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The Thoughts of Douglas
P R E D I C T I O N S
I am convinced that if you go along the lines that you are following at present, and if you continue along those lines for any considerable period of time ... I am perfectly certain that you are heading for the most terrific disaster the mind of man can conceive. From Evidence by Major C.H. Douglas before Select Standing Committee on Banking and Commerce, House of Commons, Canada, April 1923.
The SUPREME STATE, PLANNING, and SCARCITY
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. ...
The great danger at the present time is not that the present financial
system will persist ... but that under the confusion that will exist
as a result of the crises caused by the breakdown of the financial
system, an even greater tyranny may be put over on you as in the
cases of many countries at the present time, and which is in active
progress in still more countries even as I speak.
We are at the present time unquestionably
under the domination of a financial system, which rules us. It rules
us in our most basic necessities; the necessity for bed, board and
clothes, and the other things that go to make up the standard of
living. But we do not want to transfer that domination from, let
us say, what we can call the banking, system under another name to
something we call the State.
In Great Britain the phrase under
which this change is taking place is called Rationalisation or Planning;
in Italy as the Fascisti or Corporate State; in Russia it is the
Dictatorship of the Proletariat ... and is being aimed at in Germany
by the Nazis
Whether it be by accident or design, the world is steadily moving
over from a financial tyranny which has both the elements of breakdown
and has also been found out to another tyranny, a tyranny of administration
... the setting up of an entire State which can say, "You shall do
so and so". "You shall have such and such rations". "You shall live
in such and such a house, you shall work such and such hours". "You
shall be taught such and such things". "And any deviation from those
laws which we lay down for you will be penalised by either starvation
or by all the rigours of the law".
THE COMING CRISIS - WORLD WAR TWO
"You have two alternatives; you
can drift passively through concealed stages to an absolute dictatorship
of finance as suggested in the New Deal where you have a cabinet,
a dictatorship of three or four who will do exactly what the big
financiers and manufacturers want them to do, and will subordinate
the ends of the common man to the social interests of this or that
The other path is take a hand in
your destiny and say, no, I can say quite fearlessly that the world
is faced with a succession of dictatorships, and I am willing to
take the risk of trying a real democracy as a very much preferable
alternative. The game is in your hands, as they say at Monte Carlo.
Make your play faites vos jeux. The game will not wait.
THE OUTBREAK OF WORLD WAR TWO
... All we can say is that the
time is so short that we must use all those energies... wisely...
in the hope - I believe it to be a forlorn hope that we may avert
a great catastrophe... Within the next two or three years; I will
say, in spite of my well known objection to prophesying in terms
of time, certainly within the next five, years ... We shall enter
this critical period in the autumn, for if it has not already actually
begun, we are at any rate in what may be described as the foothills.
THE WAR AIMS 1939-1945
"It is therefore, I think, quite
possible to state the real as distinct from the proximate objectives
of the present war.
S Y N O P S I S
Part 2 The Financial System: Money - Its Nature and Origin - Division of Labour and Process - Money not Wealth or Production - Control by Money - The Creation and Destruction of Money by the Banking System - Addendum; Authorities other than Douglas (Macmillan Committee, Patterson, Hawtrey, Colin Clark) - Dangers of ill-informed criticisms of Financial System - Fallacy of tank Nationalisation - Bank of England before and after Nationalisation - State-issued money, abolition of interest and other errors of certain monetary reformers Price Structure, acquisition of Interest-bearing Securities 'and Taxation the real issues. - Parallel passages on the power of finance from H.H. Pope Pius XI and C.H. Douglas.
Part 3 The Price System Costs and Purchasing Power: Economic problem - Root causes resident in Financial and Price systems - The "Produce More" cry - Production and the generation of costs and distribution of purchasing power -The fallacy of "More Production" - The orthodox view of the relation between prices and purchasing power, Enormous increase of world debt proof that financial price system is not self-liquidating - The A plus B Theorem, Saving, and the Repetition of Payments Increasing Prices Reply by Douglas to criticisms of Professors Copland and Robbins.
Part 4 Effects on Prices of Unregulated Issue and Recall of Credit,: Real Causes of Inflation - Community does not control Credit-issue or Price-making - Why Consumers' Goods are scarce and Capital Goods abundant - Cost of Living constantly rising under present system - Summary of defects in Credit-issue and Price-making - Industrial Depression and Deflation the result of Financial Policy -Paradox of Poverty amidst Plenty - Its resolution not complete solution of present problems - Some absurdities of present economic and financial systems.
Part 5 Employment: Full employment and Materialism - Basic guiding principle Power production and its effects - Two inducements to employment - Work as a means and not as an end - Error of Organised Labour attitude to employment - Results of "Full Employment" inevitably disastrous - Leisure and pseudo-morality.
Part 6 Principles of Financial and Economic Reform - The Just Price and the National Dividend: Price - making and continual depreciation of the currency - True Price the ratio that total consumption bears to total production - The National Dividend - Its justification - Statement of General Principles necessary to effective reform - Model of relationships involved - The Just (or Compensated) Price - The price factor - Real and Financial Credit - Where the Money is to come from.
Part 7 Political Philosophy of Social Credit - The Nature of Democracy: Democracy and Majority Rule - Ballot-Box majorities devices for despoiling minorities -Perversion of Democratic Theory ... Majorities and the Fuhrerprinzip - Freedom and Liberty - Realistic Constitutionalism, Christianity, The British Constitution , Russia and Professor Laski - Common Law derived mainly from the Church, not from electorate - Successful Constitutionalism Organic - Magna Carta, the Church of England, the Constitution and the Church - Equalitarianism unnatural - Planning and the Rule of the Expert - Power and Responsibility - The Strategy of Reform - The Political Vote - Individual must accept responsibility for his vote - Substitution of open, recorded and responsible vote for Secret Franchise - A place for the secret ballot.
Part 8 World Control: Political Zionism, Freemasonry, Communism - Causes ultimate and proximate of world unrest - Increasing separation of ownership from control - Russia - some observations - Money and Social Welfare - Exports and Imports - Money Goods and Prices - Bretton Woods - Individualism - Hydro-Electric Scheme and Schemers.
THE POLITICAL AND ECONOMIC PROBLEM
It is suggested that the primary requisite is to obtain in the re-adjustment of the economic and political structure such control of initiative that by its exercise every individual can avail himself of the benefits of science and mechanism; that by their aid he is placed in such a position of advantage, that in common with his fellows he can choose, with increasing freedom and complete independence, whether he will or will not assist in any project which may be placed before him.
The basis of independence of this character is most definitely economic; - it is simply hypocrisy, conscious or unconscious, to discuss freedom of any description which does not secure to the individual, that in return for effort exercised as a right, not as a concession, an average economic equivalent of the effort made shall be forthcoming.
Institutions exist, to serve
It is necessary to be very clear
in thus defining the scope of our inquiry, since the exhaltation
of the State into an authority from which there is no appeal, the
exploitation of a public opinion which at the present time is frequently
manufactured for interested purposes, and other attempts to shift
the centre of gravity of the main issues; these are all features
of one of the policies which it is our purpose to analyse.
The Policy of Centralisation
of Power and its Effects
This demand to subordinate individuality to the need of some external organisation, the exaltation of the State into an authority from which there is no appeal (as if the State had a concrete existence apart from those who operate its functions), the exploitation of "public opinion" manipulated by a Press owned and controlled from the apex of power are all features of a centralising policy commended to the individual by a claim that the interest of the community is thereby advanced .
Thus far we have examined the psychological aspect of control exercised through power. Let us turn for a moment to its material side. Inequalities of circumstance confront us at every turn. The vicious circles of unemployment, degradation and unemployability, the disparity between the reward of the successful stock-jobber and the same man turned private soldier, enduring unbelievable discomfort for eightpence per day, the gardener turned piece-worker, earning three times the pay of the skilled mechanic, are instances at random of the erratic working of the so-called law of supply and demand.
In the sphere of politics it is
clear that all settled principle other than the consolidation of
power, has been abandoned, and mere expediency has taken its place.
The attitude of statesmen and officials to the people in whose interests
they are supposed to hold office, is one of scarcely veiled antagonism,
only tempered by the fear of unpleasant consequences.
In its relations with labour, the State is hardly more happy. In the interim report of the Commission on Industrial Unrest, the following statement occurs: "There is no doubt that one cause of labour unrest is that workmen have come to regard the promises and pledges of Parliament and Government Departments with suspicion and distrust."
In industry itself, the perennial struggle between Capital and Labour, on questions of wages and hours of work, is daily becoming complicated by the introduction of fresh issues such as welfare, status and discipline, and it is universally recognised that the periodic strikes which convulse one trade after another, have common roots far deeper than the immediate matter of contention.
In the very ranks of Trade Unionism, whose organisation has become centralised in opposition to concentrated capital, cleavage is evident in the acrimonious squabbles between the skilled and unskilled, the rank and file and the Trade Union official. Although the diversion of the forces of industry to munition work of, in the economic sense, an un-reproductive character has created an almost unlimited outlet for manufactures of nearly every kind, it is not forgotten that before the war the competition for markets was of the fiercest character and that the whole world was apparently overproducing; in spite of the patent contradiction offered by the existence of a large element of the population on the verge of starvation (Snowden Socialism and Syndicalism), and a great majority whose only interest in great groups of the luxury trades was that of the wage-earner.
The ever-rising cost of living has brought home to large numbers of the salaried classes problems which had previously affected only the wage earner. It is realised that "labour-saving" machinery has only enabled the worker to do more work; and that the ever-increasing complexity of production paralleled by the rising price of the necessaries of life, is a sieve through which out and forever out go all ideas, scruples and principles, which would hamper the individual in the scramble for an increasingly precarious existence.
We see, then, that there is cause for dissatisfaction with not only the material results of the economic and political systems, but that they result in an environment which is hostile to moral progress and intellectual expansion; and it will be noticed in this enumeration of social evils, which is only so wide as is necessary to suggest principles, that emphasis is laid on what may be called abstract defects and miscarriages of justice, as well as on the material misery and distress which accompany them. The reason for this is that the twin evil (common more or less to all organised Society) of servility is poverty, as has been recognised by all shades of opinion amongst the exponents of Revolutionary Socialism.
