PROPOSITION: Major Douglas would have approved
of the design of LETS
as a Social Credit system.
SOCIAL CREDIT
p10 They try
to exhibit unemployment as a symptom of industrial
breakdown rather than a sign of economic
progress.
p16 The difficulties
with which the modern employer is confronted
are not difficulties of production but
difficulties in respect to the
terms of the contract to which he, his
employees and the purchasing
public are all parties.
p18 We can produce
now goods and services at a rate considerably
greater than the possible rate of consumption.
p19 Industrial
countries cannot buy all their own production with
the wages, salaries and dividends available,
hence, must find export
markets for their goods.
p24 Is there
a manufacturer in this country not clamoring to turn
out more goods if someone will give the
orders for them?
p25 In spite
of the enormous potential productivity, a large
percentage of the population cannot get
at them. Why can't they
effect their demand? Money is kept in
short supply.
p37 Where one
party to controversy can only obtain the means of
subsistence by working while the other
party can continue for a long
time by drawing cheques on institutions
which can create their
deposits, the right to strike, to refrain
from working, amounts to the
right to commit suicide.
p48 So long as
bankers hold the practical monopoly on money, the
visible government is a obliged to take
its orders and shape financial
policy in accordance with their instructions.
p62 The proper
function of a money system is to furnish
information necessary to direct production
and distribution. It should
be an order, not a reward, system.
A demand for
a railway ticket furnishes railway management a
perfect indication of the capacity required.
It makes no more sense to
argue that because there are only one
hundred tickets printed, only
one hundred may travel while the other
seats remain unused than to say
that because there is insufficient money,
many desirable things can't
be done. The proper business of the ticket
department and bank is to
facilitate the distribution of the product
in accordance with the
public's desire and to transmit that desire
to those operating the
industry. They have no valid right to
any voice in deciding either the
qualifications of travelers or conditions
under which they travel.
p80 The gap between
demand and supply has to do with the
financial ticket system, not with the
ability of the industrial system
to meet the calls made on it.
p82 Financial
purchasing power is not merely unsatisfactorily
distributed, it is that in its visible
form, it is insufficient. Yet
it is assumed that the collective sum
of wages, salaries and dividends
distributed in respect to the prices of
articles produced are
available as purchasing power. This is
impossible given the propensity
to consume is less than one.
A + B THEOREM
If now, there
exists insufficient money to buy all goods at
prices of costs, and any portion of that
money is applied to form the
payment for the production of new goods,
then that money so applied
forms the cost hence prices of goods and
immediately, there is
disparity between total costs and the
amount of money in the world
which has remained the same as before.
p86 When a man
grows a ton of potatoes, the purchasing power of a
ton of potatoes should be created to maintain
the linear
correspondence. Yet, nine tenths of the
immediately available
purchasing power arises out of bank loans
and the purchasing power
they create has no relation to production
or consumption. A bank loan
is the only way to get purchasing power.
p88 The refusal
to create fresh money is sufficient to paralyze
production and consumption. The repayment
of bank loans, unaccompanied
by the destruction of the article produced
as a result of its
creation, immobilizes an equivalent body
of price values so that
again, the disparity between goods available
and purchasing power
available is increased.
p94 Since the
collective prices of goods cannot be met by money
available through wages, salaries, dividends,
they must be a)
exported, b) destroyed, c) bought with
purchasing power from another
period.
p95 The situation
would be obviously and immediately destructive
if the banks did not provide a source
of purchasing power in the form
of bank loans and credits which has no
relation to wages, salaries and
dividends paid for past production.
p96 All our problems
point out that this stupendous power of
creating and destroying the major portion
of purchasing power should
not be vested in the hands of profit-oriented
bankers hands. Through
this power, they've masked a good many
of the many defects of the
financial system.
p111 Unemployment
is put in the foreground as being one of the
chief sources of expense contributing
to the burden of taxation hence
generating hostility against its unfortunate
recipients.
