Chapter 17 — The National Credit
is very nice to say that each man, woman, and child, as a member of an
organized society, is entitled to the benefits of association. It is
also exact to point out that these benefits must guarantee at least the
bare necessities of life to everybody, from the cradle to the grave, in
a world which overflows with so much wealth that its biggest problem is
to dispose of this wealth.
we have seen that the practical expression of the guarantee of the bare
necessities of life is, in the modern distributive economy, the
assurance of a sufficient periodical purchasing power to get the minimum
of necessary goods for the maintenance of life.
purchasing power is presented in two ways: a direct dividend in money,
and the lowering of the retail prices of products at the time of their
purchase by the ultimate consumer.
both cases, the National Credit Office needs a source to draw from:
where to draw from to distribute the dividends to all citizens; where to
draw from to compensate the retailers for the price deductions decreed
in favour of the buyers.
source rests in the national credit.
kinds of credit
idea of credit is synonymous with the idea of confidence. One gives
credit to someone only if one has confidence in him.
confidence rests on something, on a foundation. And this object of
confidence can be varied.
the weather forecasts can make me confident that tomorrow will be a
beautiful day. My friend's character can make me confident that he will
be loyal to me. My studies make me confident of my success in such and
such an exam.
all this, there is no question of money. It is confidence regarding
moreover, I am a retailer, and I sell to a client who promises to pay me
in three months' time, my confidence is influenced by my client's future
capacity to pay. I give him credit, because I am confident that he will
find money, and that he will bring it to me in three months' time. This
confidence regards finance.
Social Crediters distinguish between real credit and financial credit.
the French of the seventeenth century came to settle on the shores of
the St. Lawrence River, in what was later known as Canada, they did not
move without having confidence that they would be able to live in this
country. Their confidence rested on the capacity attributed to the New
World of being able to provide the necessary things of life. It was the
New World's real credit.
settler who goes to settle in Northern Quebec has confidence in that
area. He believes that Northern Quebec's forest and soil will allow him
to live and raise a family. It is Northern Quebec's real credit.
doctor's competence gives confidence to the patient who consults him. It
is the doctor's real credit.
credit springs from the capacity to produce things or services answering
real credit is Canada's ability to produce and deliver goods and
services, when and where required.
credit grows with the development of the country's productive capacity.
The difference between Canada today and the Canada inhabited only by the
Indians, four centuries ago, marks the growth of Canada's real credit
during the course of these four centuries.
credit is the country's wealth expressed in possible goods and services.
credit is the country's wealth expressed in money.
credit is the capacity to supply money, when and where required.
retailer's credit given to his client is financial credit. The retailer
is confident of being paid according to set terms.
lender's credit given to a borrower is financial credit. The lender is
confident that he will be paid back according to set terms.
real credit directly concerns things, existing or easily realizable
goods, financial credit is about money, which is expected to be present
politicians talk about the province's good credit, they talk about
financial credit, about the confidence that money lenders have in the
province's capacity to repay. However, the province's real credit stays
the same, whether the bankers be welcoming or stern.
finance having to be at the service of realities, financial credit must
relate to real credit.
this is not the case. Thus, in 1930, Canada had not lost its real
credit, its capacity to produce, and yet it lost its capacity to supply
money where it was required.
is the separation, the divorce, between real credit and financial
credit, that falsifies economic life.
credit is reliable: it is the conjoint work of Providence, men's work,
progress from applied science. Financial credit reflects all the sudden
turns; it depends on the banks' action, and the banks' action, pursuing
the bankers' profits more than the good of the people, is, besides,
submitted to influences of international order, by no means in keeping
with the facts of production, nor the needs of consumption. The
1930-1940 Depression was a crisis of financial order, on an
flawed expression in money of real credit
all loans by the banks are based on real credit. It is the capacity to
produce and deliver salable goods which make the borrower a reliable
subject for the banker.
loan from the banks, inscribed to the borrower's credit, as we have seen
it, serves as money. It is banking credit, based on real credit.
credit, or bookkeeping money, is the banker's conversion of the
borrower's real credit into money. If it is a loan to the Government, it
is the conversion of the country's real credit into money.
conversion of real credit into money is necessary. But, the conversion
thus made by the banks includes a fundamental flaw. By an inconceivable
privilege, banks convert the real credit of other people into money, and
declare themselves the owners of the money thus created, which they lend
to other originators of real credit by getting them into debt.
this conversion of real credit creates temporary money, which must be
withdrawn and destroyed after a term fixed in advance, even when the
real credit, which serves it as a base, continues to exist.
the case of an industrialist who borrows to erect a factory. He gets a
credit to be repaid, let us say, during the course of five years. The
factory which he builds increases the country's real credit. It is
therefore proper that money, which must be the reflection of the
country's wealth, increases at the same time.
the industrialist must repay the loan during the course of five years.
