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The financial enigma resolved — A debt-money system by Louis Even “The Money Myth Exploded” was one of the first articles of Louis Even, and remains one of the most popular to explain how money is created as a debt by private banks. It is available in the form of an 8-page leaflet (tabloid format) that you can order from the “Michael” office, in several languages: English, French, Spanish, Italian, German, Polish, Portuguese. 1. Shipwreck survivors
Hour after long hour their eyes searched the horizon. Would some
passing ship sight them? Would their make-shift raft finds its
way to some friendly shore?
Suddenly a cry rang out: “Land! Look! Over there, in the
direction the waves are carrying us!”
And as the vague silhouette proved itself to be, in fact, the
outline of a shore, the figures on the raft danced with joy.
They were five. There was Frank, the carpenter, big and
energetic. It was he who had first cried, “Land!”.
Then Paul, a farmer. You can see him, front and left in the
picture, on his knees, one hand against the floor, the other
gripping the mast of the raft.
Next is Jim, an animal breeder; he's the one in the striped
pants, kneeling and gazing in the direction of land.
Then there is Harry, an agriculturist, a little on the stout
side, seated on a trunk salvaged from the wreck. And finally Tom, a prospector and a mineralogist; he is the merry fellow standing in the rear of the picture with his hand on the carpenter's shoulder.
2. A providential island
When they had dried and warmed themselves their first impulse
was to explore this little island on to which they had been
cast, far from civilization.
A
quick survey was sufficient to raise their spirit. The island
was not a barren rock. True enough, they were the only men on it
at the moment. But judging from the herds of semi-domesticated
animals they encountered, there must have been men here at some
time before them. Jim, the animal breeder, was sure he could
completely domesticate them and put them to good service.
Harry discovered some fruit trees which, if properly tended,
would give good harvests.
Most important were the large stands of timber embracing many
types of wood. Frank, without too much difficulty, would be able
to build houses for the little community.
As for Tom, the prospector, well, the rock formations of the
island showed signs of rich mineral deposits. Lacking the tools,
Tom still felt his ingenuity and initiative could produce metals
from the ores. So each could serve the common good with his special talent. All agreed to call the place Salvation Island. All gave thanks to Providence for the reasonably happy ending to what could have been stark tragedy.
3. True wealth
The carpenter builds houses and makes furniture. At first they
find their food where they can. But soon the fields are tilled
and seeded, and the farmer has his crops.
As season followed season this island, this heritage of the five
men, Salvation Island, became richer and richer.
Its wealth was not that of gold or of paper bank notes, but one
of true value; a wealth of food and clothing and shelter, of all
the things to meet human needs.
Each man worked at his own trade. Whatever surpluses he might
have of his own produce, he exchanged for the surplus products
of the others.
Life wasn't always as smooth and complete as they could have
wished it to be. They lacked many of the things to which they
had been accustomed in civilization. But their lot could have
been a great deal worse.
Besides, all had experienced the depression in Canada. They
still remembered the empty bellies side by side with stores
crammed with food.
At least, on Salvation Island, they weren't forced to see the
things they needed rot before their eyes. Taxes were unknown
here. Nor did they go in constant fear of seizure by the
bailiff. They worked hard but at least they could enjoy the
fruits of their toil. So they developed the island, thanking God and hoping for the day of reunion with their families, still in possession of life and health, those two greatest of blessings. 4. A serious inconvenience
Under the simple economic system which had developed, one thing
was beginning to bother then more and more; they had no form of
money. Barter, the direct exchange of goods for goods, had its
drawbacks. The products to be exchanged were not always at hand
when a trade was discussed. For example, wood delivered to the
farmer in winter could not be paid for in potatoes until six
months later.
Sometimes one man might have an article of considerable size
which he wished to exchange for a number of smaller articles
produced by different men at different times.
All this complicated business and laid a heavy burden on the
memory. With a monetary system, however, each one could sell his
products to the others for money. With this money he could buy
from the others the things he wanted, when he wished and when
they were available.
It was agreed that a system of money would indeed be very
convenient. But none of them knew how to set up such a system.
They knew how to produce true wealth - goods. But how to produce
money, the symbol of this wealth, was something quite beyond
them. They were ignorant of the origin of money, and needing it
they didn't know how to produce it. Certainly, many men of
education would have been in the same boat; all our governments
were in that predicament during the ten years prior to the war.