p112 Under conditions
which exist at present, they will never
seriously compete for steady employment
again.
p125 Is the aim
of the industrial system to produce employment or
production and distribution?
p131 Since money
is nothing but effective demand, the cooperative
industrial system can't exist without
a satisfactory form of effective
demand. A highly trained mechanic in the
cooperative industrial system
producing one part of an intricate machine
must cast his product in
the common stock and share money from
the combined product. The
control of the money system means control
of civilized humanity.
p134 The productive
rate per man-hour has increased enormously
yet not only haven't prices fallen, they
are rising. The repayment of
loans early destroys deposits and thus,
effective demand.
p135 In order
to maintain a connection between finance and
production, finance has to follow production,
not, as is, the
production following finance. During wars,
the artificial character of
finance is revealed by the extension of
production to its utmost
intrinsic limits unfettered by financial
restrictions.
p150 The main
tendency of the present system is to concentrate
the control of credit in the hands of
banks and insurance companies.
Great banks hesitate to distribute their
true profits for fear of
attracting too much attention. Yet, corner
sites, granite and marble
buildings, represent their undistributed
profits. They are interested
in consolidating the power and importance
of banking and use credit
power to get that result. That's why there
are so many beautiful
branch banks and so many cheap houses.
You don't see too much granite
and marble in the average house.
p158 The science
of finance and economics is absurd.
p169 It is sound
to ask the electorate if they want a road from A
to B but to submit the engineering details
of construction would be
absurd.
p170 Classical
policy is to avail any discussion on the policy
itself and direct public attention to
a profitless wrangle in regard
to methods.
p175 There is
a small number of individuals whose interest are
indissolubly wedded to the present economic
and social system because
it places them in positions of enormous
power. The power monopoly must
be attacked. Taxation enormously strengthens
its power. It can, by
bribes, always retain a majority. We can
only defeat money power with
money power.
p180 The first
policy of an industrial system is to deliver the
goods with a minimum of expenditure.
p182 Finance
is the technique of credit. It is not for a lack of
technical ability that we stand on the
brink of collapse, but for lack
of effective demand. An individual is
divorced from credit that is
his.
p184 It's the
business of producers to place before the public
the achievements possible. It's the business
of the public to define
quality and priority.
p185 Create the
Corporation of Canada Ltd. so that each is an
equal shareholder of stock carrying with
it a dividend which will
purchase the whole of the products in
excess of those required for the
maintenance of the producers and whose
appreciation in capital value
(dividend earning capacity) is a direct
function of the appreciation
of the real credit of the community.
p187 In the future
world, a workable financial system will be
more of an accounting and order system
than an exchange system.
p198 When the
moment comes when we may master the mighty economic
and social machine, or it will master
us, a small impetus from a body
of men who know what to do and how to
do it may make the difference
between another retreat to the dark ages
or emergence into the full
light of day. The stage is set for the
greatest victory which the
human individual will achieve over the
forces which beset him to his
fall.
ECONOMIC DEMOCRACY
p10 The particular
environment in which the fittest are surviving
is unsatisfactory.
p16 Before the
war, the whole world was apparently over producing
in spite of the patent contradiction of
the large element of the
population on the verge of starvation
p45 Centralizing
economic power has no redeeming feature
p51 There is
fundamental inequality of opportunity. No relation
between merit and reward
p72 Loan credit
controlled by the banker, financier and
industrialist is in the interest of production
with a financial
objective, not in the interest of pleasing
the consumer.
p77 There is
a stupendous waste of effort involved in the
intricacies of finance and bookkeeping
that's quite useless in
increasing of the amenities of life.
p87 No interest
should hold up distribution on purely artificial
grounds.
p88 Decentralized
economic power is necessary.
p101 The individual
possesses only one inalienable property,
potential effort over a period of time.
