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al proposition. Douglas, a very hard-headed and This monetary organization could very easily be
down-to-earth engineer, studied the question from the Bank of Canada adapted to this end, or the char-
every angle, looking at the problem, as it were, from tered banks acting as the agents of society.
the viewpoint of an engineer, disregarding the flum- Upon the presentation of sales slips showing
mery of all the old and usless formulas which scho- the discount granted the customers, the organiza-
lastic economists love to hold up to the public. That tion would grant to the merchant the total amount
was than a century ago. (Douglas’s first writings were of the discount. This is just the rëverse of the sales
published in 1918.) Had his proposal been adopted at tax, where the merchant takes the money from the
that time, we should not today be floundering about customer and gives it to the government.
in seemingly incurable and growing inflation; nor for
that matter, would we be afflicted with a great deal These credits granted to merchants would be
of other economic nonsense whose only effect is to based upon the same foundation as are the cred-
cause misery to incalculable multitudes. its created and loaned to borrowers by the banks,
What is this proposal of Social Credit? It con- namely, the capacity of the country to produce,
which capacity is national wealth, and not something
sists of establishing two prices: 1) the accounting owned by the banks. It is a base without which all the
price; 2) the discounted and compensated price. money in the world would be worth exactly noth-
The purchaser pays only the second. ing; but it is itself of value to no one as long as there
The introduction of a double price would not be is no financial credit to make it available to society.
something new. Everyone at one time or another has And the best proof of this is that restriction of credit
seen this price ticket: “Regulår price $80.00; spe- decreases production.
cial price for this sale – $64.00.” The regular price of But what about inflation? Will not all these cred-
$80.00 is the accounting price. The special sale price its, freely distributed, tend to aggravate rather than
of $64.00 is the discounted price. So the discount is subdue inflation?
here $16.00, or 20% of the accounting price.
Well, the method proposed by Social Credit also You cannot have inflation and deflation at one
makes use of the double price, but this practice is car- and the same time in the same medium. Credits
which are issued to deflate prices cannot at the same
ried to refinement and perfection in that the discount time inflate them.
will be general, that it will be applied to all products,
that the percentage will be the same for all, and that It is a common error to call every increase of the
the merchant will be compensated for the discount. amount of money in circulation inflation. You can
In other words, the seller gets the accounting price have inflation when the issuing of credits or money
while the buyer pays only the discounted price. brings with it an increase in prices. This happens
This general discount, which is usually called when the issuance of credit in the form of interest-
by the Social Crediters the national discount, would laden loans by the chartered banks: the interest is the
factor causing inflation. But an issuance of a credit,
vary according to the state of the nation’s econom- which is made upon condition that prices be lowered,
ic health, but it would apply, without distinction, to is not a factor involving inflation, but deflation.
every retail house or organization.
The question now arises: by whom and how is Another objection: Is the wholesaler not likely to
the seller to be compensated for the discount, if he is increase his accounting price since he is sure of get-
to realize the accounting price? And how can this be ting it back thanks to the discount, which of course,
done without causing inflation? will be greater?
In the first place, competition will continue to
An appropriate monetary organization play its role in the matter of price as well as of qual-
Let us state right off that the setting of a discount ity. The buyer isn’t going there where the prices are
rate for the country and the compensation of the re- higher. And if there is no sale of goods, there is no
tailer will be the function of şome monetary organiza- discount and no compensation.
tion established by the government, but free of gov- Secondly, an increase in purchasing power,
ernment intervention in the exercise of its functions; it which in this fashion reaches the consumer with-
would determine the rate of discount mathematically, out having passed through production, does not in
according to the statistics compiled on production any way affect the price which must go back to the
and consumption. In other words, without any inter- manufacturer or producer. Why should the price go
ference from politicians or private interests, it would up? The difficulty in understanding this resides pre-
operate, in principle, somewhat after the fashion of cisely in the fact that today all money entering into
our courts, where judges, appointed by the govern- circulation must pass through industry, hence must
ment, render judgements according to laws which appear in the price, the accounting price.
they have not legislated, according to the proofs es-
tablished by facts, of which they are not authors. Thirdly, if, in spite of competition, there should u

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