Poverty is, in itself a transient phenomenon, but servility (not necessarily, of course, of manner) is a definite component of a system having centralised control of policy at its apex; and while the development of self-respect is universally recognised to be an antecedent of any real improvement in environment, it is not so generally understood that a world-wide system is there by challenged.
In referring the existent systems to the standard we have agreed to accept, however, it seems clear that the stimulation of independence of thought and action is a primary requirement, and to the extent to which these qualities are repressed, social and economic conditions stand condemned as undesirable.
The Fallacy of Socialism
The danger which at the moment threatens individual liberty far more than any extension of individual enterprise is the Servile State; the erection of an irresistible and impersonal organisation through which the ambition of able men, animated consciously or unconsciously by the lust of domination, may operate to the enslavement of their fellows.
Nationalisation not the Remedy
It is a most astonishing fact that the experience of hundreds of thousands of men and women in such departments as the Post Office has not been sufficient to impress the public with the futility of mere nationalisation.
World-wide Movement towards
It has its counterpart in every sphere of activity; the coalescing of small businesses into larger, of shops into huge stores, of villages into towns, of nations into leagues, and in every case is commended to the reason by the plea of economic necessity and efficiency. But behind this lies always the will-to-power, which operates equally through politics, finance or industry, and always towards 'centralisation ....
... We are, therefore, faced with an apparent dilemma, a world-wide movement towards centralised control, backed by strong arguments as to the increased efficiency and consequent economic necessity of organisation of this character (and these arguments receive support from quarters as widely separated as, say Lord Milner and Mr. Sydney Webb), and, on the other hand, a deepening distrust of such measures bred by personal experience and observation of their effect on the individual.
A powerful minority of the community, determined to maintain its position relative to the majority, assures the world that there is no alternative between a pyramid of power based on toil of ever-increasing monotony, and some form of famine and disaster; while a growing and ever more dissatisfied majority strives to throw off the hypnotic influence of training and to grapple with the fallacy which it feels must exist somewhere.
Personality and Organisation
As it is hoped to make clear, the
effect of a single organisation of this pyramidal character applied
to the complex purpose of civilisation produces a definite type of
It cannot be too heavily stressed at this time that similar forms of organisation, no matter how dissimilar their name, favour the emergence of like characteristics, quite irrespective of the ideals of their founders, and it is to the principles underlying the design of the structure, and not to its name or the personalities originally operating it, that we may look for information on its eventual performance.
The Methods of Industrial Organisation
As we have seen, the development of industrial activity has been, very largely a practical application of the economic proposition in regard to the division of labour; the "military" organisation conceives a large business or Government Department as an aggregation of human units to carry out on a large scale that which one immensely able and versatile man could do on a small scale, and, broadly considered, the perfect organisation of this character would be derived by dissecting the various attributes of the perfect one-man business making each of them a Department, and staffing them with men who in the aggregate, represented nothing but an expansion of that attribute.
Fortunately, the perfect organisation of this character has yet to appear, but the effect to endeavour to achieve it has quite definitely left its mark on civilisation.... and the development due to the unbalanced exercise of one set only of perhaps many abilities resident in the human unit, is a very definite factor in the existing discontent one which, if perpetuated, could only be increased by wider education.
A little consideration will at once suggest that this type of organisation carried out to its furthest limits is pyramid control in its simplest form, and it is clear that successive grades or ranks decreasing regularly in the number of units composing each grade, until supreme power and composite function is reached and concentrated at the apex, are definitely characteristic of it.
The next step is to, split the functions of the higher ranks so that each unit therein becomes the head of a separate little pyramid, each of which as a whole furnishes the unit composing a larger pyramid; in every case, however, eventually centralising power and responsibility concentrated in one man, representing the power of finance and of control over the necessaries of life.
Several points are to be noticed in the conditions produced by such an arrangement: Firstly, there: is fundamental inequality of opportunity. The more any organisation, whether of society as a whole or any of the various aspects of it, approaches this form the more certain is it that there cannot possibly be any relation between merit and reward - it is, for instance, absurd to assume that there is only one possible head, for each railway company, Government Department, or great industrial undertaking.
There is no doubt whatever that
the intrigue which is a commonplace in such under takings has its
roots almost entirely in this cause and contributes in no small degree
to their notorious inefficiency.
General Dissatisfaction of Worker, and Consumer
Quite apart, therefore, from all questions of payment, there has grown up a. spirit of revolt against a life spent in the performance of one mechanical operation devoid of interest, requiring little skill and having few prospects of advancement other than by the problematical acquisition of sufficient money to escape from it.
The very efficiency with which factory operations have been sectionalised has resulted in a complete divorcement between the worker and the finalised product, which is in itself conducive to the feeling that he is part of a machine in the final output of which he is not interested. His foreman and departmental heads are from the largeness of the undertakings, almost inevitably out of human touch with him, while all the well-known phenomena of bureaucratic methods contribute to maintain a constant state of irritation and dissatisfaction...
Bearing these distinctions (between
consumers and producers) in mind it will be recognised that there
are two separate lines along which to attack the situation presented
by the dissatisfaction of the worker with his conditions of work,
and not less serious discontent of the consumer with the machinery
of distribution; and these may be called medievalism and ultra-modernism.
While appreciating the temptation to compare the two periods to the very great disadvantage of the present, it does not seem possible to agree with the conclusion of the Medievalist that we are in a cul-de-sac from which the only exit is backwards; and it is proposed to make an endeavour to show that there is a way through, and that we may in time regain the best of the advantages on which the Medievalist rightly sets such store, retaining in addition a command over environment, which he would be the first to recognise as a real advance; a solution which may be described as Ultra-Modernist.
Analysis of Existing Difficulties
THE FINANCIAL SYSTEM
Money -Its Nature and Origin!
The best definition of money with which I am acquainted is that of Professor Walker, which is that Money is any medium which has reached such a degree of acceptability that, no matter what it is made of, and no matter why people want it, no one will refuse it in exchange for his product".
You will see that this definition
rules out any physical properties in respect of money. The properties
that are left, therefore are not physical. They can be summed up
in the word "credit", which is, of course, derived from "creders",
to believe. The essential quality of money therefore, is that a man
shall believe that he can get what he wants by the aid of it. This
is absolutely the only quality that it is required to possess, although
of course, certain minor attributes, such as convenience have a bearing
on the decision as to what particular description of money, if it
fulfils the major requirements, is likely to come into most general
In every criticism of the social
distribution of wealth made public prior to 1918, the assumption
is implicit that money or purchasing-power is confined to legal tender,
and that bank deposits, etc., on which cheques are drawn, are deposits
and withdrawals of legal tender only. This is in part equivalent
to saying that banks and financial institutions only re-lend money
which has previously been lent to, or deposited with them.
This idea, while not specifically
expressed in words, is sedulously fostered by the Press, and by other
media of propaganda which are employed to convince the public that
our economic difficulties proceed from insufficiency of production.
It is significant that the peculiar brand of economics popular amongst
Marxian-Socialist and Communistic propagandists is at one with apparently
more orthodox economists, in suggesting the comparative unimportance
of money in the economic system; that it is nothing but a reflection
of the economic facts beneath it.
If I grow a ton of potatoes and exchange those potatoes for five currency notes of one pound each, held at the moment by my neighbour next door, all that has happened is that I have five pounds which he had before. My ton of potatoes has not increased the number of pounds, although it may have but probably has not increased the purchasing power of each pound. If we imagine this five pounds to be the only five pounds in existence, and money to be the only effective demand for goods, no one will be able to exchange any goods until I part with, at any rate, a portion of my five pounds. Ibid.
Division of Labour and Process:
Money not Wealth or Production:
The second point is that, so far as we can conceive, the co-operative industrial system cannot exist without a satisfactory form of effective-demand system, and the result of an unsatisfactory money system (that is to say, a money system which fails to function as effective demand to the general satisfaction) is that mankind will be driven back to the distinguishing mark of barbarism, which is individual production.
And the third point, and the point which is perhaps of most immediate importance at the present time, is that the control of the money system means the control of civilised humanity. In other words, so far from money, or its equivalent, being a minor feature of modern economics, it is the very keystone of the structure. Ibid.
Control by Money:
But from the moment that he arises in the morning to the moment that he goes to bed at night, or, more comprehensively, from the moment that he draws breath to the moment of his death, and after, his activities are governed and limited by the money system. His clothes, his food, his house, his education, either in the more literal sense or in the broader sense of ability to travel and see the world, his avocation in life, and the rapidity with which he progresses in it, are largely matters of money, and very often nothing but money.
Further than that, a lack of money
is sufficiently pronounced, is pretty certain to bring him up against
either the legal system, or starvation and death, and it is no sense
an exaggeration to say that in all civilised countries (so-called),
and the more civilised the country the more true is the statement,
the individual lives entirely by the grace of the money system.
It (money) is essentially a mechanism
of administration, subservient to policy and it is because it is
superior to all other mechanisms of administration that the money
control of the world is so immensely important.
... the position into which money
and the methods by which it is controlled and manipulated have brought
the world, arises, not from any defect or vice inseparable from money
(which is probably one of the most marvellous and perfect agencies
for enabling co-operation, that the world has ever conceived), but
because of the subordination of this powerful tool to the objective
of what it is not unfair to call a hidden government.
The Creation and Destruction
of Money by the Banking System:
. ... if money is of such importance, the first point to which to direct an inquiry in regard to it must concern its point of origin, and it is one step towards this end to recognise the fact that you do not make money by making goods or by working ... Similarly, you do not make money by agriculture. If I grow a ton of potatoes and sell them for money, I merely get the money that somebody had before in return for my potatoes, and the coming into existence or the disappearance by consumption of those potatoes does not itself make the slightest difference to the amount of money in existence; it merely affects its distribution. ...That is the first step. The second step to realise is that only to a very limited extent does money proceed from the State.
