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The Monopolistic Idea
by Major C. H. Douglas
A speech delivered at the Melbourne Town Hall, Australia on January 22nd, 1934.
The title which may be applied to this address of mine tonight is "The Monopolistic Idea." First of all, I wish to point out to you that the idea of world monopoly is not a new one, far from it, although it has taken many forms. Practically all the world's historical empires, beginning with the Roman Empire, although there were others before that, were attempts at world power. That was the first type of an attempt at world monopoly, the military idea. We had an attempt in that direction so late as in 1914. It was the hardly concealed objective of the German Empire to form a military world state which would be supreme. We know that failed.
Another attempt along administrative lines undoubtedly was launched immediately after that in the original idea of the League of Nations, which undoubtedly contemplated the formation of something of the nature of a superior state which should lay down the law for everyone else. That never got very far, because I think its objective was early realised, and imperceptibly it merged into something else, which is undoubtedly a matter for our closest concern to-day, namely, the financial world state, the financial hegemony of the world by a selected group of central banks, crowned by the Bank of International Settlements. That is simply the translation of the same idea into different methods, one after the other.
You can see that it is a constantly recurring idea, and it recurs in different forms. I think it is extremely important to recognise it, because you can then recognise what is the connected meaning of a lot of disconnected things which are going on all over the world at the same time. The form of the attempt at a comprehensive centralised monopoly in Great Britain and the British Empire is something which is called rationalisation, and it is being carried on under the direction - at any rate, the ostensible direction - of the Bank of England. Rationalisation is claimed to be the supersession of small and so-called inefficient undertakings by large trusts, and this is being achieved by a number of methods and in a number of ways.
One interesting example of how the mechanism works, came into my experience as an engineer and company director. It is a very interesting instance of how these things come about. We found that in competing for a certain class of work we were always amongst a few high tenderers, and those high tenderers with us we knew to be practically the only solvent firms in that particular business, at any rate in that particular district. But we found that firms which were notoriously inefficient and notoriously insolvent, owing enormously large sums of money to banks, were quoting prices for particular types of work which were sometimes half the prices we could quote. Of course, no explanation was given, but there were only two possible explanations of this.
One was that these inefficient firms, being completely in the hands of financial undertakings with their shareholders having no hope of ever obtaining any money or anything else, instructed their estimating staffs and operating staffs to quote any price which would get the work, because they knew that would merely have the result of increasing their overdraft with the bank, and that the bank could not shut them down, because they had no value as a scrapped concern, whereas they had a value as a going concern. The result of that state of affairs was peculiar, and it was that all the work went to the most energetic firm, or a considerable amount of it did, and the result of that, in parts of England has been to put all except a certain selected number of firms out of business.
Those firms are amalgamated, and they form the nucleus of a class. What happens to the unfortunate people not in that class does not matter from the point of view to those in the class. That is one form that this centralised monopoly takes with rationalisation in a country. The excuse which is given for that policy is, "Oh, yes, it may seem that a good deal of hardship is being inflicted at the moment, but we cannot help that; ultimately industry will be much more efficient."
there are two comments which may be made upon that. The first is that
industry already is so efficient that it does not require to be worked
at more than a small proportion of its possible output to supply all
the goods which people can absorb at the present time, so that, quite
obviously, efficiency is not a pressing matter. The second comment
which may be made is that it is by no means proved that large undertakings
are very much more efficient than small ones. In many instances exactly
the reverse is the case. This rationalisation into a series of trusts,
all controlled at their apex by banking concerns, is the form which
the monopolistic idea is taking, I think we may say, in the British
During the past two or three years I have devoted a good deal of attention to Russia. Various attaches from the Russian Embassy in London have been to see me, and I have talked to the American consulting engineers who have done and directed most of the actual work and so forth in Russia. Therefore, I think I have reasonably clear and sound ideas as to what is happening in Russia. The position there is alleged to be a dictatorship of the proletariat. What is the case, without a shadow of doubt, is that Russia is an example of a dictatorship over the proletariat.