The only thing the country lacked at that time was money, and
the governments apparently didn't know what to do to get it. 5. Arrival of a refugee
They learned that he was the only survivor of a wreck. His name: Oliver. Delighted to have a new companion, they provided him with the best that they had, and they took him on an inspection tour of the colony. “Even though we're lost and cut off from the rest of the world,” they told him, “we haven't too much to complain about. The earth and the forest are good to us. We lack only one thing — money. That would make it easier for us to exchange our products.” “Well, you can thank Providence,” replied Oliver, “because I am a banker, and in no time at all, I'll set up a system of money guaranteed to satisfy you. Then you'll have everything that people in civilization have.” A banker!... A BANKER!... An angel coming down out of the clouds couldn't have inspired more reverence and respect in our men. For, after all, are we not accustomed, we people in civilization, to genuflect before bankers, those men who control the lifeblood of finance? 6. Civilization's god
“I shall, like every other banker, carry out to complete satisfaction my task of forging the community's prosperity.” “Mr. Oliver, we're going to build you a house that will be in keeping with your dignity as a banker. But in the meantime, do you mind if we lodge you in the building that we use for our get-togethers?” “That will suit me, my friends. But first of all, unload the boat. There's paper and a printing press, complete with ink and type, and there's a little barrel which I exhort you to treat with the greatest care.” They unloaded everything. The small barrel aroused intense curiosity in our good fellows. “This barrel,” Oliver announced, “contains a treasure beyond dreams. It is full of... gold!” Full of gold! The five all but swooned. The god of civilization here on Salvation Island! The yellow god, always hidden, yet terrible in its power, whose presence or absence or slightest caprice could decide the very fate of all the civilized nations! “Gold! Mr. Oliver, you are indeed a great banker!” “Oh august majesty! Oh honorable Oliver! Great high priest of the god, gold! Accept our humble homage, and receive our oaths of fidelity!” “Yes, my friends, gold enough for a continent. But gold is not for circulation. Gold must be hidden. Gold is the soul of healthy money, and the soul is always invisible. But I'll explain all that when you receive your first supply of money.” 7. The secret burial
“How much money will you need to begin with in order to facilitate trading?” They looked at one another, then deferentially towards the banker. After a bit of calculation, and with the advice of the kindly financier, they decided that $200 each would do. The men parted, exchanging enthusiastic comments. And in spite of the late hour, they spent most of the night lying awake, their imaginations excited by the picture of gold. It was morning before they slept.
Then he went to work with his little press to turn out a thousand $1 bills. Watching the clean new banknotes come from his press, the refugee turned banker thought to himself: “My! How simple it is to make money. All its value comes from the products it will buy. Without produce, these bills are worthless. My five naive customers don't realize that. They actually think that this new money derives its value from gold! Their very ignorance makes me their master.” And as evening drew on, the five came to Oliver — on the run. 8. Who owns the new money?
“Before distributing the money,” said the banker, “I would like your attention. “Now, the basis of all money is gold. And the gold stored away in the vault of my bank is my gold. Consequently, the money is my money. Oh! Don't look so discouraged. I'm going to lend you this money, and you're going to use it as you see fit. However, you'll have to pay interest. Considering that money is scarce here, I don't think 8% is unreasonable.” “Oh, that's quite reasonable, Mr. Oliver.” “One last point, my friends. Business is business, even between pals. Before you get the money, each of you is going to sign a paper. By it you will bind yourselves to pay both interest and capital under penalty of confiscation of property by me. Oh! This is a mere formality. Your property is of no interest to me. I'm satisfied with money. And I feel sure that I'll get my money, and that you'll keep your property.” “That makes sense, Mr. Oliver. We're going to work harder than ever in order to pay you back.” “That's the spirit. And any time you have a problem, you come and see me. Your banker is your best friend. Now here's two hundred dollars for each one of you.” And our five brave fellows went away, their hands full of dollar bills, their heads swimming with the ecstasy of having money. 9. A problem in arithmetic