...The Chairman (Mr. McKenna) of
the Midland Bank, at its annual meeting in 1924, made the following
...legal tender in this country (England, in the year 1921) consists of gold, silver, and copper coinage, and Treasury Notes, to the value of say, £400,00,0,000. it will at once be obvious from a superficial examination of the accounts of the banks, that there is a good deal more money in the country than there is legal tender. The deposits of the "Big Five" banks and their affiliations alone represent about £2,000,000,000, and overdrafts and bills discounted represent about £1,000,000,000 more. For practical purposes, all this money is homogeneous - the average individual would draw no vital distinction between ten pounds in his pocket-book and ten pounds in his current account with one of the great banks. But it must be obvious, on a little consideration, that something curious must have happened to enable, say £400,000,000 of legal tender to become at least £3,000,000,000 of money, because, as far as can be seen on a cursory examination of the phenomenon, however much £400,000,000 changes hands in the course of trade, It still remains £400,000,000.
Something curious does happen -
it is the creation of new money, which ranks equally with tender
as purchasing power, by banks and financial institutions. One method
by which this result is brought about will serve as an example of
Imagine a new bank to be started - its so - called capital is immaterial. Ten depositors each deposit £100 in Treasury Notes with this bank. Its liabilities to the public are now £1000. These ten depositors have business with each other, and find it more convenient in many cases to write notes (cheques) to the banker, instructing to adjust their several accounts in accordance with these business transactions, rather than to draw out cash and pay it over personally. After a little while the banker notes that only about 10 per cent. of his business is done cash (it is really only .7 of 1 per cent.), the rest being merely book-keeping.
At this point Depositor No. 10, who is a manufacturer, receives a large order for his product. Before he can deliver, he realises, that he will have to pay out, in wages, salaries., and other expenses, considerably more "money" than he has at command. In this difficulty he consults his banker, who, having in mind the situation just outlined, agrees to allow him to draw from his account not merely his own £100, but an "overdraft" of £100 making £200 in all, in consideration of repayment in, say, three months of £102. This overdraft of £100 is a credit to the account of Depositor. No. 10, who can now draw £200. Ibid.
The banker's liabilities to the
public are now £1,100; none of the original depositors have
had their credits of £100 reduced by the transaction, nor were
they consulted in regard to it; and it is absolutely correct to say
that £100 of new money has been created by a stroke of the
In round numbers, in this country
England ... (legal tender) amounts to about 380 millions.... the
other 90 per cent. ... is represented by bankers' credit, that is
to say, by payment by cheque. Now, every effort is made to convey
the impression that a cheque upon a bank is an order to the bank
to pay out money which was paid in, either by the drawer or by someone
else. This idea is, of course, fostered by the, fact that, so far
as personal banking accounts are concerned (as distinct from commercial
banking accounts) it is roughly a true statement, but it must be
remembered that very few personal banking accounts bear any considerable
ratio to the so-called wealth of the persons to whom they refer.
Very few people keep large personal bank balances.
It is perhaps unnecessary before this Committee to go over the ground which has been so ably covered by one of its members, the Right Hon. R. McKenna to the effect that the main cause of the increase or decrease in the amount of money available at any time may be found in banking policy, and notably in central banking policy.
Mr. McKenna's argument may be epitomised in the statement that "every bank loan creates a deposit and the repayment of every bank loan destroys a deposit''.
Since, rather surprisingly, there
are certain orthodox economists who are not prepared to admit this
statement, I attach a simple mathematical proof which would appear
to put the matter outside the range of discussion: -
dL/dt + dC/dT = dD/dt , K being fixed dK/dt = 0
dC/dt = 0
dL/dt = dD/dt
Which means, of course, that the rate of increase, or decrease, of loans is equal to the rate of increase or decrease of deposits.
AUTHORITIES OTHER THAN DOUGLAS
The bank can carry on the process of lending or purchasing investments, until such time as the credit created, or Investments purchased, represents nine times the amount of the original deposit of £1,000 in cash.
The Founder of the Bank of England
R.G. Hawtrey, Assistant Secretary
to the British Treasury,
"Further, I agree with him (Douglas)
that banks create money"
Colin Clark, Australian Economist:
Economic Adviser to Queensland Government
C.H. Douglas writing in 1922
on the Power of Finance
If the civilised world continues
to permit this centralised, irresponsible, anti-public control of
the life-blood of production to continue, and at the same time the
possibility, wel-?meaning but ill-informed and dogmatic Syndicalist
makes good what is in essence exactly the same claim in the administrative
field, then the world, in no considerable time, will be faced with
a tyranny besides which the crude efforts of the Spanish Inquisition
may well retire into insignificance.
His Holiness, Pope Pius XI writing
in 1931 on the Power of Finance
It is fair to say that almost any
explanation which is not a full and accurate explanation of the working
of the financial system, has the curious result of playing into the
hands of the upholders of that system. The simple Labour-Socialist
criticism, which emphasises the contrast between the rich and poor,
forms a perfect moral sanction for the imposition of taxes on any
portion of the community which is above the starvation level ...
The business of dealing in money as a commodity is, as has already been pointed out, advantaged by anything which accentuates the scarcity of money, so that any form of attack on the business system, the constructive effect of which is to support increased taxation, can, and does, receive support from the inner circles of High Finance.
Since the greater part of the real purchasing power of the world is in a potential form which is not represented by any figures anywhere, but can be materialised by those in possession of the secret of the process, as and when required, taxation of visible purchasing-power is exactly what is most valuable in maintaining the power and supremacy - the power to reward and punish - of the money-makers". ..
There is probably not a levelling down movement of any description anywhere, which is unsupported from Lombard Street, Wall Street, and Frankfurt. Ibid.
Modern taxation is legalised robbery,
and it none the less robbery because it is effected through the medium
of a political democracy which is made an accessory by giving it
an insignificant share in the loot. But, I do not think robbery is
its primary object. I think policy is, much more than mere gain,
The Fallacy of Nationalising
Bank of England Before and After
Now, it is quite certain that the
Banks of England would never have been permitted to repeat this performance
in "private" ownership. But it is doing exactly that same thing at
the present time. The austerity racket, the £80,000,000 to
UNRRA, the "export drive" and the whole policy of control and restriction
of British consumer expansion, are precisely the policy of the Bank
of England under Montagu Norman. And Dr. Dalton (London School of
Economics), Sir Stafford Cripps, Mr. Atlee (London School of Economics)
and the Cabinet as a whole state that taxation of the British is
now not for revenue but to embody "Socialist" ideas of Utopia; and
the Bank of England will be used, not to finance the well-being of
Britons, but to see that they remain permanently impoverished. What
control has the consumer over this policy?
If monetary reformers would only recognise (a) that the monetary policy of the major nations, during war-time at least, is nationalised; (b) that it offers no problem whatever on the issue side; (c) that it is prices which do offer a problem, and that this problem has been solved with spectacular success by the use of the compensated Price, they would perhaps cease to worry about money issue and realise that there are only three for their attention, financial questions.
First, Price Structure. Second, the acquisition of interest bearing securities. Third, Taxation.
It is, unfortunately, obvious that numbers of people with a conscious ,or unconscious will to domination have come to realise that a managed money system (as distinct from a reflective or realistic, money and price system) offers the most tremendous instrument of generalised tyranny at present known. It is particularly significaht that advocacy of managed money is coming to be combined with centralised control over land. Sir Reginald Rowe, a managed money advocate, writes to the threepenny daily so well known for its democratic principles, in its issue of September 17, that "some provision such as that proposed by the Uthwatt Report is necessary". So it is ? if we are aiming at the Totalitarian State with a slave population.
Planners are solidly in favour
of the abrogation of individual priviledge and its transfer to them.
Abolition of Interest on Bank
If our enthusiasts for the abstract
virtues of the restoration of money to a central source of issue
(the Nation, or what-have-you) would spare it little time to contemplate
this situation, it is possible that misgivings of their complete
adequacy to cope with the problem might assail them. But probably
The rapturous iconoclasm of certain
groups of monetary reformers', to whom Usury", the sparring-partner
of the bankers "inflation" is the Scarlet Woman of Babylon, has had
the inevitable effect of encouraging the financial authorities to
abolish, for practical purposes, the interest paid on undrawn current
balances, and deposit accounts. We do not say they would not have
done it anyway - the one thoroughly sound feature of the banking
system was its dividends to shareholders and its interest payments
to depositors which I jointly with the insignificant mint issues,
provided almost the only fresh unattached purchasing-power. It is
obviously lost time to beg of our amateur currency experts to consider
whether they really mean what they ask, which is, the replacement
of unattached purchasing-power by loans. But they must not complain
if we, and others with us, regard them as propagandists for totalitarianism.
Christopher Hollis and Monctary
THE ECONOMIC PROBLEM
Its root causes reside in Financial and Price Systems It will be seen... that we have in the industrial field, a double problem to solve; while retaining the benefits of mechanism for productive purposes, to obtain effective distribution of the results and to restore personal initiative. C.H. Douglas, Economic Democracy", Chap. 4, 1920 edit.
THE "PRODUCE MORE" CRY
The proposition, which is being
urged for orthodox capitalistic quarters as a means of dealing with
this situation, is a little ingenuous. It consists of an intensification
policy by which, in some mysterious way, all the unpleasant features,
by being exaggerated, are to disappear, and it is usually summed
up at the moment in the phrase, "We must produce more".
1. We must pay for the war and
for betterment schemes.
Now this is a very specious argument;
a large number of people, whose instincts warn them that there is
a fallacy somewhere, have not felt themselves able to offer any effective
criticism of it, since some practical knowledge of technique is involved.
...purchasing power is the amount of goods of the description desired which can be purchased with the sum of money available, and it is clearly a function of price. . Ibid.
It is a widely spread delusion that price is simply a question of supply and demand, whereas, of course, only the upper limit of price is thus governed, the lower limit which under free competition would be the ruling limit, being fixed by cost plus the minimum profit which will provide a financial inducement to produce. Ibid.
Where competition is restricted by Trusts, price is cost plus whatever profit the Trust considers it politic to charge. Ibid.
Money is essentially an order system. It has been defined by Professor Walker ("Money, Trade and Industry" p.6) "as any medium no matter of what it is made or why people want it, no one will refuse it in exchange for his goods". Ibid.
