Social Credit by C H Douglas - Preface, Table of Contents

About the Author

Clifford Hugh Douglas was born in 1879. He was educated at Cambridge University, and was an engineer. Douglas developed a view of the role of money, and a monetary system, which he called Social Credit. He presented his ideas to the Canadian government in 1923 before the Committee of the House of Commons on Banking and Industry in 1923.

His books, including "Social Credit", influenced the Farmers Co-operative (the UFA) in Canada, to which Douglas became a financial advisor in 1927. From those beginnings, the Alberta Social Credit Party was formed in 1935, with popular educator and radio preacher William Aberhart as its leader. That party came to power and, in 1935, Major Douglas became the chief reconstruction adviser to Premier Aberhart. Differences between Douglas' views and the party's policies resulted in Douglas' resignation as advisor. Douglas published many books on his views concerning money, banking, and the globally influential and powerful. His other books include Economic Democracy (1920), The Monopoly of Credit (1931), The Use of Money (1935), and The Alberta Experiment: An Interim Survey (1937). Douglas died in 1952.

About the Book

This is the 1933 Revised version of "Social Credit", the first edition of which was published in 1924. It is an important book for inclusion at Mondo Politico for a few reasons.

First, it is difficult to find copies of this book anywhere. Students both of monetary theory and of political history should find this Mondo Politico presentation of "Social Credit" useful.

Second, many economists have rallied against the fractional reserve system of banking that prevails in the industrialized world (e.g., Irving Fisher, Lloyd Mints, Henry Simon, Murray Rothbard, Milton Friedman and most economists of the Austrian School of economics [see, for example, the Ludwig von Mises Institute]). But few, if any, other authors have explained that as productivity increases year after year, who benefits from that increased productivity is determined essentially by money and banking policy. Specifically, Douglas explains (particularly in Part 2, Chapter 2) that, if the money supply is not increased, dollars/pounds become more valuable, such that prices drop. But, if the money supply is increased just enough, the value of each dollar/pound - hence prices - can be left unchanged. Finding it desirable to keep prices unchanged in this way, Douglas then explains that, essentially, a decision has to be made about who gets the additional dollars/pounds. Under our current fractional reserve system, the banks do, by creating and lending out extra credit. Under a "social credit" system, the extra dollars would be divided up and given to all citizens in equal portions as a "dividend". His rationale: that increases in productivity - resulting as they do from innovation and technological advancement over time - are a "cultural heritage" that belongs not to banks but to all members of society. His message is clear: the citizenry are prevented from benefitting from their own cultural heritage, and this leaves them increasingly indebted to banks, and unable to reduce, over time, the portion of their lives that they spend working and simply trying to survive. Under social credit, Douglas foresees a decrease in work and an increase in leisure or, at least, the opportunity to work less if one so chooses.

Third, "Social Credit" clearly has had a major impact on the direction of politics, particularly in the Commonwealth for decades. For example, but for Douglas' works on Social Credit, Canada quite possibly would not have a Conservative Party of Canada today. Before entering politics, "Bible Bill" Aberhart opened a bible school in Alberta. The school's first pupil was one Ernest Manning. Aberhart was drawn into politics primarily after finding, in Douglas' Social Credit, what he saw to be an answer to the "poverty amidst plenty" that he saw in 1930's Alberta. Ernest Manning was at his side, spreading the Social Credit word and helping to grow the Social Credit party in Alberta. Alberta's several attempts to implement some form of Douglas Social Credit failed when the Supreme Court of Canada repeatedly held that Alberta lacked the constitutional authority to implement such monetary and banking laws: those, it held, were laws that only the federal government had the authority to make. When Aberhart died, Ernest Manning took over as premier. Owing largely to investments in the Alberta oil industry, the province received such abundant revenues that implementing any form of Social Credit mechanism was unnecessary: Social Credit lived on in Alberta (and later, in British Columbia) only as a name for what became a mainstream conservative party. Arguably due to his father's involvement in politics and his father's experience as premier of Alberta, Ernest Manning's son, Preston, later was the chief architect of one of the most quickly successful federal political parties in Canadian history, the Reform Party, which was comprised chiefly of so-called "blue tories" from the Progressive Conservative party that had lost its popularity - and most of its seats in Parliament - by the time of the federal election of 1993. Despite its meteoric rise, the Reform Party chronically found insufficient support east of Saskatchewan, Canada. In 1999, it decided, in effect, to re-unite with whatever "blue" Tories might remain in the Progressive Conservative party, but under a new party name with newly voted-upon policies: the Canadian Reform Conservative Alliance ("CA"). As of March 2002, despite the effort, the so-called CA still had not been able to gain sufficient support east of Saskatchewan to form a government. In October of 2003, the leaders of the CA and of the still quite withered PC party agreed in principle to merge the parties, effectively reuniting "blue Tories" with "red Tories" and undoing the split that had occurred when PC members left the party in the late 80's and early 90's to form the Reform Party. The memberships of the parties ratified the agreement in principle in December of 2003, and the party was registered the "Conservative Party of Canada" in January of 2004. In March of 2004, the most recent leader of the CA became the leader of the Conservative Party, leaving many to argue that the Conservative Party was just the CA with a different name. Time will tell but, arguably, none of the ride that led Canadian conservatives to split and later reunite would have happened but for the onset of the Social Credit party in the 1930s.

