(An article of Louis Even, first published in the March 15, 1944 issue of the Vers Demain Journal.)

A question, an answer

It is not uncommon to hear the following objection to Social Credit: “But how will foreign trade be carried out with Social Credit money? How will this money be accepted abroad?”

A very simple answer: “The nature of Social Credit money would be exactly the same as the nature of today's money. The same form and the same kind of metal or paper, the same bookkeeping, and the same transferring of debits and credits.”

Then the question falls apart. However, a few notions on foreign trade will show that, under a Social Credit system, foreign trade would meet with much less friction than under the present system, even if the Social Credit system would exist only on one side of the border.

Imports and exports

Foreign trade consists of commercial trade going beyond the country's borders.

To purchase coffee from Brazil, oranges from Florida or California, silk from Japan, cotton from the United States, wine from France, cutlery from England, is, for the Canadians, to import goods. It is foreign trade. Imports are goods that come from abroad.

To sell Canadian paper to New York, Canadian wheat to Europe, nickel to Germany, aluminum to Japan, fish to Italy, bacon to England, is for Canada to export goods. It is still foreign trade. Exports are goods that are sent abroad.

Foreign trade is a sound activity. It is completely within the providential order. God gave all of the earth to man. He put on earth all that is needed for the material needs of the whole of humanity. But He did not put all of these things into each small corner of the globe.

Certain nations easily produce certain goods in plenty; others produce other things better and plentifully. Therefore it is profitable for men of different countries to trade their surpluses among themselves.

Products cross the borders

In foreign trade, goods go from one country to another, in both directions, just as, within our country, goods from towns go to the countryside, and goods from the countryside go to towns.

At the grocery store in your town or village, you can see, grouped together, the products from towns and the products from the countryside.

But, at the same grocer's, you can also find things that come neither from our countryside nor our towns. You will find rice from China, tea from Sri Lanka, coffee from Brazil, bananas from the West Indies, books from France, and still other things, from almost every country in the world. They are there, it seems, as naturally as are the potatoes from the neighbouring farm.

If you were to visit foreign countries, you would, of course, also find there Canadian products. You would eat Canadian bacon in London; find flour from Alberta in France's bakeries, fish from the Gaspe Peninsula on Rome's tables, paper from the Province of Quebec in New York's large printing establishments.

Money does not cross the borders

But would you find as easily Chinese, Japanese, Turkish, French, Italian currency, or other kinds, in Canada's wallets and tills? Goods go across borders, but money does not go across borders as goods do. This demonstrates immediately that money has nothing to do with foreign taste. It is the products, wherever they may be, which have to do with consumers' tastes. One buys Chinese rice if one likes it, green tea from Japan if one likes it; but one does not spend one minute worrying if the Chinese yuan or the Japanese yen is made of gold, silver, paper, rubber, figures, or hieroglyphics.

The product is universal; but money is essentially an internal thing. A country's monetary reform has nothing to do with tastes, ideas, or the other countries' governments.

Goods paid for with goods

So money does not cross the borders like goods do; and, in foreign trade, goods are paid for with other goods or services. If they are not paid for immediately, there is debt on one side, claim on the other, as when a storekeeper sells on credit.

Obviously, when a Canadian orders a rice cargo from China, he does not ship a wheat cargo in payment. He goes to his bank and pays in Canadian currency, in dollars. The banker delivers a credit instrument that the Chinese merchant will exchange in his country for Chinese currency.

But another Chinese merchant will buy a wheat cargo from another Canadian, and will go to his own bank to effect his payment in Chinese currency. The bank will send a bill of exchange to the Canadian who exported the wheat, and the Canadian will be paid at home in Canadian dollars.

It is eventually the wheat cargo shipped by one company that paid for the rice cargo imported by another company.

The difficulties with foreign trade

The exchanging of the bills of exchange is done in banks or brokerage houses, and the preponderance of these bills of exchange, on one side or the other, determines what one calls the foreign exchange rate.

But trade between countries has nothing to do with the substance that the money is made of in either country.

Do you think that the German who sells his merchandise to us, and who is paid at home in German marks, wonders if one pays for it here in paper money, or metal disks, or with a simple cheque drawn on a bank or a credit union? There is not the least difficulty in this regard.

The difficulties with foreign trade come, above all, from two things: 1. The countries want to export more than they import; 2. The value of each country's monetary unit is unstable in relation to itself.

The first difficulty is smoothed away

A country, Canada for example, will want to exports goods for 2 billion dollars; but it will try, through tariff barriers or otherwise, to limit its imports to $1.5 billion. It wants to send abroad $500 million more in goods than it receives. Not out of charity: it requests payment. But it is reluctant to accept goods in payment, because it wants its citizens to stay very busy, to have work that gives them wages to buy the goods that are left.

The Social Crediters have, for a long time, understood and denounced this policy as being as absurd as it is unnatural. But as long as one continues to link the right to goods to wages, as long as one does not want to complement this right by dividends to raise it to the level of offered production, one will continue to look abroad for purchasing power which is lacking to the country's consumers; one will continue selling abroad goods that the citizens need but cannot pay for. With more exports than imports, one reduces the amount of goods in front of the amount of money, instead of agreeing to increase the amount of money in front of the products.

Thus one respects the rule that wants no other source of purchasing power than the personal contribution to production. Since all countries, until now, have held to this rule, all have tried to export to others more than they have imported from them. Hence are formed the economic frictions that are harmful to foreign trade and that lead to political frictions, with the tragic outcome of which we are aware.

Social Credit, by putting all the money needed into the country to buy all of the country's production, makes this crazy fury disappear. A Social Credit country is ready to export its surplus, and in return requests the same surplus quantity from others. The population of a Social Credit country has money to buy what is coming in with the money that would have bought what is going out. And a foreign country is happy to find this interaction with the Social Credit country.

Social Credit therefore makes the first cause of friction disappear in foreign trade, at least in the country that adopts the Social Credit system; trade between this country and all others is immediately facilitated and favoured.

The second difficulty is smoothed away

The second cause of friction in trade is the instability of the purchasing value of money in one's own country.

With foreign trade, a certain time elapses between the order and the payment of the received merchandise. The price is agreed upon and the drafts are drawn up at the same time as the order. For example, a French businessman sells me Parisian goods for a value of 8,000 francs. I accept a draft that will make me pay him, in six months' time, let us say 200-Canadian dollars (the foreign exchange rate at the time of purchase).

If, in six months' time, the restriction of money has caused the dollar value to go up, I will deprive myself of as much purchasing power in paying $200 in six months' time as if I had paid $250 immediately, at the time of purchase. It is an injustice that exporters and importers always risk facing, with continual inflations and deflations of the system.

Social Credit, by always maintaining the money supply at the level of the production volume, would maintain a much better stability in the value of the Social Credit country's monetary unit.

Foreign tradesmen would know what the Canadian Social Credit dollar would signify in six months or a year's time: It would still have the same value as at the time of sale or purchase.

Trade with a Social Credit nation would therefore be sought. Those who say that Social Credit would be harmful to foreign trade say the exact opposite of what is actually true. It is either because they are unaware of what Social Credit is, or because they are unaware of what foreign trade is.