(power x time which is equal
to work) The real unit of world
currency is the time energy unit.
p104 The failure
of effective demand under existing circumstances
has prevented overproduction.
p108 Payment
by financial manipulation other than that earned by
personal endeavor is anti-social.
p111 We desire
to produce a definite program of necessities with
a minimum of time energy units.
p115 Credit should
be the power to draw on the collective
potential capacity to do work and available
to any private enterprise
ready to do work deemed in the interest
of the community.
p117 proved ability
to render special service will be the
qualification for facilities to render
service.
p119 What is
called credit by bankers is administrated primarily
for private profit whereas it is and should
be communal property.
p122 Real capital
is the potential capacity to do work.
The creative energy of mankind has been subjected to
financial fetters having no relation to
real demands of existence and
therefore the allocation of tasks has
been placed in unsuitable hands.
Real credit is the measure of the effective reserve of the
community's power and energy and drafts
on this reserve should be
accounted for by a financial system which
reflects that fact.
p124 The state
should lend, not borrow, so the capitalist usurps
the function of the state.
p128 under social
credit, there is an immediate fall in prices
and a rise in purchasing power of money
as it maximizes expansion of
personal control of initiative and minimizes
then eliminate economic
domination.
p144 It's been
shown that the basis of power is economic and the
present system designed to concentrate
power.
p147 Distribution
should be a function of work done, not of work
in progress, ie employment.
THE MONOPOLY OF CREDIT
p4 The
economists' failure to make any noticeable contribution
to the solution of the problems within
their special field can be
explained by the incompatibility of any
effective solution with the
credit monopoly which is at once their
employer and critic.
p5 The
money system seems never blamed. Human nature is assumed
at fault. Rather a change of head
than a change of heart.
p6 inexorable
economic laws are the statement of results which
accrue from the operation of a purely
artificial money and accounting
system.
"Unrestrained by the financial system, the resources of
modern production would be sufficient
to provide plenty for all at the
expense of less and less labour."
p18 How
banks create money at a stroke of a pen: The
institution writes a draft to itself for
the sum involved which the
general public honours by being willing
to provide goods and services
in exchange for it."
p23 The
financial system is seen to be, as it is, in opposition
to every other interest."
p24 Real
credit is the rate at which products can be delivered
when and where required. Financial
credit is the rate at which money
can be similarly delivered.
p33 As
machines replace people, an increasing proportion of
goods must be unsold to us.
p34 An
insignificant amount of financing is done by savings.
Most is done by banks through drafts upon
themselves that they charge
for. If a workman doesn't spend a part
of his wages, some goods remain
unsold because wages equal costs. If they
are now reinvested and are
used to wages of others through each other
through investment more
goods are produced with costs paid for
by the same money. Hence, due
to this process, there exist goods that
are not represented by the
purchasing power.
p35 Where
any payment of money appears twice or more in series
production, then the ultimate price of
the product is increased by the
amount of that payment multiplied by the
number times of its
appearance without any equivalent increase
of purchasing power.
p44 Money
value of second hand goods should be in existence
until the goods have physically disappeared.
p49 The
situation which money, not production,is chronically
insufficient, must transfer control to
the institutions that have
acquired the money making monopoly.
p50 It
is the gap between purchasing power and prices that
explains the anomaly between the half
idle production system and a
half starving population. It is
due to the defective accounting
system called finance.
p57 In
war, nations draw on their real credit "ways and means"
account.
p62 Because
of the increasing gravity of the mathematical
defect, the banking system cumulatively
takes control of the economic
system.
p64 Contribution
to wealth made by the financial system is
negligible with respect to scientists,
engineers and organizers.
Social unrest, international friction,
can be traced directly to it.
p66 The
credit of sectional and private institutions drawn on
the national wealth is higher than that
of the government itself.
p67 During
the war, no question of money was allowed to enter
into the desirability of physical action.
It demonstrates that the
idea that a physical policy cannot be
carried out unless there is
sufficient money, is an illusion fostered
for interested purposes.