Finally, to this day, there remains a considerable interest in Douglas' Social Credit monetary theories, particularly in Australia, Canada and the UK and among monetary reformers the world over.

PREFACE TO REVISED EDITION

THE first edition of this book was issued in 1924 in order to correlate the financial theories, which have since become widely known under the same title, with the social, industrial, and philosophic ideals to which they are appropriate.

At the time that it first appeared (in 1924), it was generally assumed that the world was entering upon a period of increasing prosperity, and such prosperity in a material sense did accrue in the United States to an extent never previously experienced.

It will be noticed that the view that this prosperity could be of long duration was not held to be consistent with the theories of Social Credit, so long as the conditions imposed by the existing financial system remained unchanged, and it was suggested that such prosperity would be followed by a crisis of the first magnitude. The same views were expressed in a long cross-examination before the select Committee of the Canadian House of Commons on Banking and Industry in 1923, and have unfortunately proved to be only too well founded. The pressure of the world crisis, and the fear that it may develop into forms threatening the extinction of civilisation, have brought home to large numbers of people in every country the instant necessity of finding an explanation of the paradox of poverty amidst plenty, with its accompaniment of social and political stress and strain, as well as the urgency of a remedy.

In every country of the world, and more particularly in the British Dominions overseas, the financial system has been brought to the Bar of Public Opinion as the chief factor in world unrest, and there is little doubt that the jury has confirmed the Verdict somewhat rhetorically expressed by Mr. William Jennings Bryan in his famous election speech: "The money power preys upon the nation in times of peace, and conspires against it in times of adversity. It is more despotic than monarchy, more insolent than autocracy, more selfish than bureaucracy. It denounces, as public enemies, all who question its methods, or throw light upon its crimes. It can only be overthrown by the awakened conscience of the nation."

The present edition of the book has been completely revised, and new matter has been added to amplify the meaning it was intended to convey, but the main thesis remains substantially unaltered as a result of the confirmation which events have supplied as to its essential soundness.

C. H. DOUGLAS.

TEMPLE,
.... May 1933.

PREFACE TO THE FIRST EDITION

THERE is an ancient saying (which will bear consideration in these days of change and unrest) that the devil is God upside down. A consideration of many of the injurious and tyrannical practices which obtain support in Great Britain and America under the cloak of such words as justice and Democracy, and the object lesson provided by Russia, and possibly by Italy and Spain as the consequences of their extension, may serve to emphasise the necessity for clear thinking in this matter.

In the following pages an endeavour has been made to indicate the general lines which, it would appear, are essential in dealing not only with the concrete problems, but the perverted psychology which, in combination, threaten civilisation.

C. H. DOUGLAS.

TEMPLE, ....January 1924

Contents

PART I
CHAPTER

I. STATIC AND DYNAMIC SOCIOLOGY 4
II. INDUSTRY - GOVERNMENT OR SERVICE? 14
III. THE RELATION OF THE GROUP TO THE INDIVIDUAL 24
IV. FREEDOM OF ASSOCIATION 34
V. SABOTAGE AND THE CULTURAL HERITAGE 44
VI. THE THEORY OF THE SUPREME STATE 52
VII. THE NATURE OF MONEY 60
VIII. THE COMING OF POWER 66

PART II

I. THE WORKING OF THE MONEY SYSTEM 78
II. THE NATURE OF PRICE 94
III. UNEMPLOYMENT - OR LEISURE? 108
IV. POVERTY AMIDST PLENTY 120
V. WHY TAXATION IS HEAVY 130
VI. TAXATION AND SERVITUDE 146
VII. THE BID FOR WORLD POWER 156

PART III

I. THE STRATEGY OF REFORM 168
II. SOUND MONEY 180
III. THE CRITICAL MOMENT 196

APPENDIX - THE DRAFT SCHEME FOR SCOTLAND

Go to Chapter 1 of  Part One

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