He will therefore apply to the prices of the products of his factory,
not only the production costs, but a part of the price of his factory,
so that he can effect the repayment.
the end of five years, all the created money will be withdrawn from
circulation and returned to its source. And yet the production capacity
of the factory is still there. The base for this conversion into money
is still there, but the money is not there any more. The country does
not possess the financial equivalent of its real wealth.
social nature of money
real credit has a social nature, even if the matter concerns private
factory, which we have just quoted as an example, would have absolutely
no value if it were not for the existence of society. Just suppress the
consumers, and tell me what the factory will be worth.
factory, which is private property, certainly increases the private
owner's wealth, but at the same time, it also increases the country's
wealth. And the whole country will benefit from it, provided, however,
that the products of the factory can be sold.
banker, who lends money created on the borrower's real credit, and who
forces the borrower to bring back this money, is not only unjust to the
private creator of wealth, he is also unjust to all of society, whose
claims on the produced and offered wealth he restrains.
conversion into money of real credit can only be exercised by a
sovereign authority, acting in the name of society itself, and pursuing,
not the banker's profit, but the economic welfare of society as a whole.
national conversion of real credit into money
is why the Social Crediters call for the national conversion of real
credit into money, whether this real credit be the fruit of a public or
of a private firm.
conversion must be made orderly. It must be in keeping with the facts of
production, and with the needs of consumption.
national conversion of real credit into money can very well be carried
out, as in the banks, by the simple inscription of financial credit:
bookkeeping money. But it must not be loaded with interest, nor limited
to an arbitrary term.
increase of real wealth increases the base for this conversion into
money, and any destruction of real wealth destroys this base. The money
must not disappear unless its base disappears.
national credit account
the present system, when the banker creates the money which he lends, he
simply records it into a ledger (or a computer), to the borrower's
credit. The borrower uses it by drawing cheques on this credit, as long
as any credit remains.
a Social Credit Government, which would convert into money the increase
of the real credit proportionately, would simply record the money thus
created into a ledger, to the nation's credit. It is on this national
credit that cheques would be drawn to pay the national dividend to the
citizens, and to compensate the retailers for the national discount
decreed on retail prices.
administration of this national credit account would have nothing
arbitrary, nor anything capricious about it. It would be administered by
a national monetary authority, a non-political commission, appointed by
the Government, but charged with administering the national credit in
accordance with the data of production and consumption, just as judges,
appointed by the Government, judge only in accordance with facts in
regard to law.
would be a commission of accountants, charged to record the value of all
production and of all destruction of wealth. The difference between
these two evaluations would give the net increase, the base for the
increase of money.
is not an impossible task. There already exists precise statistics on
almost anything that constitutes the country's increase of goods:
production of capital goods, production of consumer goods, imports,
births, etc.; and on anything that constitutes the country's reduction
of goods: depreciation, wear and tear, fires, consumption (total
purchases), exports, deaths, etc.
would be a good base to start from, the credit commission looking for
information which it might be lacking.
is absolutely nothing dictatorial in the work of such a commission. It
does not dictate the production; it records it. It does not dictate the
consumption; it records it. It is the citizens themselves who, freely,
produce and consume, thus providing the data for total production and
consumption; the national credit commission simply records this data and
deduces the net enrichment increase from it.
conforms to realities; it does not misrepresent them. And the money that
is issued according to this bookkeeping would result from the free acts
of production and consumption which would govern the volume of money, as
opposed to the disordered system of banking credit, where money governs
production and consumption.
British author, John Hargrave, made up a very simple definition of
Social Credit. This definition expresses very well this freedom of
production and consumption, and this submission of money, as flexible as
a bookkeeping system:
what you want; take what you want; keep count of what you produce and of
what you take.”
nothing would hinder the sale of production, this system would rise to
high levels, as long as there were orders from consumers. It is this
production increase which would determine the amount of national credit
to be distributed in the form of dividends or of national discounts.
the citizens, enjoying a satisfying standard of living, would prefer to
devote themselves more to free occupations and less to the production of
marketable goods, it would bring about the gradual development of a
leisure economy, the logical outcome of progress, which replaces human
labour by the machine while increasing production.
increase of leisure (free activities) is an objective much more
conformable to human aspirations, and more rational in an economy of
plenty, than full employment, a goal aspired to so avidly today.
to substitute the pursuit of leisure for the pursuit of full employment,
the cult of freedom for the cult of servitude, we must first admit an
income which is made up of dividends for all, and not an income made up
only of wages and salaries.