Now, the considerable sums of purchasing power required to
finance industrial undertakings cannot
be obtained without access to
the mechanism of public credit which has
come under the control of the
private banking system.
p85 If
the problems could be kept upon the plane of pure reason,
it would still would be a large problem,
but simplicity itself.
On the one hand, we have increasing capacity to produce
goods; on the other hand, we have an immense
population not only
unable to buy goods from shops that are
eager to sell but are by the
miscalled unemployment problem,
prevented from producing still
further goods. This demonstrates
that the money system is the
bottleneck which separates production
and consumption.
p93 There
is something in the banking system and its operation
which produces a constitutional inability
to look at the industrial
system as anything but a financial system.
To a banker, the
satisfactory conditions of industry are
those which make banking run
smoothly. Big banking profits are
inefficient considering the trivial
nature of the function.
p94 The
translation of this commercial struggle into a military
contest is merely a question time and
opportunity.
War: Douglas's
technical definition of war is "any action taken
to impose your will upon an enemy or to
prevent him imposing his will
upon you."
More energy is spent to modify the methods of war than the
motives of war. The seeds of war
are alike in every village.
Increasing unemployment can only end in
war.
p97 Capturing
markets is economic war and economic war has
always resulted in military war.
p98 This
attempt to capture the trade is the primary irritant to
military war.
p99 If
one of the village's grocers captures all the business,
the others suffer. Poverty and economic
security submits human nature
to the greatest strain. What is
it that presents wealth from being
distributed? The poverty amidst
plenty has been a crisis of glut, not
scarcity.
p100 We
now know that full employment is not necessary to
produce the wealth we require. It
is lack of money in our hands and
not lack of goods that make men poor.
The cure for poverty and war
can be found in the simple rectification
of money system.
p103 We
need only to recognize the public nature of the monetary
system but not admitted by bankers.
p107 The
control of credit is the perfect mechanism for the
control of industrial activity.
p108 The
power to inaugurate and modernize the plant of industry
in the best interests of the community
must, of necessity, be
entrusted to technically capable individuals.
p109 Unemployment,
if it is to be a release, it must not be
accompanied by economic penalization.
If it is to be a misfortune,
then every effort should be directed to
restraining the abilities of
those engineers who will make not two
but two hundred blades of grass
grow where one grew before.
p110 We
are working towards the leisure state where business
will cease to be a major interest in life.
p111 our
capital is the knowledge which is the cumulative result
of the effort not only of the present
generation but of pioneers and
inventors of the past.
p112 the
financial system is simply an accounting system; a
reflection in figures of the state of
affairs alleged to exist. Our
budget is not required to balance since
our wealth is always
increasing.
p115 This
immense, almost impotent, power wielded by the
financial organization must be responsible
for the present situation.
The efforts of those in control of financial
policy are primarily
concerned with making the world safe for
the bankers rather than
making the world safe.
p120 Political
democracy without economic democracy is dynamite.
No modern economic system can be based
on rewards and punishment. If
civilization is not to disappear, bankers
as presently understood will
be replaced. It will be just as
easy to inaugurate a financial system
which will meet all the necessities of
modern civilization as to
introduce piecemeal reforms.
A financial systems is pure arithmetic.
Compromise in arithmetic is out of place.
p124 The fundamental
defect of the financial system is
mathematical and not political.
The existing financial system is not
a correct reflection of economic fact
and is misleading and
restrictive.
Any effective remedy must traverse the banking system's
claim to the ownership of the financial
credit extended to that
industry.
p138 "Every
bank loan creates a deposit and a repayment of every
bank loan destroys a deposit.
Therefore D=deposit,
L=loans, C=cash on hand, K=capital. Assets
= loans + cash. Liabilities = deposits
+ capital. So he says L+D=D+K
and dL/dt+dC/dt=dD/dt+dK/dt but dK/dt=0.
Assuming cash
is fixed, dLdt=dD/dt, therefore, loans = deposits.