And the banker was always greeted with unfailing respect and gratitude. But now, let's see... Why does Tom, the prospector, look so grave as he sits busily figuring with a pencil and paper? It is because Tom, like the others, has signed an agreement to repay Oliver, in one year's time, the $200 plus $16 interest. But Tom has only a few dollars in his pocket, and the date of payment is near. For a long time he had wrestled with this problem from his own personal point of view, without success. Finally, he looked at it from the angle of the little community as a whole. “Taking into consideration everyone on the island as a whole,” he mused, “are we capable of meeting our obligations? Oliver turned out a total of $1000. He's asking in return $1080. But even if we bring him every dollar bill on the island, we'll still be $80 short. Nobody made the extra $80. We turn out produce, not dollar bills. So Oliver can take over the entire island, since all the inhabitants together can't pay him back the total amount of the capital and the interest. “Even if a few, without any thought for the others, were able to do so, those others would fall. And the turn of the first spared would come eventually. The banker will have everything. We'd better hold a meeting right away and decide what to do about it.” Tom, with his figures in his hand, had no difficulty in proving the situation. All agreed that they had been duped by the kindly banker. They decided upon a meeting at Oliver's. 10. The benevolent banker
“How can we pay you $1080 when there is only $1000 on the entire island?” “That's the interest, my friends. Has not your rate of production increased?” “Sure, but the money hasn't. And it's money you're asking for, not our products. You are the only one who can make money. You've made only $1000, and yet you ask $1080. That's an impossibility!” “Now listen, fellows. Bankers, for the greater good of the community, always adapt themselves to the conditions of the times. I'm going to require only the interest. Only $80. You will go on holding the capital.” “Bless you, Mr. Oliver! Are you going to cancel the $200 each of us owes you?” “Oh no! I'm sorry, but a banker never cancels a debt. You still owe me all the money you borrowed. But you'll pay me, each year, only the interest. If you meet the interest payments faithfully each year, I won't push you for the capital. Maybe some won't be able to repay even the interest because of the money changing hands among you. Well, organize yourselves like a nation. Set up a system of money contributions, what we call taxes. Those who have more money will be taxed more; the poor will pay less. See to it that you bring me, in one lump sum, the total of the amount of interest, and I'll be satisfied. And your little nation will thrive.” So our boys left, somewhat pacified, but still dubious. 11. Oliver exults
“Business is good. These boys are good workers, but stupid. Their ignorance and naivety is my strength. They ask for money, and I give them the chains of bondage. They give me flowers, and I pick their pockets. “True enough, they could mutiny and throw me into the sea. But pshaw! I have their signatures. They're honest. They'll honor their pledges. Honest, hardworking people were put into this world to serve the Financiers. “Oh great Mammon! I feel your banking genius coursing through my entire being! Oh, illustrious master! How right you were when you said: `Give me control of a nation's money, and I won't mind who makes its laws.' I am the master of Salvation Island because I control its money. “My soul is drunk with enthusiasm and ambition. I feel I could rule the universe. What I, Oliver, have done here, I can do throughout the entire world. Oh! If only I could get off this island! I know how I could govern the world without wearing a crown. “My supreme delight would be to instill my philosophy in the minds of those who lead society: bankers, industrialists, politicians, reformers, teachers, journalists — all would be my servants. The masses are content to live in slavery when the elite from among them are constituted to be their overseers.” 12. The cost of living unbearable
Those who paid the most in taxes complained against those who paid less. They raised the prices of their goods to compensate for this loss. The unfortunate poor who paid no taxes lamented the high cost of living, and bought less. If one took a salaried job with another, he was continually demanding increases in salary in order to meet the mounting cost of living. Morale was low. The joy went out of living. No one took an interest in his work. Why should he? Produce sold poorly. When they would make a sale, they had to pay taxes to Oliver. They went without things. It was a real crisis. And they accused one another of wanting in charity, and of being the cause of the high cost of living. One day, Harry, sitting in his orchard, pondered over the situation. He finally arrived at the conclusion that this “progress”, born of a refugee's monetary system, had spoiled everything on the island. Unquestionably, all five had their faults, but Oliver's system seemed to have been specifically designed to bring out the worst in human nature. Harry decided to demonstrate this to his friends and to unite them for action. He started with Jim, who was not hard to convince. “I'm no genius,” he said, “but for a long time now there's been a bad smell about this banker's system.” One by one they came to the same conclusion, and they ended up by deciding to have another conference with Oliver. 13. Enslaved by Oliver
