MAJOR POINTS IN BOOKS BY MAJOR CLIFFORD H. DOUGLAS
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.
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