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
     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
     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
     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

                               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
     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
     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
           "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"
     p62  Because of the increasing gravity of the mathematical
defect, the banking system cumulatively takes control of the economic
     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
     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
     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
          Any effective remedy must traverse the banking system's
claim to the ownership of the financial credit extended to that
     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
        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)

     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
     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
     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.

     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
     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
     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
     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
     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
John C. Turmel, B. Eng.

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