Study Course in Social Credit

By J.M. Hattersley

Lesson X – The Social Credit Movement

Major Douglas once defined Social Credit as “the policy of a philosophy”. That is to say, it is an idea that has two parts to it. In the first place, there is the philosophy – a particular outlook on humankind and its world. Secondly, there is the policy – an analysis of our present social and economic system and suggestions for its improvement, to make it reflect this fundamental outlook.

As far as his basic philosophy was concerned, Douglas never claimed that he had discovered anything new. Rather, his argument was that, since the close of the Middle Ages, Society has progressed from an economic and social system that regarded the welfare of people – all people – as its basic goal, to one that was based on the worship of an abstraction, that is money.

“The policy of this country . . . is related philosophically to the adulation of money. Money is an abstraction. Money is a thing of no value whatsoever. Money is nothing but an accounting system. Money is nothing worthy of any attention at all, but we base the whole of our actions, the whole of our policy, on the pursuit of money; and the consequence, of course, is that we become the prey of mere abstractions like the necessity of providing employment.”¹

The objective of the Social Credit system he proposed was therefore to set to rights the unbalanced, materialist society that had arisen from the worship of false values:

“I will put the objective as I see it for your consideration in a very general form, and that is, we want to establish a correct relationship between the individual and the group, so that the group, and the attributes of the group, shall serve the individual, and not the individual be the slave of the group. The whole of society exists from my point of view – it may not be yours – but from my point of view, the whole of society exists for the benefit of the individual.²

Humankind was, and is, involved in a life-and-death struggle to become the master of the very economic, financial and industrial machine it has created to be its servant, and the stakes in the struggle are nothing less than man's own personality and the continuation of civilizations itself. Writing in the first edition of his book “Social Credit” in 1924 (he saw no need to change his opinions in the revised edition of this book in 1933), he summed up the situation in these words:

“The outstanding fact in regard to the existing situation in the world at the present time is that it is unstable. No person whose outlook upon life extends even so far as the boundaries of his village can fail to see that a change is not merely coming, but is in progress; and it requires only a moderately comprehensive perception of the forces which are active in every country of the world today to realize that the change which is in progress must proceed to limits to which we can set no bounds.

That is to say, the breakup of the present financial and social system is certain. Nothing will stop it. “Back to 1914” is sheer dreaming; the continuation of taxation on the present scale, together with an unsolved employment problem, is fantastic; the only point at issue in this respect is the length of time which the breakup will take, and the tribulations we have to undergo while the breakup is in progress . . .

“There is at the moment no party, group or individual possessing at once the power, the knowledge and the will which would transmute the growing social unrest and resentment (now chiefly marshaled under the crudities of Socialism and Communism) into a constructive effort for the regeneration of Society. This being so, we are merely witnesses to a succession of rearguard actions on the part of the so-called Conservative elements of Society, elements which themselves seem incapable or undesirous of genuine initiative; a process which can only result like all rearguard actions in a successive, if not successful, retreat on the part of the forces attacked . . .

A comparatively short period will probably serve to decide whether we are to master the mighty economic and social machine that we have created, or whether it is to master us; and during that period a small impetus from a body of men who know what to do and how to do it, may make the difference between yet one more retreat into the Dark Ages, or the emergence into the full light of a day of such splendour as we can at present only envisage dimly.” ³

Political History:
In its essence, we can understand Social Credit, therefore, as a philosophy which seeks to assert the mastery of the individual over the organized power of Society (represented by the powers of money and of government). This is in place of the perverted order of Society at the present time, in which money is the master, mankind the servant, and government more the servant of the monetary powers than of the electorate. Although the name “Social Credit” was only coined by Major Douglas around the year 1920, the philosophy has lasted many thousands of years – through Christ's plain statement in the Sermon on the Mount, that “You cannot serve God and Mammon”⁴ - to the elaborate provisions for the economic health of a nation contained in the laws of the Old Testament.⁵

It is worth being familiar with the provisions of Old Testament Law on economic questions, because in essence they were carried forward to form the basis of the world's economies at least up to the close of the Middle Ages. Five points in particular can be observed:

1. Elaborate provisions to secure an “inheritance” to every family that could not be permanently alienated.
2. Requirements for worker safety, prompt payment of worker's wages, and fair weights and measures in trade.
3. Interest prohibited on loans to one's fellow citizens.
4. A tax rate set as a fixed proportion of a nation's production, to maintain a Civil Service of defined size.
5. A regular “Year of Jubilee” for the repatriation of land and the forgiveness of debts, every fifty years.