There, is no doubt that Russia is a very
highly centralised organisation, over which the individual Russian
has no control of any kind whatever. He does what he is told; he works
as long as he is told; and he eats what he is given. I think in fairness
I ought to say that almost all people who have been to Russia unite
in agreeing as to the extraordinary enthusiastic spirit which is present
in the average Russian worker. Whether he really sees something outside
this particular place to which he is going or whether he is hypnotised
by an idea - and the Russian is a highly emotional, easily hypnotisable
individual - I do not presume to say.
These systems always require some kind of a war - either an economic war or a war against disease, if you like - to keep them going, and Italy, having brought her affairs up to a fairly high standard of efficiency, is undoubtedly in a difficulty to find what she is going to do next. It is very often thought that the issue in the world or, at any rate, in the industrial and economic world, at the present time, is that between something called capitalism, and, let us say, socialism.
The first thing about which to be clear in your minds is that there is an actual revolution from anything that could be recognised as the old form of capitalism going on under your notice. The sort of thing that would have been recognised as capitalism even 25 years ago is practically dead. It has been superseded by other things under different names, but all, in my opinion, actuated by the desire to establish effective monopolies.
The great monopoly which gives the power to monopolise other things is what we call the monopoly of credit.
I want to give you a very
short idea as to what is actually meant by that, as to how it came
about, and as to what may be the outcome of the existing position in
regard to it. In the first place, what is it?
The fact must be realised that the wealth of the world is really produced by production; the tickets which are the effective demand for that wealth are produced by the financial system; and the two things are not necessarily connected at all.
You can grow wheat until
your barns are filled to bursting point, and you can manufacture
motor cars until your roads are black with them; and yet you will
not increase by one penny so far as those processes are concerned,
the amount of purchasing power in the world. I want to point out
to you how it comes about that the ticket system has become separated
from the production system or the transportation system. Just imagine
what you would say, what you would think, if you were called upon
to build a railway, if you had to provide all the work and all
the material, and then somebody set out in the principal towns
to establish a ticket office from which to issue the tickets for
that railway as a monopoly.
Now when this state of affairs was in existence there was also one very extraordinary fact - the owner of the cattle, the owner of the wealth, and the owner of the money, the owner of the leather discs, comprised really one and the same person. So there you had the production system and the money system concentrated under the one control, in the one set of hands. Obviously a system like that could not be expected to work for very long. Some bright gentleman no doubt got the idea of punching out a few additional bits of leather, and that was really the first form of inflation.
Now I would like you to follow me in a jump over a long span of years to the middle ages. In the middle ages the goldsmiths were the world's bankers; the goldsmiths were primarily and originally artisans in precious metals, and because of that fact no doubt they had the best strongrooms in those days. As a result of that fact it came to be the habit of the Feudal nobles of the middle ages to leave their gold plate and other movable and portable valuables with the goldsmiths for safe keeping. The goldsmiths in turn gave the owner of the plate or valuables an ordinary receipt which in those days was written on parchment, because parchment was fairly endurable. The goldsmith would sign that receipt in the same way as anyone would sign a receipt at the present time.
signed receipts came more and more into use they really became the
lineal ancestors of our modern bank notes, because people began to
use those receipts for paying for other things without bothering
to draw out the plate and valuables to which the receipts referred.
So that if a man bought a piece of land in those days he would very
often pay for that land by means of one of these goldsmith's receipts,
and the seller of that land would not bother to draw out the gold
plate to which the receipt referred, but in turn would exchange the
receipt with someone else for something that he required.
It was the fact that the
goldsmith was known to be a reputable person which really made these
notes or receipts acceptable. So that at that stage you get a very
significant change which took place, a transfer from the producer
of the wealth to the custodian of the wealth, of this power of issuing
something which would be accepted. Then there was a third and final
transfer, which was consummated at the time of the outbreak of the
Great War in 1914. It was the conventional belief before that time
that there was one piece of gold in a bank to represent every pound
deposited, drawable either by cheque or in some other way; it was
a conventional belief that if you had £100 in the bank you
could go to the bank and demand 100 sovereigns.
