in our economy as interest-bearing debt. So we have the first step of creating interest-bearing debt and the commencement of internal inflation, the beginning of the inflationary spiral, a spiral that is devastating our economy and inhibiting our social life.
Furthermore, as all the money is created and owned by the banks, the nation, having no money of its own, can only pay the interest with other borrowed money. Nor have we anymore money of our own to repay the original debt. Thus the debt becomes unrepayable, a debt in perpetuity, compounding at whatever interest rate is set by the lenders, the creators, the banks. It is little wonder that debt serving is crippling, that we see our money devalued in our wages, salaries, and profits. And it is little wonder that we see ever-increasing prices. And with ever-increasing wages and prices, the cost of Government increases, and taxation must increase in proportion.
Our money system is a man-made system. It can easily be adjusted to enable the goods and services produced by human beings, assisted by automation, to be consumed by us all in a fair and just manner.
Our society has a general consumption problem. An adjustment must be made to modernize our mechanism of distribution, our money and incomes system. Society's solution is as simple as that!
You know and I know that there are numerous books giving evidence of poverty amidst plenty in every country in the world.
Worse still, millions of human beings are dying young or existing in abject poverty. How would you feel if you were the mother or father of those children?
Both past and present Government solutions have been: to solve the social gap by borrowing more interest-bearing debt money, mainly from bankers and financiers, and to tax more and more. Taxation has doubled and trebled over recent years. Taxation has not, and never will, cure the problem.
So this is the faulty basis of our nation's money supply. For us to understand this fact, it is our responsibility to lead a grass-roots campaign to modernize the creation and management of money.
As money increases in quantity, servicing costs increase in step, and this is reflected in increased prices, further fueling inflation. To refer again to the authority for these statements, "Money Facts", in question 131 on page 24, we find reinforcement for my argument.
Question: "Do private banks perform a service in buying Government bonds?" Answer: "No, because they create money — an obligation of Government simply to buy bonds guaranteed by the Government. There is no risk involved like there is in loans to businessmen and consumers. The banks traditional function is to lend to private borrowers and assume the risk of creditors. Their reward for buying bonds with money they create is the 'subsidized' profits they enjoy."
That statement is unequivocal and unarguable as is the answer to the following question, which asks: "What is the burden of Government bonds held by the private banking system?" The answer: "The burden is the heavy bond-interest payments, born by the taxpayers, that go to private banks, when the same amount of money could be created by an agency of the Government. Then the taxpayers would not bear this tremendous cost on Government bonds purchased with reserves given to the private bankers."
The implication of those statements are self evident. However, it is expedient here to observe that the very significant amount of tax funds, diverted to that purpose, are denied to the social systems that are forever hampered by the lack of funds. Alternatively, it is purchasing power that has been extracted from the taxpayer for, as we have seen, inappropriate and unnecessary purposes, especially for paying the needless cost of Government borrowing.
Here I must stress with all the power of my command: we are not talking about the Government's financial policies. We are talking about a system, deeply rooted in our economy, which imposes burdens and hardships which reflect themselves in undue need, suffering, crime, and violence in our society — the very things for which our society is seeking answers.
Added to this is one more unpalatable fact. As the banks create the money for the Government, they also create the money for all industry and commerce and the general private sector. Generally speaking, the business community also "borrow" their businesses finance into existence; small, medium, large businesses all of them. They pay the continuing service costs of the debt, and pass it on in prices in the process, creating more price increases. Wage and salary earners struggle to increase their income to maintain relativity. Those who cannot, the weak and the elderly, suffer the most. To support these statements, may I refer again to my authority, question 14 on page 3.
Question: "Why are interest rates so important?" Answer: "For many reasons. First, interest plays a large part in the cost of living. All business firms borrow to conduct their operations, some more than others. These include firms at every stage of production. So interest is a charge, which is added, at each link of the production chain. This is a cost, which must eventually be paid by the consumer. If the consumer does not pay it, output cannot be sustained. Thus interest rates are also a determining factor of the level of business activity." The affect is calamitous!
Why then the high levels? "Money Facts". answers thus: "The reasons have differed as the years passed. In the early years, the official reason given was that too many dollars were chasing too few goods, 'causing inflation.' In recent years, the deficit in our balance of payments was cited. High interest rates, it was argued, were necessary to keep capital at home! At all times, there has been talk of 'fighting inflation', real or imagined." In the light of that statement that society's money supply created as interest-bearing debt is the fundamental cause of inflation, it is interesting to note question 20, on page 4.