Under the feudal system which formed the framework for society in the Middle Ages in Europe, each tenant held land from a feudal overlord, in return for services in maintaining the fabric of society. Trade was largely regulated by “guilds” of those in a particular trade, who enforced rules for apprenticeship, a “just price”, and quality. Usury was a punishable offence. Taxation took the form chiefly of customs duties and personal services given in exchange for the use of land.

The New World:
The discovery of the New World by Columbus in 1492, and the inflow of gold and silver from Peru and Mexico that followed in the succeeding century, had an economic impact that today is hard to conceive. Money sank to a quarter of its previous purchasing power. Customary feudal services in return for land, which had been commuted into fixed monetary payments, suddenly became more or less worthless. In England, and later Ireland and Scotland, land speculation was rife – common lands or customary tenancies were “enclosed” for sheep farming or as game preserves, agricultural workers were dispossessed, and from this time dates the emergence of a class of the “working poor” without property – Karl Marx's “proletariat” - drifting to cities without work, property or means of support – a social problem continuing to the present day.

The opening up of the Americas did mean that many of those for whom there was no place in their home country could emigrate. From the early seventeenth century onward, the developing American colonies provided land and the chance of a new career for many for whom the new financial developments (including Calvin's legitimizing of the practice of Usury) had left no place. Settlement in the New World may have been a challenge, but the American colonies were, in fact, conspicuous in their prosperity, so much so that Adam Smith, writing his “Wealth of Nations” in 1776, spends considerable time speculating why this should be so. Two basic reasons seem plain, however:

1. The ready availability of free agricultural land, to which no burden of rent was attached.
2. The “Colonial Scrip” - paper money issued by the colonies, which provided a cheap and ample money supply up to the time of the American War of Independence.

It is not always known to what a degree monetary factors were responsible for the final break of the Colonies from Great Britain and the founding of the United States. Following a visit of Benjamin Franklin to Britain in which he had incautiously explained American prosperity as flowing from the use of their own paper money, an Act was passed (1764) by the British Parliament “restraining the emission of paper bills of credit” by the American colonial governments, and by prohibiting their use as legal tender, and so their use for paying taxes to Great Britain. Franklin reports that the immediate consequence of this Act was a severe deflation in the colonies, prosperity turning overnight into unemployment and poverty. It was a refusal to pay tax on imported tea that led to the dumping of such a cargo – the famous “Boston Tea Party”, the beginning of the Revolution. That this matter of money issue was considered of major importance when the Colonies finally threw off British rule, can be seen from Article 1, Section 8, paragraph 5 of the present day United States Constitution:
“Congress shall have power to coin money, regulate the value thereof, and of foreign coin.”
So was won a notable victory in man's struggle for financial independence.

The Nineteenth Century:
            The Nineteenth Century saw the expansion of the United States until it filled the whole of the Southern part of the North American continent. It also saw a powerful if sometimes concealed struggle taking place, as Banking interests sought to obtain the privilege of central banking and money creation, already enjoyed by the privately owned Bank of England, in place of the express powers granted to Congress in the constitution. In the teeth of opposition from men like Thomas Jefferson, and after once being vetoed as unconstitutional, a bill chartering the Bank of the United States was passed in 1791. In 1811, President Madison refused to renew the Bank's charter. However, following the disruption of government caused by the war of 1812 and the burning of the Capitol in Washington, pressure to have a new bank started was ultimately successful and a new national bank was chartered in 1816.

President Andrew Jackson vetoed the Act of Congress that would have re-chartered the United States Bank when its charter expired in 1832. The Bank's charter, he felt, was not compatible “with justice, with sound policy, or with the constitution of our country.” In spite of a deliberately induced financial panic, Jackson held firm, and the bank's charter expired and was not renewed.