“Money's scarce on the island, fellow, because you take it away from us! We pay you and pay you, and still we owe you as much as at the beginning. We work our heads off! We've the finest land possible, and yet we're worse off than before the day of your arrival. Debts! Debts! Up to our necks in debts!” “Oh! Now boys, be reasonable! Your affairs are booming, and it's thanks to me. A good banking system is a country's best asset. But if it is to work beneficially, you must have faith in the banker. Come to me as you would to a father... Is it more money that you want? Very well. My barrel of gold is good for many thousands of dollars more. See, I'm going to mortgage your latest acquisitions, and lend you another thousand dollars right now.” “So! Now our debt goes up to $2000! We are going to have twice as much interest to pay for the rest of our lives!” “Well, yes — but I'll lend you more whenever the value of your property increases. And you'll never pay anything but the interest. You'll lump all your debts into one — what we call a consolidated debt. And you can add to the debt, year after year.” “And raise the taxes, year after year?” “Obviously. But your revenues also increase every year.” “So then, the more the country develops each year because of our labor, the more the public debt increases!” “Why, of course! Just as in your country – or in any other part of the civilized world for that matter. The degree of a country's civilization is always gauged by the size of its debt to the bankers.” 14. The wolf devours the lambs
“Gentlemen, all sound money is based on gold, and it comes from the banks in the form of debts. The national debt is a good thing. It keeps men from becoming too satisfied. It subjugates governments to the supreme and ultimate wisdom, that which is incarnate in bankers. As a banker, I am the torch of civilization here on your little island. I will dictate your politics and regulate your standard of living.” “Mr. Oliver, we're simply uneducated folks, but we don't want that kind of civilization here. We'll not borrow another cent off of you. Sound money or not, we don't want any further transactions with you.” “Gentlemen, I deeply regret this very ill-advised decision of yours. But if you break with me, remember, I have your signatures. Repay me everything at once — capital and interest.” “But that's impossible, sir. Even if we give you all the money on the island, we still won't be square with you.” “I can't help that. Did you or did you not sign? Yes? Very well. “By virtue of the sanctity of contracts, I hereby seize your mortgaged property which was what you agreed to at the time you were so happy to have my help. If you don't want to serve willingly the supreme authority of money, then you'll obey by force. You'll continue to exploit the island, but in my interests and under my conditions. Now, get out! You'll get your orders from me tomorrow.” 15. Control of the press
Oliver had observed that of the five islanders, two were conservatives and three were liberals. That much had evolved from their evening conversations, especially after they had fallen into slavery. And between the conservatives and those who were liberals, there was a constant friction. On occasions, Harry, the most neutral of the five, considering that all had the same needs and aspirations, had suggested the union of the people to put pressure on the authorities. Such a union, Oliver could not tolerate; it would mean the end of his rule. No dictator, financial or otherwise, could stand before a people united and educated. Consequently, Oliver set himself to foment, as much as possible, political strife between them. The refugee put his press to work, turning out two weekly newspapers, “The Sun”, for the Liberals, and “The Star”, for the Conservatives. The general tenor of “The Sun” was: “If you are no longer master, it is because of those traitorous Conservatives who have sold out to big business.” That of “The Star”: “The ruinous state of business and the national debt can be traced directly to the political responsibility of those unmentionable Liberals.” 16. A priceless bit of floatsam
He opened the trunk. Among the articles within, a sort of album caught his eye: “The First Year of Social Credit”. Between the covers he found the first of a Social Credit publication. Curious, Tom sat down and began to read the volume. His interest grew; his face lit up. “Well, just look at this!” he cried out loud. “This is something we should have known a long time ago.” “Money gets its value, not from gold, but from the products which that money buys. “Simply put, money should be a sort of accountancy, credits passing from one account to another according to purchases and sales. The sum total of money will depend upon the sum total of production. “Each time production increases, there is a corresponding increase in the amount of money. Never at any time should interest be paid on new money. Progress is marked, not by an increase in the public debt, but by the issuance of an equal dividend to each individual... Prices are adjusted to the general purchasing power by a coefficient of prices. Social Credit...” But Tom could no longer contain himself. He got up and set off at a run, the book in his hands, to share this glorious discovery with his four comrades. 17. Money — elementary accounting