It might be misleading
to describe this ingenious process as
wholesale counterfeiting since the state
has resigned its sovereign
right over its own credit.
p143 The
persistence of the idea that monetary saving has a
physical counterpart in physical accumulation
will exercise the
attention of historians for years to come.
p144 Any
saving means that a proportion of goods must remain
within the credit area and are in the
economic sense, wasted. The
appearance of the same sum of money in
a fresh set of prices implies
chronic insufficiency of fresh purchasing
power.
p145 Industry
can operate without money, money cannot operate
without industry.
p146 The
real basis of credit is the producing and consuming
capacity of the community, not savings.
p147 At
present, the whole of the goods and services produced
are the potential property of the financial
system. The credit now
claimed by the banking system is really
ours.
p154 There
is reason to bring a financial system under review
since is is not operating satisfactorily.
p155 People
want goods optimized; bankers want money optimized.
p157 Credits
represent 92% of money in circulation.
It is obvious that the rate of flow of purchasing power
should equal the rate of generation of
prices.
The existing financial system increasingly mortgages the
future in order to sell existent goods.
The defect is capable of adjustment. Reverting to the
physical realities of the productive system,
the true cost of
production is the consumption of all production
over an equivalent
period of time.
p167 A
considerable increase in the total purchasing power is
necessary to obtain a sufficient effective
demand upon the
possibilities of the modern industrial
system.
Strength, unaccompanied by a motive for aggression, is a
factor for making peace. A people
willing to trade but not forced by
unemployment to fight for trade, is best.
Brotherhood would so affect
the motives of other nations as to prevent
them from making war upon
us. Bankers dislike war only less than
they dislike any change in a
financial system of which they appear
to be completely satisfied.
THE ALBERTA EXPERIMENT
p18 In 1929,
the banks demanded the return of money which existed
only as entries in their ledgers.
p77 You cannot
have too much industrial effort.
p95 I do not
believe that financial power, if seriously
challenged, is anything like so great
as it is popularly supposed to
be.
The best protection against black magic is not to believe.
p97 The money
changers will be cast out of the Temple and it will
be impossible to starve in the midst of
plenty.
p129 Such credit
to be interest-free and non-callable.
p146 Banks would
be paid for services performed.
p193 The Alberta
experiment pursued a policy of capitulation to
orthodox finance under the label of a
Social Credit government.
(I think this was an unfair criticism.
All of Aberhart's monetary
legislation was stopped by the Supreme
Court of Canada in Ottawa. He
had no choice but to capitulate in his
frontal assault. He missed the
end run. JCT)
THE BRIEF FOR THE PROSECUTION
p10 The economic
and political fortunes of mankind may not be so
much at the mercy of inexorable law as
the outcome of manipulation by
small groups who know what they are doing.
p11 Policy is
crystallized along the lines of subservience of
debtor to the credit.
p25 Finance always
controls policy; political power has to make
terms with economic power.
p28 Manufacture
and farmer are under complete control of the
banker who can liquidate them at will
without notice.
At the end of October 1929, New York banks, without notice,
called in almost all overdrafts and increased
rates from 3% to 30%.
Borrowers threw securities on the market
to pay but there was no
buyers. The banks had it all. p30
Businesses were separated into two
classes. Those supported by overdrafts
and those closed down.
Elimination of competition was the primary
objective. In 1932,
attacks on the banking system, as a system,
a credit monopoly, were
increasing. Roosevelt's first action
was financial. Close the banks.
p32 The fatal
weakness of the banks is its need to borrow for the
purpose of lending.
p35 weakness
of democracy is the existence of financial
oligarchies. p37 Bankers had done well
in World War 1 and wanted World
War ll.
p43 "Banks
create the means of payment out of nothing. (Theory
and practice of banking" by H.D. Mcleod.
"The amount of dollars in circulation varies with bank
policy. Every loan creates a deposit,
repayment destroys a deposit.