The American Civil War, which coincided with the Presidency of Abraham Lincoln, marked the beginning of a new era in U.S. monetary history. There is some credibility to the story that this war was conceived as a means to divide the growing United States between French and English Rothschild banking interests. Circumstantial evidence in favour of this is the considerable aid given to the Southern cause by Great Britain during this war, which might have been even greater had it not been for the direct intervention of the Tsar of Russia. In addition, the demands of war exhausted Lincoln's treasury, and the North would have been in bankruptcy, had it not been that Lincoln financed the operation by issue of fiat money – State issued “Greenbacks”. This action was over the disapproval of his Secretary of the Treasury, Chase. Nevertheless it enabled the North to prosecute the war successfully without any accumulation of debt.

This issue of Greenbacks prompted immediate counter moves on the part of the Banking interests. An Act to permit circulation of Bank notes within Washington D.C. was vetoed by Lincoln. In 1863, however, a National Bank Act was passed. Not long after, Lincoln was assassinated, and the rest of the century saw no President with the strength of will to resist the growing power of the bankers over the United States monetary system. Speculation was deliberately used to cheapen the Greenback. A violent deflation was initiated when in 1873, a scarcely examined clause of the new Mint Act led to the demonetization of silver, making it no longer acceptable for coinage within the U.S.A. A further financial panic with the aim of forcing the abandonment of U.S. Treasury “silver certificates” which passed as currency, was engineered in 1893. Thousands of farmers and small businessmen were ruined. The end of this struggle to keep the United States financial system under the people's control ended with the passing of an Act to incorporate the Federal Reserve Bank under private ownership in 1913.

Alberta:
In the U.S. Presidential campaign of 1896, William Jennings Bryan had campaigned on the issue of remonetizing silver, with this stirring question “Shall humanity be crucified upon a cross of gold?” Though he narrowly failed to secure election, Bryan won wide support from those who had lost their homes in the depression, particularly in the Middle West. Many of those people around the turn of the century emigrated into the newly opened Canadian prairies, particularly the new Province of Alberta, created in 1905. Within the United Farmers of Alberta movement, they sparked a lively interest in monetary reform. So the torch of the cause of monetary freedom passed into a new country – the Province of Alberta, Canada.

Students of monetary reform in Alberta were quick to hear of the writings of Major Douglas when these first appeared following World War I. In 1921 also, the United Farmers of Alberta replaced the Liberal Party as the government of that Province. Progressive and United Farmer M.P.'s from Alberta formed a “Ginger Group” of Members of the federal Parliament interested in monetary reform, and were responsible for having Major Douglas invited as a witness before a committee of Parliament in 1923.

1935:
            The catastrophic depression of the 1930's was nowhere felt so keenly as on the Canadian prairies. It was in these circumstances that a book on Social Credit, “The Meaning of Social Credit” by Maurice Colbourne reached the hands of William Aberhart, a Calgary school principal and Dean of the Prophetic Bible Institute in Calgary. He was impressed and convinced by the Social Credit argument, and began to advocate Social Credit on his regular weekly Bible radio broadcast. His message brought a ready response from all who were suffering under the depression, particularly the many members of the United Farmers, who had regularly discussed the monetary reform issue in their meetings and conventions, yet had been thwarted by the unwillingness of their own government to implement it.

At first Aberhart did not intend himself to start any new political movement, but when it became obvious that none of the established political parties were prepared to adopt a monetary reform program the Alberta Social Credit League was founded, and in the ensuing provincial election, gained 56 seats in the 63 seat Legislature. Social Credit remained in power with large majorities until it was replaced by a Conservative administration in 1972. During this time, through debtor protection legislation, through careful and honest administration, by strong emphasis on developing natural resource revenues, and by using branches of the Provincial Treasury to provide an exchange medium for a Province from which conventional banks had largely withdrawn,  this Cinderella province became one of the richest and most progressive in Canada. Social Credit later (1951) became the government of the next door Province of British Columbia, and elected a single M.L.A. in Manitoba.