“This,” he said, “is what we can do without waiting for a banker and his keg of gold, nor without underwriting a debt. “I open an account in the name of each one of you. In the right hand column are the credits which increase your account; to the left are the debits which subtract from your account. “Each wants $200 to begin with. Very well. We write $200 to the credit of each. Each immediately has $200. “Frank buys some goods from Paul for $10. I deduct $10 from Frank, leaving him $190. I add $10 to Paul, and he now has $210. “Jim buys from Paul to the amount of $8. I deduct from Jim $8, leaving him $192. Paul now has $218. “Paul buys wood from Frank for $15. I deduct $15 from Paul, leaving $203. I add $15 to Frank's account, and it goes back to $205. “And so we continue; from one account to another, in the same fashion that paper banknotes go from one man's pocket to another's. “If someone needs money to expand production, we issue him the necessary amount of new credit. Once he has sold his products, he repays the sum to the credit fund. The same with public works; paid for by new credits. “Likewise, each one's account is periodically increased, but without taking credits from anyone, in order that all may benefit from the progress society makes. That's the national dividend. In this fashion, money becomes an instrument of service.” 18. The banker's despair
“Dear sir! Without the slightest necessity you have plunged us into debt and exploited us. We don't need you anymore to run our money system. From now on, we'll have all the money we need without gold, debts, nor thieves. We are establishing, at once, the system of Social Credit on the island. The national dividend is going to replace the national debt. “If you insist on being repaid, we can repay you all the money you gave us. But not a cent more. You cannot lay claim to that which you have not made.” Oliver was in despair. His empire was crumbling. His dreams shattered. What could he do? Arguments would be futile. The five were now Social Crediters: money and credit were now not more mysterious to them than they were to Oliver. “Oh!” said Oliver. “These men have been won to Social Credit! Their doctrine will spread far more quickly than mine. Should I beg forgiveness? Become one of them? I, a financier and a banker? Never! Rather, I shall try and put as much distance between them and me as I can!” 19. The fraud unmasked
An inventory was taken; the boat, the oars, the little press, and the famous barrel of gold. Oliver had to reveal where he had hidden the gold. Our boys hoisted it from the hole with considerably less respect than the day they had unloaded it from the boat. Social Credit had taught them to despise gold. The prospector, who was helping to lift the barrel, found it surprisingly light for gold. If the barrel was full, he told the others, there was something in it besides gold. The impetuous Frank didn't waste a moment; a blow of the axe, and the contents of the barrel was exposed. Gold? Not so much as a grain of it! Just rocks — plain, worthless rocks! Our men couldn't get over the shock. “Don't tell us that he could bamboozle us to this extent!” “Were we such muttonheads as to go into raptures over the mere mention of gold?” “Did we mortgage all of our possessions for a few pieces of paper based on a few pounds of rocks? It's a robbery, compounded with lies!” “To think that we sulked and almost hated one another all because of such a fraud! That devil!” Furious, Frank raised his axe. In great haste, the banker has already taken flight towards the forest. 20. Farewell to Salvation Island
After
the opening of the barrel, and the revelation of his duplicity, nothing
further was heard of Oliver. Shortly after, a ship, crusing off the normal navigation route, noticed signs of life on this uncharted island, and cast anchor a short distance offshore. The men learned that the ship was en route to America. So they decided to take with them what they could carry, and return to the United States. Above all, they made sure to take back with them the album, “The First Year of Social Credit”, which had proven to be their salvation from the hands of the financier, Oliver, and which had illumined their minds with an inextinguishable light. All five solemnly promised to get in touch with the management of this paper, once back in America, and to become devoted and zealous apostles of the Cause of Social Credit in their country. You like what you have just read? It's important to make it known to others! You can order copies of this 8-page leaflet “The Money Myth Exploded”, or even better, you can subscribe to the “Michael” Journal, from which this article is taken, to get the latest news about the developments of their Movement.
From parable to reality A debt-money system
The
debt-money system introduced by Oliver into the Salvation Island made
the little community sink into financial debt in proportion as it
developed and enriched the island by its own work.
This is
exactly what happens in our civilized countries, is it not?
Canada of
today is certainly richer, in real wealth, than it was 50, 100 years
ago, or in the pioneers' age. But compare the national debt, the sum of
all public debts of Canada today with this sum 50, 100 years, three
centuries ago!
Yet the
Canadians themselves produced this enrichment by their labour and their
know-how. Then why should they be collectively indebted for the result
of their own activities?
For
example, consider the schools, the municipal aqueducts, the bridges,
roads and other fabrics of public character. Who build them all?
Builders of the country. Who supply them with the needed materials?