Every security purchase creates a deposit,
the sale destroys a
deposit." Reginald McKenna, Governor
of the Bank Of England.
p43 Banks
made fantastic profits via war finance.
p42 Banks
took control of industry.
industries were departments of banking controlled by debt.
p49 Gold
is a bad system because it is not representative of
production possibilities or consumption
necessities.
p54 Public
is trained to believe life is becoming more
expensive. Most social services are provided
via taxation due to the
inability to buy what is physically obtainable.
p55 Under
existing financial methods, there is no relation
between wealth and money.
Money is created by banks out of nothing.
Money kept in short supply deludes people into thinking
wealth is in short supply.
Keeping the less fortunate short of money ensures bankers
their profits.
p56 The
purpose of an economic system is not to provide jobs but
to maximize goods and services with minimal
work.
p57 Private
enterprise is perverted through the financial
system.
p58 Savings
are miscalled capital.
p67 In
the face of wider knowledge of the nature and functions
of money, banker's money will be eliminated.
Politicians present the bribe to the electorate at the
expense of the minority in such a way
to get a majority. This must be
altered since, while a minority of opinion
is not necessarily right, a
right opinion on a novel problem begins
with a minority of one. To the
greatest possible extent, the will of
all individuals should prevail
over their own affairs.
p70 So
long as men pursue agriculture for its own sake, there is
no danger, but when land comes mere property
possessing only
commercial interest, the efficiency of
the land is reduced. Only
commitment of its care of those best qualified
for the trust increases
efficiency.
p83 Economic
phenomena of depressions were intended by some, yet
could have been avoided.
The national wealth is a tangible consequence of past
production. The national credit
should be the availability to produce
new wealth.
THESE PRESENT DISCONTENTS
AND THE LABOUR PARTY AND SOCIAL CREDIT
Why are men working
hard for comparatively long hours, with
marvelous tools, and almost unlimited
mechanical energy at our
disposal, seem yet powerless to achieve
even elementary economic
security.
The re-identification
of the real credit with financial credit is
the vital issue.
The state should
lend, not borrow, purchasing power.
I can't believe
that LETSers can read this stuff by one of the
great original theoreticians of the LETSystem
principle and not
acknowledge his contribution. Before anyone
should accept that Douglas
has been discredited by mainstream economists,
they should consider
just how his writings affected the creation
of the LETSystem.
How did Major
C.H. Douglas in the 1920s have an input to the
original design of the LETSystem in the
1980s? That's because when
Linton needed help with the LETSystem,
I was there to help because of
what Douglas had taught me. So there are
three engineers who have
shared input into the LETSystem. Clifford
Douglas, me and Michael
Linton.
Consider the
titles:
1) "Monopoly
of Credit" which titles the problem quite clearly as
compared with the workings of the LETSystem
where all members are
allowed to issue their own credit and
thus eliminate any monopoly of
credit;
2) "These Present
Discontents" caused by the monopoly of credit;
3) "Economic
Democracy" which suggests that when everyone creates
their own credit and present that demand
to the production industry,
they will be voting for and directing
production with their money and
choose to purchase tractors instead of
tanks.
4) "Social Credit"
which identifies the solution to the anti-
social monopoly of credit;
5) "Brief for
the Prosecution" which says it's not accidental.
What do you say,
Michael? After reading his stuff, can you tell
me he doesn't sound like us. Is it fair
that the first engineer to
accurately elucidate the problem to steer
me into backing you should
go unacknowledged?
You'll even note
that he's the first one to liken being
unemployment due to lack of money as empty
trains due to lack of
tickets.
I think adding
your acknowledgment of his contribution would be
of great use to the growth of the interest-free
credit movement as a
whole. All those people who acknowledge
Douglas's analysis of our
present discontents would be ready supporters
of the LETSystem.
With planetary
deterioration accelerating at a frightening pace,
it's imperative that LETSers show all
those monetary reform groups
that Greendollars are the right monetary
reform and absorb those new
members.
John C. Turmel, B. Eng.