There were, I think, nine hundred millions of deposits in the Joint Stock Banks in 1914, at the beginning of August, 1914. Practically all the gold was drawn out of the Joint Stock Banks, and I am informed that the gold at the Bank of England was reduced to something like ten millions - a very small amount for the Bank of England. There were six hundred millions of deposits still undrawn, or being drawn at a very rapid rate, when that gold was exhausted. As you will probably remember, a moratorium was declared - that is to say, all debts were held up for three or four days, all the banks were closed, and so forth. Then the banks reopened with a nice stock of clean white little notes, which said, "I promise to pay the bearer £1 on demand."
If you had taken one of those little notes to the Bank of England they would have taken it and given you another little note exactly like it, saying "Here is your £1." That worked perfectly, and everyone was happy. People took the notes, and business was carried on in exactly the same way. I want you to notice what these £1 notes represented. They were issued by the Treasury, although, unfortunately, they were issued through the banks, which gave the banks control over them. But those £1 notes received their value not because of anything deposited in the banks, because all the deposits in the banks had been drawn out; they received their value because they rested on the general credit of the country. That was the first stage.
What do we mean by the general credit of the country in this connection, and what is its important factor?
The general credit, the real credit
of the country, I think is correctly defined as being the ability
to produce and deliver goods and service as, when and where required.
I do not believe
it is conceivable, or in the nature of monopolies, for a monopoly
to supply the world to the extent either that the world is capable
of producing a commodity, or is really desiring it.
Now, what does this credit really rest upon?
This is a very important matter, because it
has to do with who is the real owner of the money which represents
the effect demand tickets. I pointed out to you in the beginning
of this explanation that originally money started with the owners
of wealth. Of course, it is the orthodox Labour argument that labour
produces all wealth. If that were true it would be perfectly right
and proper in my opinion to say that all money belonged to labour,
but I am afraid it is not true. That is not the case.
But we of the Western world are the inheritors of a magnificent culture which we ourselves did not produce, but which largely was handed down to us from previous inventors, engineers, organisers and so on.
We are merely the administrators of that cultural inheritance, and to that extent that cultural inheritance is the property of all of us, without exception.
You must remember that your best engineers, organisers and administrators definitely have been trained to put the world into a state of unemployment for the past 150 years. That is what they have been trying to do. When you have achieved that thing you do not know what to do with it. But what you have to do is the simplest thing in the world. You have to represent this real credit, this capacity to produce enormous quantities of wealth, by financial credit in the form of money-tickets.
It is a technical matter into which I am not going tonight, but you have to recognise that the ownership of that part of the ticket which represents the cultural inheritance is one in which we are all joint owners.
I believe that not only from the commonsense point of view of making the machine work, but from the ethical point of view and from every other point of view you can conceive, the time is ripe, is overripe, for the issue of a national dividend in some form or other. You are going to be faced, if you allow your best brains free play, if you like to put it that way, with a rapidly increasing problem of so-called unemployment, and that problem of so-called unemployment is simply the stopping of the work of those people who are not required.
Are we, as a world of presumably sane people, going to say that because we no longer require the work of these people, and yet can make all the goods that they require, we are going to prevent them from having the goods? The thing is insane.
But the situation has an even more tragic aspect - that is, that this determination to recruit the employment of the whole population as being a permanent and inevitable accompaniment of any economic system which will be tolerated, means that as soon as you possibly can use in any modern country all that the whole population with modern machines can produce, you must strive for export markets.
That is a perfectly straight-forward proposition for two or three countries in a world of 40 or 50 countries, to strive for export markets, but when the whole 50 countries are striving for export markets, then, short of exporting to Mars, there is no solution of that particular problem. The result of that struggle to capture export markets and to maintain the technique of the present obselete system is inevitably war. That is the danger with which you are faced - possibly the imminent danger - so that if I have made my point clear there is no subject in the world at the present time of such vital concern to every man, and particularly to every woman who has children, or hopes to have children, than this problem of credit.
I repeat that the problem of credits must be solved, and that increased purchasing power in the form of a national dividend should be given every person.
A national dividend is justified economically, by the increased power of production, and morally by the fact that this increased production is not due to any section of the community - neither the labourer, scientist or capitalist, but to all.
The world will have plenty of problems to solve after this problem has been solved, as it can be, but I assure you there will be very few people left in this world to solve any problem, if you do not solve this particular problem very soon.