Manufacturers of the country. And how come they can be employed in
public works ? Because there are other kinds of workers who produce
food, clothes, shoes, who supply all the things and services required
for the wants of the constructors and manufacturers.
Thus the
whole population of Canada by its work of different kinds, produce all
those developments. If we must obtain goods from abroad, we send other
goods abroad in counterpart of them.
Now, what
do you see? Everywhere the citizens are taxed to pay those schools,
those hospitals, those bridges, roads and other public works. The
Canadians, as a collectivity, are thus compelled to pay what they
produce as a collectivity. You pay much more than the double price
And this
is not all. The population is made to pay more than the price of what it
produced. Their own production — a real enrichment — has become for the
Canadians a debt burdened with interest. When years add to years, the
sum of the interests can equal or even exceed the amount of the debt
imposed by the system.
It
happens that the population may have to pay two, three times the cost of
what its members produced.
In
addition to the public debts, there are industrial debts, also loaded
with interests. They compel the manufacturers and contractors to
increase their prices beyond the cost of production, in order to
reimburse the capital and the interests; otherwise they would become
insolvent, bankrupt.
Both
public and industrial debts are paid, plus interest, by the Canadian
population, to the financial system. We pay taxes for the public debts,
and a surplus of price for the industrial debts. Prices are swelling
while the purse is flattened by taxes. A tyrannical system
These and
many other facts are indicative of a money system, a financial system
which controls instead of being a servant; a system to dominate the
people — as Oliver dominated the fellows of the Island before they
rebelled.
And if
the money masters refuse to lend, or if they make their conditions
unbearable for the public bodies or for the manufacturers, what happens?
It happens that the public bodies give up many projects, no matter how
urgent; and the manufacturers give up development or production plans
that would answer to real needs of Canadians. This is a cause of
unemployment. And those who still have something, or who earn a salary,
must be taxed to prevent the unemployed from starving completely.
Can you
imagine a more tyrannical system, with so baneful effects on every
Canadian? A bar to distribution
And this
is not all. Not only the money system indebts the producers, or
paralyzes the production it refuses to finance, but it is a wretched
financial tool for the distribution of the goods.
Notwithstanding the fact that stores, shops and warehouses are full, and
that everything is at hand for an even greater production, the
distribution of the goods already produced is stinted.
You can
obtain only what you can pay. In face of an abundant production, there
should be an abundance of purchasing power, of money in the wallets of
the people. Such is not the fact. The price of the finished goods is
always higher than the amount of money distributed as purchasing power
in the course of their production. This is inherent to the accountancy
of the present system of finance which has no mechanism to fill the gap.
The
capacity to pay is not made to equal the capacity to produce. Finance
and reality do not work at the same rate. Reality means an abundance of
goods easy to produce. Finance means a lacking money hard to obtain.
To correct what is wicked
Thus the
present money system is truly an oppressive one, when it should be a
system of service.
This does
not mean that we must do away with it, but we must correct it. The
application of the financial principles known as Social Credit would
make this correction magnificently. (Do not confound Social Credit with
the political party which usurps that name while pursuing other ends and
practising an adverse policy.) The principles of Social Credit, when applied, would make the money system a servant instead of a master. They were discovered and enunciated by a genius, C. H. Douglas (deceased in 1952). His first writings on this subject were published in 1918.
Not a Political Party
The first
idea that comes to the mind of too many people living in Canada, when
they hear the words Social Credit, is the idea of a political party. But
no. Social Credit is not a party, although there was a party by that
name. Social Credit is no more a party than Christianity is a party,
even if, in some countries you find political parties with such names as
Christian Democrats, Christian Party, Christian Center, etc. A political
party exists purposely to seek power, to be or strive to be the group
that rules the country. Social Credit works in the very opposite way. Social Credit will set the individual free; it will place the individual in a situation where he can himself be the ruler of his own life. Social Credit will thus distribute power to individuals not the power to boss their neighbours, but the power to order the goods they want from the potential production of their country. Social Credit. Exact. Logical. Humane
Social
Credit considers realities. It refuses to be hypnotized by the halo with
which finance has been surrounded.
The
economic realities are, on one hand, the production; not only the
existing production, but the production immediately possible, the
production capacity; and they are, on the other hand, the human needs.
Social
Credit gives priority to the realities over the financial signs that are
not realities, that must simply represent, and faithfully represent, the
realities.
Real credit and financial credit
This is
why Social Credit makes a distinction between real credit (a reality)
and financial credit (a representation).
