In 1958 the Montreal division of the Young Chamber of Commerce requested a succinct explanation of Social Credit theory for presentation to their members. More than half a century later are not Mr. Louis Even’s principles and proposals prescient to our own times?
The Christmas Octave holiday period is a designated season for both giving thanks for our many blessings and for adult discussion as to what we as Christian citizens are called to do in helping improve the well being of our brothers and sisters. Below is a re-presentation of the Social Credit initiative; why not take this time to discuss it amongst yourselves?
by Louis Even
Social Credit proposes the establishment of an economic and social system in which each individual can, without prejudice to his freedom of choices, be guaranteed absolute security of at least the necessities of life.
This GOAL is hindered by some fundamental obstacles created by the present financial system:
1. Presently, ail the money required by the expansion of the economy, is done through the issue of interest bearing debt. Repayments bring these debts and the money created through them to extinction in the banking system. The interest charged imposes total repayments that are greater than the total money issued, so to keep the economy rolling, other loans at interest are also continually required. The negative effects are twofold: prices must now also include the interest charges ; and corporate, consumer and public debts that collectively are completely impossible to ever pay off, they continue to grow.
2. There is an inherent disparity of both the “amount” and the “when”, with the purchasing power distributed to individuals (salaries, dividends) during the life cycle of production of these same goods. There is no mechanism in the present financial system to correct this gap in the volume and the rate of flow of consumer money.
3. Sources of energy, inventions, progress in production techniques and process, mechanization, motorization, and automation all increase the flow of goods, while at the same time, diminishing the need for human labour. Yet, the present system continues to tie income to employment, instead of tying it to the flow of goods and making every citizen — whether employed or not — benefit from these fruits of progress. Improvements and innovations in production are the result of an ever growing body of knowledge passed on from generation to generation, as common inheritance. This common inheritance is a real capital; it is even the dominating factor in today’s abundant production. But the present mode of distribution and sharing out of wealth does not take this factor into account.
Basic principles for correction
The corrective actions proposed by Social Credit are based on two principles, expressed by the Scottish engineer Clifford Hugh Douglas, the founder of the Social Credit school:
1. Financial credit must exactly reflect Real credit.
Real credit is the physical capacity to produce and deliver the goods needed. Financial credit — money in ail its forms — must therefore reflect this real credit, that is to say, be issued as production costs are occurred , and be withdrawn from circulation according to the rates of consumption of goods and depreciation of productive assets. All that is physically feasible to produce in answer to the public and private needs of the population must be made possible financially.
2. The real cost of production is consumption.
This truth can be easily understood if one leaves aside the financial aspect to only consider the real aspects. The real cost of an article is the total amount of energy and materials consumed during the process of its manufacture.
So if, on the one hand, the total production in the country, both public and private, in a year, is $32 billion, and if, on the other hand, over the same period, the total consumption in the country is $24 billion, one must conclude that the real cost of production for that year is not $32 billion, but actually $24 billion, or three-fourths of the bookkeeping price. So if ail of this production is to reach the consumers (which is actually the sole goal of production), the consumers must be able to buy ail of this production at three-fourths of its bookkeeping price; this can be achieved by granting the consumers a 25% general discount, while compensating the retailers and producers for this discount with another source of money, so they may recover ail of their financial costs.
Social Credit therefore proposes, as regards financial supply of money :
1. The establishment of a National Credit Office — which could well be the Bank of Canada — whose role would be to put money supply in conformity with the realities of production and consumption.
2. This National Credit Office would issue, without interest, the money/credits needed to finance new production, and these credits/money would be withdrawn from circulation as this production is consumed.
3. The bookkeeping (total costs plus profit %) price of products would continue to be set by the producers themselves; but a general discount is granted to the consumers upon every retail sale, according to the calculation explained above; the National Credit Office branches compensate the difference to the retailers, upon presentation of the sale receipts.
4. A periodical (weekly or monthly) dividend is given, without condition, to every citizen, whether employed or not, as a co-owner of the biggest factor in today’s production. This dividend should be large enough so that, combined with the discount on prices, it would allow every individual to enjoy at least the necessities of life. This dividend would increase even as total national production increased while requiring less human labour. Progress, instead of creating the related unemployment problems and misery of today’s financial system, would create leisure and freedom for non-industrial activities, while maintaining sufficient money supply to buy all production ordered..
For its implementation
This new mode of distribution and sharing out of the wealth expropriates nobody and does not nationalize the means of production, and it is both logical and humane. But it is so different from present methods in use that it cannot be implemented without first having been studied and accepted by the citizens themselves. And, let us be very, very frank, it also clashes head-on with the money dictatorship. Neither an election nor a change of government can bring about these conditions.
One cannot expect the establishment of Social Credit before a sufficient force is created among the people to demand its implementation. And this force will not be created until a sufficient number of individual citizens know and understand both the power and the principles. That is why the Pilgrims of Saint Michael support no candidates in elections, oppose all smokescreens that increases division among citizens when the point is to unite forces, and intensively keep up their work of education, informing citizens of the principles and benefits to everyone of Social Credit.