The Generation of Costs, and
the Distribution of Purchasing Power
Such an undertaking would, let
us assume, make a complicated engineering product, requiring expensive
plant and machinery, and would absorb considerable quantities of
power and light, lubricants, etc., much of which would be wasted;
and would inevitably produce a certain amount of scrap, the value
of which would be less than the material in the form in which it
entered the works. The machinery would wear out, and would have to
be replaced and maintained, and generally it is clear that for each
unit of production there would he three main divisions of factory
costs, the "staple" raw material, the wages and salaries, and a sum
representing a proportion of the cost of the upkeep on the whole
of the plant, which might easily equal 200 per cent. of the wages
The Gap between Prices and Purchasing
A concrete example will make this
clear. A steel bolt and nut weighing ten pounds might require in
the blank about eleven and a half pounds of material representing,
say, 3s.6d. the nett selling price of the scrap recovered would be
about one penny. The wages value of the total man-hours expended
on the conversion from the blank to the finished nut and bolt might
be 5s. and the average plant charge 150 per cent. on the direct time
charge, ie. 7s.6d. The factory cost would, therefore, be 15s.11d.,
of which 7s.6d., or just under one-half, would be plant charge. On
this plant charge probably 75 per cent. or about 5s.7d., is represented
by the sum of items which are either afterwards wiped off for depreciation
and consequently not distributed at all at that time, or are distributed
in payments outside the organisation, which payments clearly must
be subsequent to any valuation of the articles for which they are
paid, and so do not affect the argument.
An additional factor also comes
into play at this point. All large-scale business in settled on a
The reason that the decrease in the consumers purchasing power has not been so great as would be suggested by these considerations, is, of course, largely due to intrinsic cheapening of processes which would, if not defeated by this dilution of the consumer's purchasing power, have brought down prices faster than they have risen. - Ibid.
There are thus two processes at work; an intrinsic cheapening of the product by better methods, and an artificial decrease in purchasing power due to what is in effect the charging of the cost of all waste and inefficiency to the consumer. And it is clear that under this system the greater the volume of production the larger will be the absolute value of the waste which the consumer has to pay for, whether he will or not, because as the bank credits are created at the instance of the manufacturer, and repaid out of prices, each article produced dilutes, by the ratio of its book price to all the credits outstanding, the absolute purchasing power of the money held by any individual. Ibid.
These facts are quite unaffected by the perfectly sound argument that increased production means decreased cost per price, since it is the total production price which has to be liquidated. Ibid.
The Fallacy of "More Production!"
The whole argument which represents a manufactured article as an access of wealth to the country and to everyone concerned, no matter what its description and utility, so long as by any method it can be sold and wages distributed in respect of it, will, therefore, be seen to be a dangerous fallacy based on an entirely wrong conception, which is epitomised in the use of the word "production", and fostered by ignorance of financial processes. Ibid.
THE ORTHODOX CONCEPTION OF THE RELATION BETWEEN PRICES AND PURCHASING POWER
The point we have to make is not merely that financial purchasing power is unsatisfactorily distributed, it is that, in its visible forms, it is collectively insufficient. C.H. Douglas, "Social Credit". Part, 2, Chap. 1, 1924 edit.
One stage in advance towards this end is the theory generally associated with the name of Mr. J.A. Hobson, who attributes the general lack of purchasing power (the fact of which he most properly emphasises) to the undue investment of savings, on the part of the more fortunate members of Society in what are termed capital undertakings, with the result that production of capital goods is in excess of the amount required. That such unbalanced production does take place is, unquestionable; but that Mr. Hobson's explanation is inadequate to explain the process, which accompanies and complicates this unbalancing, is, I think, not less certain. Nor does this theory account for the collective growth of bank deposits. Ibid.
Both of these explanations really proceed from a misconception of what actually takes place in the financial and costing departments of Industrial organisations, and a further failure to grasp the possible relation which can exist between the abstraction of money and the concrete physical realities to which it relates. There is every justification for these misconceptions; they are strictly orthodox in the sense of being the general teaching of the majority of those people who claim to be experts on the matter; and it is necessary that they should be stated in order that the invalidity of them may he exposed. - Ibid.
This orthodox theory, then, assumes that the money equivalent to the price of every article which is produced, is in the pocket, or the bank pigeon hole of somebody in the world. In other words it assumes that the collective sum of the wages, salaries and dividends distributed in respect of the articles for sale at any given moment, which represent collective price, are available as purchasing power at one and the same moment. Certain persons have more money or bank pigeonholes than they wish to spend on consumable goods. They do not spend it; they save it, as the phrase goes. By this abstinence from spending they form a fund which enables capital goods, ie. tools, plant, factories, to be paid for, and therefore produced, and because of the process by which these are paid for the capital goods thus produced become the property of those persons who have thus saved. - Ibid.
Now the first point to be grasped in regard to this argument as a whole is that, even supposing at any given moment it were true, one week afterwards it could no longer be true. If on a given day, there was extant in the world sufficient money to buy all the goods in the world at the prices it had cost to produce those goods, and any portion of that money were applied to form the payment for the production of new goods, then that money so applied forms the cost of the new goods, and immediately there is a disparity between the total costs, which are the minimum total prices, of goods, and the amount of money in the world which would ex-hypothesi, be exactly the same as before. This would be true even if no one "saved" any further quantity of money. The persons who have saved the money would not have saved the goods which the original money represented, they would merely have transferred their claims from the original goods in existence to new goods, and could only "get their money back" by the sale of those goods; nor would there be any mechanism in existence by which the old goods could be bought. That surely must be self-evident. - Ibid.
But the process does not stop there. From the investor's or "savers" point of view, his only object in putting his money into capital goods is to get an increased amount of money back, and on Mr. Hobson's assumption, in particular, he can only get his money back from the public in the form of prices. The condition then is, that there are more goods in the world at each successive interval of time, because of the financial saving, and its application to fresh production, while the interest, depreciation, and obsolescence, on this financial saving has to be carried forward into the prices of production during a succeeding period. - Ibid.
Each pound saved would be a pound withdrawn from consumption and put into production. Since costs must be less than prices, it only requires a very simple examination of this condition to see that the cycle would become unworkable in a very short period of time, since no one would be able to buy anything. Depreciation alone would absorb the world's purchasing power, although not seriously diminishing the world's true wealth, and if no other factors intervened, we should have starved in the midst of plenty many years ago. - Ibid.
He (the manufacturer) has no power of making money in the literal sense, but he has the prerogative of allocating cost. At this point please note that his allocation of cost can fall into three main headings at any moment. First, the money or purchasing power which he is actually distributing to the citizen in his capacity as an earner. Secondly, an additional figure which represents his idea of his own remuneration, and which he calls "profit", and thirdly, the sum which represents the claim for debt, including semimanufactures. I do not wish to go at the moment into the exact division of allocated costs into profit and recovery of debt, or the justification of these divisions, I merely wish to establish that every manufacturer can and does distribute costs in the form of wages and salaries and allocates costs which are not distributed as wages and salaries. These latter costs can only be distributed after he has sold all his goods, and collected both the distributed and the allocated costs, and he does not distribute enough before they are sold to buy them. - C.H. Douglas Hawtrey Debate, March 22, 1933.
... there seems to me to be a confusion between price values and purchasing power, the confusion to which I referred at the beginning of my reply. For instance, Mr. Hawtrey says that incomes arise out of production. They do not. Price values arise out of production, incomes arise out of purchasing power created by the banks. - Ibid.
Receipts are prices; dividends are paid out of them. Wages and salaries are costs, together with profits. They are not paid out of receipts, but antecedently, out of credit. - C.H. Douglas, "The Labour Party and Social Credit", 1922.
Two misconceptions are apparent in the arguments adduced (to prove that total incomes are equal to total costs). the first and less important, is the failure to realise that depreciation and maintenance, obsolescence, etc., are added into prices, and written off profits. Dividends come out of profits, consequently, are smaller than the profit item in prices and cannot liquidate it. - Ibid.
Enormous Increase of World Debt Proof that Financial Price System is not Self-Liquidating
Your Majesty, Mr. President, Members
and Guests of the Handelsstands Forening, Oslo: ... In the year 1694
the Bank of England was formed in Great Britain. ...In the 17th century
that is to say in the century in which the Bank of England was founded,
the world debt - and we have pretty accurate figures with regard
to these matters - increased 47 per cent.
We also know that in fact, in those times of boom which are referred to by economists as proving that it is self-liquidating, the rate of increase of debt is greater than in times of depression; so that in real fact, in times of boom even, there is no justification for saying that, at any time of the trade cycle, the price system is self-liquidating. "Money and the Price System" - a speech delivered by Major C.H. Douglas at Oslo on February 14, 1935, to H.M. The King of Norway, H.E. The British Minister, and the President and Members of the Oslo Merchants Club.
Having in view the importance of
the issues involved, it may be desirable to summarise the conclusions
to be derived from a study of the methods by which the price of production
is based on cost under the existing economic arrangements.
The New and The Old Economics by
C.H. Douglas, 1933.
THE A PLUS B THEOREM, SAVING,
For the convenience of readers who have not Professor Copland's paper, or the book in which this theorem is contained, it is printed herewith:
"A factory or other productive organisation has, besides its economic function as a producer of goods, a financial aspect - it may be regarded on the one hand as a device for the distribution of purchasing power to individuals, through the media of wages, salaries, and dividends; and on the other hand, as a manufactory of prices - financial values." From this, standpoint, its payments may be divided into two groups: "
Group A - all payments made to individuals (wages, salaries and dividends)."
"Group B - all payments made to other organisations (raw materials, bank charges, and other external costs)."
"Now the rate of flow of purchasing power to individuals is represented by A, but since all payments go into prices, the rate of flow of prices cannot be less than A plus B. Since A will not purchase A plus B, a proportion of the product at least equivalent to B must be distributed by a form of purchasing power which is not comprised in the description grouped under A."
It is fortunate that the criticism of Professor Copland is practically contemporaneous with a criticism of the same theorem by Professor Robbins, as it is possible to use either of them to confute the other. It is, however, obvious that, at any rate, Professor Copland has not understood, what seems to me to be, in fairly simple language, and what are the consequences which might be expected as a result of its truth.