On the Federal scene, Social Credit members were returned to Parliament, chiefly from the Province of Alberta, from 1935 onward. Under the National Leadership of Solon Low, the total varied between ten and nineteen members of Parliament, with increasing support from British Columbia, up to 1957. In the “Diefenbaker sweep” of 1958, all Social Credit candidates were defeated. However, disillusion with Diefenbaker, and Social Credit reorganization under a new leader, Robert N. Thompson, led to 30 Social Crediters being elected in 1962, where Social Credit held a balance of power in a minority Parliament, and 24 in the following year – a new factor being that the greatest number came from the Province of Quebec under the dynamic leadership of Real Caouette, where Social Credit had already been a non-political pressure group for some time,.

From that time onward, however, Social Credit's fortunes as a political movement went into decline. World War II's financing had inflated the Canadian economy, and memories of the depression years were fading, with other political issues taking the attention of voters. The death of Real Caouette, and the unfortunate loss of the new, young and extremely popular leader, Andre Fortin in a motor accident, made it difficult to hold the party together, and Alberta's long standing Premier Manning, once personal aide to Aberhart, indicated a preference for conservatism rather than financial reform, and much Alberta political support was diverted to a new Reform party organized by his son, Preston. Similarly, much Quebec support moved to the independantist Parti Quebecois.

In Canada, it has always been a problem that matters of Banking and Finance are the responsibility of the Federal rather than Provincial governments, which puts a severe limitation on the powers of Provincial Governments claiming to be Social Credit. Nevertheless, the two Western Provinces of Canada prospered under their many years of Social Credit rule. Four main policies have been characteristic of those governments, and lay behind their economic success:

1. A policy of developing natural resources in the interests of all the people – characterized by incentives given to oil exploration in Alberta, and massive hydro power developments in B.C. Alaska's Permanent Fund, which pays an annual dividend to residents from interest on invested oil royalty income, owes its inspiration also to Alberta policies.
2. A policy of avoiding all direct debt – that is, debt that is not balanced by a revenue producing asset from which it will be repaid.
3. A policy in Alberta of providing competition to the commercial banking system, through the Government owned and guaranteed Treasury Branch system.
4. A policy of encouraging local initiative and government at the grass roots level.

The Outlook for Monetary Reform.
In addition to the position it attained in Canada, Social Credit has for many years been a force in New Zealand, in the form of the Democratic Party, and has supporters in the United States, England and Australia. Nevertheless, until recently, its success as a political movement has been disappointing. Douglas himself was rightly chary of political party politics, since the whole process of government as it is currently conducted is contrary to his ideals of personal freedom of choice, and the Social Credit political experience had been that a “single issue” party based on monetary reform only has voter appeal in times of financial collapse – something that at the present time (2009) brings it once again to the foreground. At which time, a “small impetus from a body of men who know what to do and how to do it” will be needed to prevent yet one more retreat into the Dark Ages, and lead mankind into a civilization of personal freedom and prosperity that is already physically possible for more than the favoured few, once the barriers of greed and financial manipulation have been broken down.       

To which end, this Study Course is dedicated.

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FOR FURTHER READING:

Brooks Adams: “The Law of Civilization and Decay”
C. Marshall Hattersley: “The Community's Credit”, “This Age of Plenty”, “Wealth, Want and War”.
Congregational Union of Scotland -  “Wealth, a Christian View”
Rev: Denis Fahey C.S.Sp. “Money Manipulation and Social Order”
Olive Cushing Dwinell  “The Story of Our Money”
H.E.Nichols - “Alberta's Fight for Freedom”
Maurice Colbourne “The Meaning of Social Credit”
Gorham Munson; “Aladdin's Lamp”
Old Testament Exodus, Leviticus, Deuteronomy
John W. Hughes “C.H.Douglas – the Policy of a Philosophy”
J. Martin Hattersley “A New Way Forward”; brief to the MacDonald Commission on the Economy.

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QUESTIONS:

1. Social Credit has been defined as “The Policy of a Philosophy”. What is the difference between Social Credit Philosophy and Social Credit Policy?
2. To what causes do you attribute the prosperity of the American colonies before the War of  Independence?
3. How far do you believe that each of the following factors will be necessary for effective political and financial reform in the world:
(a) Political leadership
(b) Economic pressures
(c) Public Education
(d) Disgust with lethargy, incompetence and corruption in established political parties.
4. “The only good politician is a scared politician”. What methods can money reformers take to influence the established political order?

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