The word
"credit" comes from the Latin word "credere" and bears the idea of
confidence. Even in everyday language, to give credit to someone, is it
not to indicate that we have confidence in him?
Social
Credit calls real credit of a country what really gives confidence in
that country, confidence that one can live there without too much
difficulty. The real credit of a country is its production capacity. It
is its degree of possibility to produce and deliver the goods to the
needs.
And
Social Credit affirms that financial credit must be the exact
representation of the real credit.
It is
therefore the production capacity that must determine the movement of
finance. It is absolutely not for finance to command, paralyze or limit
the production capacity.
This is
why Social Credit demands the establishment of a credit office that
would keep an account of national (or provincial) credit. Any
production, those of consumption goods and those of capital goods, would
then be entered as an increase of wealth. And all consumptions (or
destruction, or depreciation) would then be entered as a decrease of
wealth. The net increase in wealth would be production minus
consumption.
With very
few and passing exceptions where a country would live at the expense of
another, the production of a country surpasses its consumption. The
country is becoming richer. It is therefore absurd to say that it is
going into debt. The public debt is an absurdity.
And when
a country is getting richer, its citizens must certainly draw advantage
of it. This is what Social Credit recognizes, when speaking of a
dividend to all, instead of debts and taxes on everyone.
Money without inflation
The
present system is subject to inflation. Inflation means rising prices.
When
money cannot begin without, as today, creating a debt, it is necessary
that ways be found to draw from the public more money than there was put
into circulation, so as to refund the debt plus the interest of the
debt. Whence taxes, that are added to prices or that diminish the
purchasing power before the prices. Whence also increases of prices by
industrials, who must draw from the public only the money to pay for the
products, but also for the financial charges, the interests on the
industrial loans.
Social
Credit would suppress this cancer, this tumor upon the prices, since the
production would be an increase of wealth, and not an indebtedness.
And,
Social Credit would lower the prices to be paid by the buyers, since it
would have the community pay only what it consumes, and not all what it
produces.
If, as an
example, in the whole country, the consumption was only equal to three
quarters of the production, the buyers would only pay, on any article
bought by them, only three quarters of the accounting price. The Credit
Office would take care of compensating the retailer so that he may
recuperate all of his accounting price.
This
means that the amounts of money included in the prices, but not having
reached the hands of the public, or directed towards saving or
investment, are not applied to the purchase of the production, would be
by the organism of credit replaced to the benefit of those who are in
need of the products. This would prevent the accumulation of products in
the face of needs. And the mechanism to do it would have the advantage
of operating with a decrease in prices, therefore in eliminating all
possible inflation.
A dividend to everyone
The
periodic dividend to everyone, recommended by Social Credit, is also in
conformity with the economic realities.
The
modern production, in fact, is more and more the result of applied
science, of inventions, of improvements in production techniques, and of
all these things that constitute a common good: an heritage transmitted
and increased from one generation to the other. The modern production is
less and less the result of individual labour.
Hoping to
distribute the production only through the reward of human labour, is
therefore contrary to the facts. It is at the same time impossible, for
the money distributed as recompense for work can never buy the
production that contains other elements in its prices.
Seeking
salary increases with decreases in human labour, is also to change the
meaning of the word salary. It is no more a recompense for work; it is
the inclusion in the salary of the hired persons of what should be a
dividend for all, since it is the fruit of progress and not of labour.
This deviation is a hindrance to the desired goal, since in becoming a
salary instead of remaining a dividend, these additional amounts go into
the prices.
Social
Credit would distribute the dividend to everyone, directly, without
charging it to industry. It would truly raise everyone's purchasing
power.
Besides
being the recognition of a very productive community capital, this
social dividend would at the same time be an excellent way of satisfying
the primitive destination of the earthly goods. "Earth and its riches
were created for all men" (Pius XII). This is totally ignored by the
present economic regime in its financial technique of distribution.
Social
Credit would thus directly establish an adequate repartition of the
goods of nature and of industry, instead of leaving the task to the
surgery of taxation, that amputates and grafts continually, without ever
healing the disease.
A share
to each and everyone, guaranteed by the dividend to each and everyone
from birth till death; and this share should be sufficient to at least
insure what is necessary for life. Louis EVEN |
So
Tom became the teacher. He taught the others what he had learned from
that God-sent Social Credit publication. 