The A plus B theorem, then, may
be said to be, first, an assertion that, under certain circumstances,
almost universal in modern industry, which will subsequently be specified,
purchasing power cannot be equal to prices, if purchasing power and
prices are both considered as a flow, which is the commonly accepted
and correct method of regarding the matter. The second aspect of
the theorem is that it puts forward an explanation as to the mechanism
through which this disparity is produced. Obviously, the correct
method of approaching the subject, although not that commonly employed
by professional economists, is first of all to ascertain if the situation
does, in fact, confirm the theorem.
As association of American engineers
and technologists at Columbia University remarks: "The advent of
technology makes all findings based on human labour irrelevant, because
the rate of energy conversion of the modern machine is many thousand
times that of man. The total capacity of U.S. industrial equipment
is one billion horsepower which does the work of ten billion men,
or five times the earth's total population".
On the other hand, we way regard
Governments as being spokesmen of the financial system, since it
is by the sanction of Governments that the existing system is maintained.
It is claimed by these governmental spokesmen that we are living
in a period of great stringency, that financial economy is necessary,
both of the voluntary or saving description and of the involuntary
description, which may be for the present purpose described as taxation.
Turning to the specific criticism
of the theorem, Professor Copland begins by remarking as follows:
Let us suppose that production
is divided into five processes, all of them in progress at the same
time. Each of these five processes pays its workmen weekly, and each
pays £10 in wages. Each one of the factories carrying out the
five processes allocates 100 per cent. on to its direct labour in
the form of book charges, which is a very moderate overhead average
charge. For the moment we will leave out payments for materials.
From the ordinary point of view, the people who put up the money are legitimately entitled not only to a profit on this money but also to get it back again in full, since in their case the money may be assumed to represent past effort, so that the factories in question must make a charge on each article turned out which will provide money to meet claims. The only objection to this perfectly fair assumption is that, in the aggregate, the public has not got the money.
The second method, and probably the method by which most modern financing is done, under cover of a smoke screen provided by comparatively small subscriptions from the public is that some financial institution actually creates the money, taking debentures on the new factories as security. Ethically, there is every difference between money created by a stroke of the pen and money acquired as the result of years of effort, but I am not at the moment concerned with ethics. At first sight it is a better method, considered as an isolated operation.
When the new factories come into existence, new money in distributed to the men who built the factories. But there are two practical objections, leaving aside any question of ethics. The new money or credit is claimed by the financial institution as its property, and therefore when it is lent, creates a debt against the public. At the same time, being distributed in advance of consumable goods, it tends towards true inflation. The debt differs in nature from the debt created by private finance in exactly the same way that a debt to foreigners differs from an internal debt - its repayment actually takes money out of the country. If a rise of prices has occurred, it is repaid twice over, once in increased prices and again on redemption.
Secondly, there is no provision in this method of financing for the money required to pay the interest on the debentures, which, in fact, can only be paid, if it is paid, by the issue of fresh money to pay it, which, under existing circumstances, comes from the same source, that is to say, the financial system. From this point of view, it is the difference between usury and profit - a difference clearly drawn in the Middle Ages.
There is an additional factor,
perhaps more important than any of these, and this is that, either
by directly calling in the debentures or by selling the debentures
to the public and calling in public overdrafts, Financial Institutions
can, and most unquestionably do, recall the money equivalent to the
plant value at a greater rate than this plant depreciates.
It is now necessary to see to what extent this conception of overhead charges can be extended, and I think that a little consideration will make it clear that in this sense an overhead charge is any charge in respect of which the actual distributed purchasing power does not still exist, and that practically this means any charge created at a further distance in the past than the period of the cyclic rate of the circulation of money.
There is no fundamental difference between tools and intermediate products, and the latter may therefore be included. Admittedly, at this point, we get into a certain difficulty, both to ascertain the average rate of circulation of money, and the antiquity of the various charges made, but the disparity is so great that, qualitatively, there is no difficulty in proving the point.
In Great Britain, for instance
the deposits in the Joint Stock Banks are roughly £2,000,000,000.
in rough figures, the annual clearings of the clearing banks amount
to £40,000,000,000. It seems obvious that the £2,000,000,000
of deposits must circulate twenty times in a year to produce these
clearing house figures, and that therefore the average rate of circulation
is a little over two and a half weeks.
Categorically, there are at least the following five causes of a deficiency of purchasing power as compared with collective prices of goods for sale
1. Money profits collected from the public (interest is profit on an intangible).
2. Savings, ie. more abstention from buying.
3. Investment of savings in new works, which create a new cost without fresh purchasing power.
4. Difference of circuit velocity between cost liquidation and price creation which results in charges being carried over into prices from a previous cost accountancy cycle. Practically all plant charges are of this nature, and all payments for material brought in from a previous wage cycle are of the same nature.
5. Deflation, ie. Sale of securities by banks and recall of loans.
There are other causes of, at the moment, less importance.
Excluding taxation, which is a separate although allied subject, all distributed purchasing power is recovered from the public through the agency of prices. This is just as true in connection with the recall of trade loans as in any other form of expense. It seems obvious, therefore that, with the exception of savings, the whole of the above causes of the difference between purchasing power and prices can be found in B payments, which are money ultimately on its way back to the bank, and none of them, with the exception of savings, are found in A payments, and if we subtract the A payments distributed in a given week minus savings from the total prices claimed in a given week, we shall get B payments as a measure of the net debt claims against the public for the week in question.
As bearing upon this, the Association
of American Engineers at Columbia University, previously referred
to, remarks that "the total debt claim against the physical equipment
of all American industry has risen to the fantastic figure of 218,000,000,900
dollars - a debt claim on posterity".
Professor Copland then goes on
to argue that the whole system of production would have broken down
had my analysis been correct, and mentions the interesting fact that
A payments in Australian industry are about one-fourth of the total
value of the output of goods in factories.
It may now be convenient to deal
with Professor Robbins' views on the matter.
I cannot help feeling that we are
indebted to Professor Robbins, for putting the logical, inference
from the financial position into plain words, and it appears to me
to be such a reductio and absurdum as should convince anyone
that its premises are unsound. Professor Robbins, however, does not
agree with Professor Copland, but remarks:
I am not quite sure whether Professor
Copland would regard the foregoing explanation by Professor Robbins
as being an outstanding example of clarity, but, apart from that
and with a slight modification which I will indicate at once, I should
be inclined to say that, if I understand it correctly, Professor
Robbins has obtained a more accurate conception of the truth than
has Professor Copland.
In passing, it may be noted that, not only in the case of Professor Copland and Professor Robbins, but in the discussions which took place before the MacMillan Committee in 1930 and at Ottawa in 1923, it seemed to me and to others that the professional bankers and economists were quite ignorant of rudimentary cost accounting, and it is possible that this ignorance may have some bearing on the remarkable divergence of opinion which seems to exist on matters of fact. Not only is real saving in the physical sense - by which I mean a constant surplus of production in a form tangible or intangible inevitable, apart from being a desirable feature, of the present production system, but there is no possible case in which the present system is worked, as it is supposed to be worked, in which charges do not appear in respect of the use of real, ie., physical capital.
It is a perfectly proper thing,
from a cost accounting point of view, for a workman to charge for
the use of a hammer, and the moment he does this he is making charges
in respect of capital. When the banking system endeavours to drive
down prices by deflation, so as to make it possible to collect these
charges, it is merely transferring the injustice which it normally
inflicts on the general public, to the manufacturers and the investor,
who have been induced to undertake the business of providing goods
and services on the tacit understanding that, not only shall they
be paid for their present work that they shall be paid for their
past work, which in their case is represented by savings which they
have invested in the new business.
THE EFFECTS OF UNREGULATED ISSUE
The Real Causes of Inflation
Secondly, they are distributing this purchasing power obtained out of "credit" largely (and this is increasingly true) in respect of capital production - ie. things which in themselves are, of no use to consumers: tools, factories, etc. The community as a whole, therefore, is producing and being paid for real capital as well as ultimate products, and much of the real capital is permanent and, survives the lifetime of its producers.
Now consider these points in connection
with the proposition
Further, the existing control is
semi-automatic; every increase of credit-expansion on these terms
means a greater capital production and a proportionately smaller
use of that capital to deliver ultimate products.
Community Does Not Control Credit-Issue
or Price-Making at Present
Why Consumers' Goods are Scarce
and Capital Goods Abundant
Cost of Living Constantly Rising
under Present System
the wages, etc., system distributes goods and services through the same agency by which it produces goods and services - the productive system. In other words, it is quite immaterial how many commodities there are in the world, the general public cannot touch them without doing more work and producing more commodities. Ibid.
this feature, in conjunction
with those previously examined, has many far-reaching consequences
- amongst others the feverish struggle for markets, which in turn
has an overwhelmingly important bearing on Foreign Policy.
A careful consideration of these
factors will lead to the conclusion that loan-credit is the form
of effective demand most suitable for stimulating semi-manufactures,
plant, intermediate products, etc., and that "cash" credit is required
for ultimate products for real personal consumption.
Summary of Defects in Credit-Issue
Industrial Depression and Deflation
the Result of Financial Policy
(1) That the primary cause of the industrial depression and consequent unrest is financial. It is due to lack of power to buy, not due to lack of power or will to produce. That is to say, it is not in the main administrative, nor due to the technical relationship between employers and employed, but is due to money relationships which are governed primarily by the financial system, and secondarily by financial policy. Such ''remedies'' as "rationalisation" or "nationalisation" do not touch the fundamental problem.
(2) That while the policy pursued in regard to credit issue probably controls the general rate of production, and may be the main cause of the differential rate of economic prosperity as between one nation and another, the fundamental defect of the financial system, as operated, is mathematical, not political. The existing financial system is not a correct reflection of economic fact, as it should be, and is both misleading and restrictive.
...under the existing financial
system the general public can at no time acquire by purchase the
whole of production, but while this is so, and the proportion of
a given volume of production which the public can buy is probably
fixed by the system, the total volume of production is almost certainly
governed by financial policy.
Paradox of Poverty Amidst Plenty
- Its Resolution not Complete - Solution of Present Problems
Briefly, then, the symptoms of
this paradox of poverty amidst plenty are: -
If you will examine these factors,
you will see that they have one common ingredient, and one only,
which can be expressed as lack of purchasing power. Or to put the
matter another way and in a form which is most important to bear
in mind, the richness of the physical economic system is not reflected
in a corresponding abundance of purchasing power in those places
where it would be effective.