Question: "How effective is interest as an inflation fighter?" Answer: "Well, if killing the patient is considered an 'effective' treatment for the illness, then high interest is an effective anti-inflation tool. Of course, plunging the country into a deep recession will cut the labour-wage demands, and will force some business firms to make price concessions. But the cost of this is economic stagnation. And even then, prices overall will probably not fall, and they may even rise. That is in a modern economy. Just lowering the demand for goods and services somewhat will not necessarily stop the price push."
We have shown how the present system works: how bankers create money, how they add debt through interest charges, how this debt is transferred through prices, how the consumers struggle to maintain their standard of living. We now want to show, by a simple but extremely important legislative change — by Government enacting legislation to establish an independent state monetary authority to be the sole creator and issuer of our money supply — the effect it will have on our economy and our social services. The change of ownership of money at its origin, the birthplace of creation, from the private banks back to a people's independent state monetary authority, would result in a costless money supply at its source. Because the people, society, would now own and manage the nation's money supply, the requirements of Government would be met without cost.
Because this money would be owned by society, there would be no interest cost nor debt to repay. This Government allocation of society's money supply for Government spending would automatically be cancelled by the modernized banking system as consumers buy goods and services. The shops and other businesses would continue as normal to deposit their sales in their banks, and the banks would cancel it against loans, directly or indirectly, in exactly the same manner as they do today.
That it is feasible, there is no doubt. But is it morally right and financially and economically sound, even desirable that we should do it? The answer would again seem to be an unequivocal: "yes"!
On page 12 of "Money Facts", the question is asked: "If Government can issue bonds, why can't it issue money, and save the interest?" The curious wording of the answer leaves one in no doubt of the total approval of the suggestion by this prestigious committee. It reads: "A few clear-headed and firm individuals, such as Abraham Lincoln, have insisted that the Government should. The late Thomas A. Edison stated the matter this way: If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good makes the bill good also. It is absurd to say that our country can issue $30 million in bonds, and not $30 million in currency. Both are promises to pay, but one promise fattens the usurer, and the other helps the people."
Abraham Lincoln was so determined on the matter that he is on record as saying: "Government possessing the power to create and issue currency and credit, and enjoy the right to withdraw currency and credit from circulation by taxation or otherwise, need not, and should not, borrow capital at interest as a means to financing Government works and public enterprise. The Government should create, issue, and circulate all currency and credit needed to satisfy the spending power of Government and the buying power of consumers. The privilege of creating and issuing money is not only the supreme prerogative of Government, but it is the Government's greatest creative opportunity." Nothing could put the seal of approval on this presentation more forcibly, more powerfully, than those words.
To change the ownership of money at its origin, at the point of creation, must be shifted from the private banker back to a people's independent state monetary authority. That change would result in a costless supply at source. When distributed from this point, it must be free of interest and other costs. Gone would be the tendering interest charges; gone, the interest cost. Money would now be in the hands of the people who can best use it for producing goods and services, who create employment. And gone would be the added unseen cost of interest on debtor producers and distributors.
The newly-established independent state money authority, working with the statistics department and the Government Treasury, would decide, from information already available, the amount of money needed to operate a passive economy — not too much, nor too little. This is a natural scientific reality. Production, consumption, and money, the tools to make things happen, would be in harmony. There would be no need for the state monetary authority to charge interest to their distributing agents, the private trading banks, nor on the supply of money for Government services. The state money authority would lend the nation's money supply to trading banks, free of cost.
Money is a government's economic tool that is now wrongly managed and used by bankers and economists in an active manner, and should be independently managed by an independent state monetary authority in a passive manner, not too much, not too little. And when managed scientifically as explained (in lectures 2 and 3), money would become a real servant of society.
Total retail prices of goods and services, and total wages, salaries, and dividends would be kept in equilibrium using the regular flow of monthly-updating statistics, done scientifically and mathematically by the professional accountants employed by the independent state monetary authority.
Money should not be a commodity to be bought and sold as a commodity in a financial speculator's market. Money could and would become a servant to humanity. Hence, the merciless scourging of financial speculators would be a story to send to the dust bins of history!
We can bring to birth a new civilization with absolute economic security for every individual.
Henry Raynel
(Lectures 2 and 3 will be reproduced in our next issue.)
Subscribe