The word, “credit” can be used to express a number of different ideas. So it might be well at the outset to define it.
Webster’s New Twentieth Century Dictionary devotes almost one entire column in fine print to this word, but it begins with a general definition: Credit (Latin, creditum, credere, to trust, to believe) belief, faith, a reliance or resting of the mind on the truth of something said or done.
Then the dictionary goes on to give various other, more restricted meanings, most of them having to do with financial solvency and probity, ability to attract capital, notes or bills of exchange, etc.
But underlying all these variations of meaning is the sense of confidence. Whether it is question of a sermon, a commitment, a promise, deferred payments, we do not lend credence to the sermon, to the commitment, to the promise or to the promissory notes unless they inspire confidence. No confidence, no credit!
But this confidence itself must be well founded. If the foundations of this confidence prove to be feeble, then confidence is shaken. It vanishes completely if the base of the confidence proves to be illusory, if the final outcome deceives us, or if deception ensues in place of the hoped-for realizations.
Having established this general principle, let us now speak of the credit of the country in which we live — its real credit, the country’s capacity of production — leaving aside for the moment the question of financial credit.
The first Europeans came to live in North America in the 16th and 17th centuries because they had confidence that they would be able to make a living there. In other words, they gave credit to the new world.
They based this confidence upon a number of factors. There was land to be farmed, since the soil already supported vegetation. There was pure water, plenty of lakes and rivers. There was an abundance of timber. They could build their houses, start farming, raise their animals; but there was still another factor: the colonists’ belief in their ability to produce. They had not only their strong arms and their willingness, but also the skills they had acquired, skills and special training which, for the most part, had been handed down to them from previous generations, for Europe was at that time a civilized continent. Heritage counted for much then, not only in the cultural life, but also in the economy and in production itself.
Material resources, the ability to work, knowledge, skill; all of these inspire confidence, all of these are real credit.
And these are not all. There are also the factors of life in society; the division of work; the diversity of professions; some specialize in one kind of production, others in a different kind. All offer their surplus in the common market and benefit from the surplus of others, creating a collective enrichment of the sum total of production. The same number of individuals could never attain this level had they worked alone in isolation.
This factor, like the handing down of acquired knowledge, which in turn is due to life in society, gives to real credit an eminently social character. Real credit is, above all, social credit. It is, in fact, largely a common property, and this must be taken into account in deciding who has the rights to the fruits of that production which exploits this real credit.
Thanks to life in society, certain societies or communities acquire a very great real credit, for without this factor, they would repulse human habitation rather than attract it.
Take, for example, Northern Quebec. No one would dream of settling there if he had to live off the riches particular to that bit of the world. The territory abounds in iron ore, but you can’t eat or wear iron ore! Today, if there are towns springing up in this forbidding land, it is because other lands can use this iron ore, and those who dig it out and export it can get, from these other lands, all that they need in order to live decently and comfortably.
This real credit of a country grows in the measure that the knowledge and development of harnessing power increases and in the techniques of production that are perfected. It increases also with the widening and deepening of the flow of wealth amongst the groupings of the human family. These increases are also a communal attainment in which all the members of the society have a right to share, receiving dividends according to the rhythm of the flow of this wealth.
In today’s Canada, the real credit is certainly incomparably greater than was that of the Canada of 1608 when Champlain founded the first town, Quebec City. Its riches are proving to be more and more abundant. Its population, its farms, its industries are making of it a country which can produce to meet any demand, and not merely a country of potential production. Its systems of communications and its relations with other countries make it possible for it to share its production with, and share in the production of, other countries. Its schools, laboratories, institutions of all sorts, and its endless variety of services far surpasses any dream of the founding fathers.
The real credit, that confidence which a country inspires in those who live in it, or wish to live in it, is in effect its potential productive capacity. It is the degree of facility with which it can furnish the products and services required, when and where they are required, to meet the public and private needs of its population.
This capacity to produce is bound to real things: to human labor, to natural resources, to mechanical force, to inventions, to progress in science and techniques, to life in common – all of which are goods in which all citizens are co-heirs, and hence of which all should have a share in some manner.
But it is precisely the social character of these realities and the interdependence of all economic activities which necessitate a system which will order and partition the fruits of these realities.
This system is the financial system. It should have no other purpose than to make possible the mobilization of the means of production and an adequate distribution of products.
Considered as an instrument in the service of an economy, and in the measure in which it fulfills this role, the financial system is a marvelous thing which we should have to invent if it did not already exist. And the more the production must broaden its activities in order to maintain and increase the flow of its goods, the more it has need of such an instrument.
Years ago, a man who has an acre of land, a plow, a horse, and the desire to cultivate his land, has no need of this financial instrument to begin his work. His decision is sufficient.
But the industrialist who makes the plow cannot proceed without getting materials, labor, and machinery. To gather all this, his decision alone is not sufficient. Suppliers of material, transport companies, workers, hydro-electric companies, all will willingly collaborate, providing they have the means of getting compensation which will permit them to have, not necessarily a share in what will be produced (plows), but something of equivalent value which they will pick at will from the market place.
This compensation takes the form of monetary units. It is given to the supplier of materials, to the workers, the transport company, and the electric company in the form of money. Money: it is a form of figures, made of metal or paper or in the form of a check, which will permit him who presents it to obtain a corresponding quantity of produce or services, which in turn are evaluated in terms of monetary units according to established convention of that community at any point in time.
Money is not wealth. It is not work, nor material, nor a finished product. It is only a title to a certain amount of wealth, and if that wealth did not exist, this money, this symbol, would be worth nothing in the hands of him who presented it.
Money is not the productive capacity of a country. Its value is in the fact that it makes it possible to mobilize this productive capacity by transferring the title to its products to those whose collaboration is necessary in the work of production.
Money, then, is not real credit, but only a symbol of real credit. It is only financial credit, invented to allow people to order goods and services from the productive capacity of the country.
Financial credit might be said to be the button which one presses in order to set in motion the wheels of production. Or again, it is the control lever which one uses to direct production as one wishes.
And here the big question presents itself: Who will direct this lever? Who has the right to press the button? Who should possess financial credit, the key to placing production at the service of needs?
If real credit is in fact a community good, a social credit, how does it happen that the population does not have control of the button? How does it happen that the productive capacity of the country remains, in part, immobilized in the face of crying needs? How does it happen that the population is taxed and plunged into debt in order to have permission to make use of that which rightfully belongs to it?
Who should have the right to tell the productive system what it should produce to meet private needs? Public needs? How should that will be expressed? The article on the next page, “Restore to the people the control of their own wealth”, will answer this question.
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