Some Absurdities of Present
Economic and Financial Systems
Great Britain, which was one of
the nations very vocal in asserting that Germany must pay, is feverishly
searching for methods either by tariffs or otherwise, which will
prevent German goods, which are by common consent the only method
by which Germany can pay from entering this country, and is providing
Germany with credits in order that she may import British coal.
Considered merely from the point
of view of financial operations, and without trespassing on the domain
of world policy, it is not difficult to see that every advantage
to finance, as a business, lies in rendering the Reparations Clauses
of the Treaty of Versailles ineffective.
If Germany's productive capacity
for the next twenty years or so were effectively hypothecated to
the service of the allies who were engaged against her in the late
war (1914-1918), it is fairly obvious that she would not be good
security for loans. For this reason, if for no other, the efforts
of the financial interests are likely to be directed to obstructing
the payment of reparations, and finally to the cancellation of the
obligation to pay them - a state of affairs which in the existing
financial arrangements would no doubt be signalised by the grant
of an "international" loan to Germany for a reconstruction of which,
by all accounts, she is in no need.
Full Employment and Materialism
There are numbers of fairly intelligent
people who accept the idea that the world is moving inevitably to
Dictatorship of the type adumbrated by Stalin, in the same way that
the drawing rooms of the mid-nineteenth century were filled with
believers in the inevitability of "Progress". The two ideas are not
unconnected - they are the direct consequence of the delirium of
materialism - the acceptance of the dogma that the one end of man
is gadgets, that he must at all costs be kept employed under discipline
making more and more gadgets, and carrying the blessings of his gadget
civilisation to the benighted heathen.
There is not a large newspaper
in the world which has not misrepresented the technological increase
of production per man-hour as "unemployment", and as a failure of
statesmanship. Not because things which ought to have been made,
were not made, which may be true, but because of the determination,
conscious and vicious, to keep unemployment and poverty synonymous.
And that this misrepresentation is part of the Big Idea, is,
I think, demonstrated conclusively by the dangerous nonsense being
circulated by all the machinery of propaganda at this critical time
in regard to the Russian Social and Economic Systems.
The Basic Guiding Principle
Power Production and Its Effects
The productivity of a unit of human labour has increased somewhat irregularly over the whole field of production. In some cases the increase in a hundred years has amounted to thousands per cent, in some cases the increase of output per unit has become much less. Ibid.
It is, however; broadly true to say that general economic production which may be defined as the conversion of existing materials in a form suitable for human use, is proportional to the rate at which energy of any description is used in the process, and this line of attack is probably closer to reality than any method in which financial units are employed. Ibid.
On this basis it is safe to say that one unit of human labour can on the average produce at least forty times as much as was the case up to the beginning of the nineteenth century. Ibid.
The following examples are some indication of the progress made in the past few years alone. The rate of production of pig iron is three times as great per man as it was in 1914. A workman using automatic machines can make 4,000 glass bottles as quickly as he could have made 100 by hand twenty-five years ago. In 1919 the index of factory output (based upon 1914 as 100) was 1146, and the index of factory employment was 129. By 1927 output had risen to 170, but employment had sunk to 115. In 1928 American farmers were using 45,000 harvesting and threshing machines and with them had displaced 130,000 farm hands. In automobiles, output per man has increased to 310 per cent. An increase of 210 per cent. Ibid.
Now, if you will consider the fact
that the general output of goods of all descriptions per unit of
mechanical labour employed, is, at least, proportional to the total
energy put into the productive system, and that this energy has increased
in the last 100 years by at least 3,000 to 4,000 per cent., you will
see that one of three things must happen.
Two Inducements to Employment
But the second necessity under which men and women labour, after the primary necessity has been met, can broadly be described as the satisfaction of the artistic instinct; which can be further analysed and defined as the incorporation in material forms - of ideals conceived in the mind. Ibid.
these two human necessities are confused in many arguments which proceed from apparently divergent authorities on industrial and social questions ...
Until recently, the statement that a large body of the public lived on the verge of starvation, because it was unemployed, and that, therefore, the problem of the modern world was the abolition of unemployment received almost universal assent. It is fair to say that opinion is no longer so unanimous on this matter; and in consequence, from the position of being stated as an axiom, it may be observed, that it is receding into the position of a proposition to be proved, and the confusion to which we have just referred is more or less successfully invoked to this end. Ibid.
Work as a MEANS and as an END
Error of Organised Labour -
Attitude to Employment
...Considering the matter always
from a practical point of view, it must be evident that the soundness
of this stress on the prime necessity for continuous and general
employment, using that term in the narrow sense of commercial employment
for wages, rests on quite other grounds than the use of employment
as a means for distributing wages - can, in fact, only rest on the
premises of either the Modernist or the Classical idea.
Results of "Full Employment"
- Inevitably Disastrous
Leisure and Pseudo-Morality
The matter is rarely stated in
so many words. It is more generally suggested that leisure, meaning
by that, freedom from employment forced by economic necessity, is
in itself detrimental; a statement which is flagrantly contradicted
by all the evidence available on the subject. It is hardly an exaggeration
to say that 75 per cent. of the ideas and inventions to which, mankind
is indebted for such progress as has been so far achieved, can be
directly or indirectly traced to persons who by some means were freed
from the necessity of regular, and in the ordinary sense, economic
employment, in spite of the fact that such persons have never been
more than a small minority of the general population.
PRINCIPLES OF ECONOMIC AND FINANCIAL REF0RM
The Just Price and the National
Now the core of this problem is the fact that money which is distributed in respect of articles which do not come into the buying range of the persons to whom the money is distributed is not real money - it is simply inflation of currency as far as those persons are concerned. The public does not buy machinery, industrial buildings, etc., for personal consumption at all. So that as we have to distribute wages in respect of all these things, and we want to make these wages real money, we have to establish a relation between total production, represented by total wages, salaries, etc., and total ultimate consumption, so that whatever money a man receives, it is real purchasing power. This relation is the ratio which total production of all descriptions bears to total consumption and depreciation. Ibid.
The total money distributed represents total production. If prices are arranged as at present, so that this total will only buy a portion of the supply of ultimate products, then all intermediate products must be paid for in some other way, they are paid for by internal and external (export) loan credit. Ibid.
If prices are arranged so that they bear the same relation to cost that consumption does to production, then every man's money will buy him his average share of the total consumption, leaving him with a balance which represents his credit in respect of his share in the production of intermediate products (semi-manufactures) - a share to which he is entitled, but which is now almost entirely controlled by the financier in partnership with the industrial price-fixer. Ibid.
The effective demand is that of
the public, based on the money of the public, and the willingness
of the producers to respond to economic orders; but the paramount
policy which directs the mobilisation is anti-public, because it
aims at depriving, with the greatest possible rapidity, the public
of the means to make its demands effective; through the agency of
If I have made myself clear you will see that credit-issue and price making are the positive and negative aspects of the same thing, and we can only control the economic situation by controlling both of them - not one at a time, but both together ... The issue of credit instruments will then not result in an expansion of money for the same or a diminishing amount of goods, which is inflation, but in an expansion of goods, for the same or a diminishing amount of money, which is deflation. Ibid.
... by controlling both credit
issue and price-making the public acquires control of policy with
all its attributes.
The early Victorian political economists agreed in ascribing all "values" to three essentials: land, labour, and capital ... But it is rapidly receiving recognition that, while there might be a rough truth in this argument during the centuries prior to the industrial revolution consequent on the inventive period following the Renaissance, and culminating in the steam engine, the spinning-jenny, and so forth, there is now a fourth factor in wealth production, the multiplying power of which far exceeds that of the other three, which may be expressed in the words of Mr. Thorstein Veblen "The Engineers and the Price System", ( although he does not appeared to have grasped its full implications) as the "process of the industrial arts".
The National Dividend
the dividend is the logical
successor to the wage, carrying with it privileges which the wage
never had and never can have, whether it be rechristened pay, salary,
or any other alias; because the nature of all these is a dole of
purchasing-power revocable by authority, whereas a dividend is a
payment, absolute and unconditional, of something due. The first
is servitude, however disguised, the second is the primary step to
Statement of General Principles
Necessary to Effective Reform
One method by which it is possible
to visualise in a familiar form the embodiment of such a set of relationships
is in the conception of, let us say, Great Britain Limited. If we
imagine a country to be organised in such a way that the whole of
its natural born inhabitants are interested in it in their capacity
as shareholders, holding the ordinary stock, which is inalienable
and unsaleable, and such ordinary stock carries with it a dividend
which collectively will purchase the whole of its products in excess
of those required for the maintenance of the "producing" population,
and whose appreciation in capital value (or dividend-earning capacity)
is a direct function of the appreciation in the real credit of the
community, we have a model, though not necessarily a very detailed
model, of the relationships outlined.
Contemporaneously with this, he
might also be a "producer", and although it is probable that the
money incentive could be made small in comparison with the dividends
he would receive as a shareholder, the relation between these two
forms of effective demand offers a flexible method of transition
from the existing arrangements.
Under such an arrangement, wages
and salaries become what they are in fact at present - merely a credit
grant against future production and a measure of the human energy
put into production. This credit grant would be cancelled by the
writing down of the national assets to an extent represented by the
sum of the wages and salaries, the assumption being, of course, that
the wages and salaries represent the consumption of goods over a
given period which have to be debited against the production of the
same period. The dividend, which is declared over the equivalent
period, represents the division of the difference between actual
consumption and actual production (both of actual products and productive
capacity) over the same period.
In order that a financial system
may work in accordance with the necessities of the conception on
which money rests fundamentally it is necessary:
The original conception of the
classical economist that wealth arises from the interaction of three
factors - land, labour, and capital was materialistic conception
which did not contemplate and, in fact, did not need to contemplate,
the preponderating importance which intangible factors have assumed
in the productive process of the modern world.
If this point of view be admitted,
and I find it difficult to believe that anyone who will consider
the matter from an unprejudiced point of view can deny it, it seems
clear that the money equivalent of this property which is so important
a factor in production, vests in and arises from the individuals
who are the tenants-for-life of it.
The question of its nett increase
is also beyond reasonable question. Every scientific invention and
discovery, besides forming a real asset in itself and being essentially
an addition to the assets of civilisation, reacts on other assets
in a manner which automatically increases their value, just as the
addition of a new subscriber to a telephone exchange automatically
increases the value of the telephone system to the existing subscribers
by giving each one of them an additional line of communication. This
factor, probably far more than the material assets of civilisation
form the basis of its real and growing store of wealth.
The Just (or Compensated) Price
It should be emphasised that the practical operation of a price factor of this character involves no difficulty and is, in fact, in various forms a commonplace of business operations at the present time. As compared with the complex system of discounts which are a feature of every business, and vary not merely from business to business, but from one department of the same business to another, the application of a uniform price factor for the purpose of reducing the general price level is a matter of elementary simplicity. Ibid.
Real and Financial Credit
Where the Money is to Come From
You will, of course, inquire where
the bank will receive the necessary funds with which to credit the
individual consumer (or alternatively, the retailer - compiler's
note) ... The answer to this is that at stated intervals, of say,
one to three months, the banks would present an account of such credits
to the Treasury, which would in turn pay to the banks a Treasury
Draft equalling the amount so that the banks would then be covered
in the transaction. The justification for the issue of the Treasury
Draft is found in the increased real credit (the rate at which goods
and services can be delivered as, when and where required - vide
supra - compiler's note) of the community, which accrues from the
increased trade which is assured by the lowering of prices.
The Just Price and the Price
The greater part of the surplus
production is capital production, and we have to find a method of
restoring his money to the producer of capital goods as soon as they
are produced, while only charging the consumer for them at the rate
that they are used up. The justification for this, of course, is
that real credit is a measure of the rate of production.
The Nature of Democracy
Democracy and Majority Rule
Ballot-Box Majorities - Devices
for Despoiling Minorities
The etymological description of
democracy is "popular government rule' by the people" (Skeat). Out
of six words comprising this double definition, four require definition
in themselves "popular", "government", "rule" and "people". But even
so vague and inexact a definition as that of Skeat would probably
not be advanced by most people, who would say that democracy is rule
by the majority, or universal suffrage.
When a man says he has something of which some kind of definition or description exists, it is a sound principle, before forming any opinion of the thing, to make sure that he really has it. It is certain, for instance, that the state of affairs in any of the titular democracies cannot be made to agree with even Dr. Skeat. It is almost equally certain that it would be a major catastrophe if it did so correspond. Clearly, there can be two explanations for this. Either the "people" are prevented from "ruling" by the machinations of wicked men, or "rule by the people" is an impossibility. Ibid.
The second explanation has an important consequence - that democracy, being impossible but attractive as an idea, would form the best possible cloak for the condition indicated by the alternative explanation. This is the criticism strenuously propagandised by the admirer's of totalitarian rulers such as Herr Hitler and Mr. Stalin (although Communists amusingly describe Russia as democracy). It can be demonstrated that real democracy is possible; but it must be conceded that a visible dictatorship is preferable to an anonymous tyranny or a manipulated electorate. Ibid.
So-called democracy, ... is a ballot-box device for despoiling minorities, not, it should be carefully noted, for the benefit of majorities, but for the benefit of third parties. Motor taxes do not distribute motor cars, wine taxes do not distribute wine, and expropriated estates do not go to the landless. Ibid.
The present vogue of geopolitics relating wars to a specialised form of dialectical materialism, clearly belongs to the evolutionary blind-force school of thought, from which the German contention that wars, and even greater wars, are salutary can easily be recognised as a "logical" deduction. - Ibid.
It is a curious fact, which may or may not be coincidental, that the type of society which is induced or produced by this type of thinking, bears marks resembling the workings of the thermo-dynamic principle of entropy - the tendency of energy to deteriorate from a potential to a latent and unavailable state - to "run down".
That is to say, so far from this systematic penalising of minorities under the entirely unproved theory that the equalitarian state is a desirable objective and corresponds to anything we can describe as "progress" or the survival of the fittest in any cultural sense, it appears to correspond to the exact reverse. Perhaps the most complete embodiment of dialectical materialism is contemporary Russia, and it will be noticed that the rulers of Russia are living in the monuments of a different era, the Kremlin and the architectural achievements of the period of Catherine the Great, and appear to be unable to produce anything but industrial monstrosities. Ibid.
the observed working of political
systems does make it essential to examine the properties of a political
majority and the first characteristic requiring attention is that
Most people of necessity, and especially
in these days of mass propaganda, form their opinions at secondhand,
and a great deal of opinion formed in this way is purely passive.
Little or no critical faculty is applied to it, but on occasion,
it is regurgitated as though it has been formed as a result of personal
experience. This is always true but when the opinion refers to a
complex or subtle problem, it is a mathematical certainty that what
is registered is a minority opinion popularised, or has no intrinsic
To take an example from comparatively recent history, of what value is the opinion of the average voter on Tariffs? We may further notice, at this point the contemporary emphasis on the virtues of the common man" - not on his uniqueness as an individual, but precisely the opposite; on his "common"-ness, his resemblance to a mass produced article. Ibid.
Perversion of Democratic Theory
Majorities and the "Fuhrerprinzip"
Now the first point to observe is that it finds no support in history. If the outcome of the present Bedlam should result in a victory for size, and the rule of the world pass to mere populations, whether German, Russian or American, it will be something entirely new. Ibid.
Greece, Rome, Venice, Spain, Holland, England, all of them small, have all, in their turn, set the fashion in civilisation, and, in every case, their eminence has not only been in the midst of far greater, and in most cases, opposing populations, but has, for the most part, been most clearly marked at a period when the disparity in numbers was greatest. Ibid.
Admittedly, this day of splendour has been to a much greater extent than is commonly realised, a monetary phenomenon. But to say that is completely to miss the most important lesson that can be deduced from history. That lesson is that the increment of association is greatest where the association most flexible, or to put it another way, money has been, in the past, the most flexible voting system ever devised, enabling the voter to change his policy and to hold an election every five minutes. Ibid.
It is obvious that a majority is only a specialised and deceptive word for the "Fuhrerprinzip". No majority can act without a Leader. When an individual resigns power to a leader, he resigns it primarily to be used against him. To the extent that the "Fuhrerprinzip" has been effective, the present state of the world is the result of the "Fuhrerprinzip". You can't have it both ways - either the device is ineffective or the results are catastrophic. Ibid.
The attempt to construct a system of human relationships on the "rights" of majorities is not democracy. If it were, democracy would stand self-condemned. Ibid.
Freedom and Liberty
Liberty is really a simple thing, though difficult to come by. It consists in freedom to choose or refuse one thing at a time. Ibid.
Some passages from - REALISTIC CONSTITUTIONALISM
My Lord President, my Lords, and
Put quite shortly, my main thesis
is that this is not true; that the rules of the Universe transcend
human thinking, and cannot in the ordinary sense of the words,
be altered, and therefore must be ascertained and obeyed.
Christianity, The British Constitution,
Russia - and Professor Laski
A Constitution is either an organism
or an organisation.
The real British Constitution -
not Professor Laski's - is an organism.
Common Law Derived Mainly from
Church - Not from Electorate
Magna Carta, The Church of England,
The Constitution, and the Catholic Church
It should be noticed that three partial sovereignties were present on that little island of Runnymede on a June morning in A.D.1215, and its important to note that Magna Carta strengthens and confirms all of them - the Church, the King, and a much more real democracy than anything we have nowadays. It is patently false to suggest that the barons acted only for the nobility. They were the spearhead; but the preamble to the document expressly states that it is framed by the advice of the Archbishops of Canterbury and Dublin, inter alia. Ibid.
The contrast in the spirit of the
law with that of current legislation is fundamental. The over-riding
intention is to establish every man, of what ever degree, in his
rights, not to take them away. Clause 69 states that "all the aforesaid
customs, privileges and liberties ... as much as it belongs to us
towards our people, all our subjects, as well clergy as laity, shall
observe as far as they are concerned towards their dependents". ...
The question arising out
of the Christian Church ... is the Doctrine of the Incarnation. At
bottom what we have to make up our minds upon is whether human-political
action is subject to the same kind, or some kind, of compulsion to
be "right" as we accept in doing a multiplication sum, and if so,
whether the Christian Church, the Mystical Body of Christ, is the
living incarnation of that "right-ness".
Is there a moral "law" connecting political transgression with national punishment? Contemporary Governments clearly think that there is not; that they are free to legislate in a moral vacuum. Can anyone point to a pronouncement of the Church of England, as such, which contests that idea? Assuming that so-called nationalisation of this or that has any virtues, which is far from self-evident, has the Church ever criticised the methods by which it has been achieved? Ibid.
The policy of that religion (or Anti-Christ) is plainly labelled in the names of Communism and Socialism - .it is the treatment of men as a collectivity. The civilisation which results from that policy is exemplified in Russia and in that to which we are fast moving in this country, the Police State, with its "direction" of, "labour" (notice the collectivity). Ibid.
The "mass" is unsaveable, just as a mob is insane ("without health"); the object of Anti-Christ is to keep mankind in ever larger mobs, thus defeating the object of Christ, to permit the emergence of self governing, self conscious individuals, exercising free Will, and choosing good because it is good. The energising factor is attraction, inducement. Ibid
We can (now) return to the unsatisfactory part which the Church of England plays in the world drama, and the altered attitude which seems to be essential to its survival. It appears to be axiomatic, as the Roman Catholic Church contends that Socialism and Communism must be fought by any Church which calls itself Christian, whatever may be the differences of opinion as to the weapons to be employed. A church which cannot see that Europe was free and attractive to just the extent that it was Christian, and is torn with dissension and is losing its charm, to the extent that it is Socialistic, has betrayed its vocation. Ibid.
It must be insisted that Christianity is either something inherent in the very warp and woof of the Universe, or it is just a set of interesting opinions, ... The Roman Catholic Church has always recognised this, and it has never wavered in its claims. Ibid.
During the current local government election (1947), the Scottish Catholic Bishops have circulated a letter to their members, "To be read at all public Masses on any one Sunday before the municipal elections in 1947". After remarking that: "A few years at most, will decide whether the Christian tradition which has made Europe is to survive, or atheistic materialism is, for time at least, to triumph ... "it offers three considerations to govern the exercise of the vote, of which the last is: "No Catholic can in conscience vote for the representative of a party which denies the fundamental truths of Christian philosophy". Ibid.
Have the Archbishops and Bishops of the Church of England issued any similar advice? And, supposing they had, and their perplexed flock had appealed to the Dean of Canterbury and the Bishop of Birmingham (both, incidentally, nominees of Mr. J. Ramsay Macdonald) for a statement of the "fundamental truths of Christian philosophy" what answer would they have received? Ibid.
The Jewish Question is a mass of untruths, half-truths, and false materialism, and one of the essentials of any solution is to strip it of the occultism, which is its chief ally. What has the Church of England to say of Secret Societies?Ibid.
"Let no one suppose from this,
that I am suggesting a state of affairs in which all men and women
will be equal. Men and women never were equal, are not equal at the
present time, and in my opinion never will be equal, but their inequalities
rest on a far more fundamental basis than that of differences in
a bank pass book, and the abolition of such artificial inequalities
will not only bring into the light of day the real difference in
individuals but will secure by common consent their general acceptance." -
The main preoccupation of the Armistice
years, on the part of those most potent in the world's affairs, has
been to prevent the rectification of the dominant financial system,
a rectification which would have removed any noticeable distinction
between the privileged and the previously underprivileged except
those distinctions which continuously serve to ridicule the claim
to human equality. Economic equality, which is quite another matter,
becomes meaningless in the face of large general surpluses available
Planning and the Rule of the
"A Servant when he Ruleth"
Genuine Democracy - The Power
to Contract out
It is necessary to provide individuals,
as individuals, not collectively, with much more opportunity to judge
political matters by results, and to be able to reject, individually
and not collectively, policies they do not like, which involves a
large measure of power to contract out.
Genuine democracy can very nearly
be defined as the right to atrophy a function by contracting out.
It is essentially negative, although contrary to the curious nonsense
that is prevalent about "negativeness" it is none the less effective
for that reason.
This genuine democracy requires
to be carefully distinguished from the idea that a game is a necessarily
bad game because you can't or won't play it, and therefore the fact
that you can't or won't play it is the first recommendation for a
chief part in changing the rules. On the contrary, that is an a
priori disqualification. For this reason, if for no other, a
period of discipline in the prevalent social and economic systems
in say, the early twenties, seems highly and pragmatically desirable.
The power of contracting-out is the first and most deadly blow to the Supreme State. Ibid.
Power and Responsibility - The
Strategy of Reform
There is a key word which forms the solution of this, perhaps the greatest of all problems which confronts the world at the present time. The word is "responsibility". We have got to make individuals bear the consequences of their actions. Instead of electing representatives to inform bankers and industrialists (who understand the technique of their jobs perfectly) how to do them, and to pass a multitude of laws which, (while providing unnecessary jobs for large numbers of people who could be better employed) still further impede industry, the business of democracy is to elect representatives who will insist upon results, and will, if necessary pillory the actual individuals who are responsible either for the attainment of results or their non attainment. It is not a bit of use asking democracies to decide upon matters of technique, and it is quite certain, as has already been demonstrated, that if you throw a plan to a democracy it will be torn to shreds.
It is not the business of the parliamentary
machine to reform, for instance, the financial system. It is the
business of the parliamentary machine to transmit the desires of
the people for results (which at present the financial system is
not producing) out of the financial system. And to transmit to the
people the names of individuals who are responsible for the financial
system, so that, by the exercise of the right of Eminent Domain,
which has been established as vested in the representatives of the
people, they may, if necessary, take steps to remove those responsible
for impeding the will of the people.
The Political Vote -
But, admitting this, the individual
voter must be made individually responsible, not collectively taxable,
for his vote. The merry game of voting yourself benefits at the expense
of your neighbour must stop, whether by Members of Parliament who
double their salaries as the first-fruits of an electoral victory
or by so-called co-operative societies which acquire immense properties
with the aid of Bank of England created money. There is a clear method
by which to approach this end - the substitution of the open ballot
for the secret franchise, and allocation of taxation according to
the voting for a programme which incurs a net loss. This would also
imply a large measure of freedom to contract out of legislation of
a fundamental character, with a consequent discouragement of the
spate of so-called Laws which are little more than Works Orders.
(a) The secret ballot to be abolished
and replaced by an open, recorded, and published vote.
The Secret Ballot in Parliament
We believe that few of our worst
enemies, accuse us of being incurably optimistic (a concession for
which we are duly grateful); but we confess to being considerably
impressed by the courageous words of Mr. Martin Lindsay (Wellington
and Sandhurst, a battalion commander in the Second Phase of the World
War, in which he served with distinction in Norway and North-West
Europe; Member of Parliament for Solihull). Mr Lindsay contributes
a centre-page article to The Observer for May 13, urging the adoption
of the Secret Ballot for MP.'s. The choice of medium is something
we frankly do not understand. However, the following opinions, actually
printed in this popular (though not with us) newspaper, stand on
their own inherent quality and have our emphatic endorsement:
Following upon the recent article
by Mr. Martin Lindsay, M.P., advocating secret voting by Members
of Parliament, the political correspondent of the Liverpool Daily
Post, announcing the tabling of a Motion for discussion in the
House of Commons, says it has "deep significance" and "cuts at the
roots of the two-party system round which modern British politics
revolve. The comment, a column long, is cautious in tone, the sole
positive opinion which receives uncontradicted emphasis being that
secret voting by MP.'s would leave a government too weak to do their
Anyhow, the Secret Ballot for MP.'s
is out for an airing. The next thing is the open ballot for electors,
with responsibility attached to each vote.
While it is incontestable that
the monetary system as it is operated will account for all of these
it will not account for the persistence in the system. Let us see
how War fits into them. War is a contest of tools of sabotage. Let
us symbolise the tools by the word "guns". Let us also symbolise
useful production, ie., production for ends which individuals wish
to attain themselves, by the word "butter".
The first part of the proposition
is self-evident; it is the business of the promoter who does not
fight, to produce a crazy and bemused aggressor having centralised
under him, sufficient forces, who will establish the second part
Now, the "Favourable Balance of
Trade" theory is so idiotic when it is understood that it has been
necessary to give it respectability. Such institutions as the London
School of Economics (which was largely endowed by Sir Ernest Cassel,
closely associated with Kuhn, Loeb & Co.) have embodied complex
versions of it, together with suitable presentations of gold standard
banking, "free trade", taxation, etc., in diploma courses ensuring
to the discreet holder a reasonable livelihood and a licence to be
heard on any economic subject. In passing, it may be observed that
in recent years graduates of this and similar institutions have guarded
themselves to some extent against certification by two members of
another profession, by explaining that it is not the business of
Economists of Repute to pass an opinion on the merits of the system
in regard to which they received their diplomas, but merely to explain
how they work.
Sabotage and restriction of output
form so large a subject in themselves that it is only possible to
indicate their general nature. Crude destruction, such as the burning
of millions of bags of coffee, the killing of thousands of day-old
cattle, and many other devices to keep up prices so that the workman's
wages will buy him less, are the fringe of the question.
For many years, the stronghold
of Finance in British political circles was the Liberal Party (Sir
John Simon, the present Chancellor of the Exchequer is a Liberal)
although it is quite probably that it has an effective voice in the
so-called Conservative Party, also. But the Jewish influence in recent
years has been more obviously exerted through the Labour Party whose
Socialist-Trades-Union-Fabian policy is unmistakable.
Attacks upon private property and ownership, particularly of land, complete orthodoxy in finance, amounting to a defence of it, sabotage by restriction of output and bureaucratic control, close connection with the London School of Economics, (Dr. Hugh Dalton, its Chancellor-lect was Sir Ernest Cassel, Reader in Commerce), Internationalism. As I have said elsewhere, the official Labour Party has no fundamental difference of opinion with the controllers of the Financial System - it merely claims that its motives, intelligence, and general equipment qualify it to work the sane system better. I don't suppose there is a member of its Front Bench who could describe in detail a single industrial process; still less, perform it.
It is clear that the Labour Party has been captured. How?
I am inclined to think that, in
ascribing the situation to bribery by the agency of large subscriptions
to Party Funds (although this may be an essential factor) we are
leaving something unexplained. From where does the continuity of
Policy come? Why is it pursued in the face of universal dissatisfaction?
While it is clear enough that Finance benefits, and some Financiers,
there is far too much support for, or at any rate passive acquiescence
in, policies quite outside the range or of either of the average
politician or the average banker, and too much opposition from the
most unexpected quarters to, for instance, Social Credit, to accept
simple greed as the only cause.
In "Le Moyen Age" (1922) M. Funck-Brentano
The Knights-Templars, originally an association of Militant Crusaders of the highest reputation, were suppressed on charges of heresy, black magic, sexual perversion and widespread sedition and anti-monarchism. They "became an imperium in imperio, which threatened the whole social system" The curious phenomenon of Rasputin at the time of the downfall of the Russian Empire has a resemblance to the influence which members of the order were said to exert.
It is widely accepted that they became Freemasons, having learnt the secrets of the Craft in Palestine.
A short time ago, I had an opportunity to discuss the present situation with an acquaintance uniquely well informed on current affairs. Rather unexpectedly, I asked him whether he considered that Continental Freemasonry (The Grand Orient) had anything to do with the war. He changed colour perceptibly, and then said carefully "I think the Grand Orient can start a war but I don't think it can stop it". I think I can guess what he meant.
British Freemasonry is, of course,
quite different, because we are always being told so. A little log
rolling perhaps. This man moved into an important job for no obvious
reason; that man never seeming to obtain normal promotion. No interference
in politics whatever, you know.
Freemasonry is international and worldwide. Its members comprise Dukes and draymen. Probably ninety-nine per cent of its members (including all the Dukes) have not the least conception of its objects, which its organisation is expressly designed to conceal. Its ritual and legend is purely Judaic. The connection of Jewish (an other) Financiers with it is beyond dispute. Most probably it is the mechanism by which policy selects its administrators, just as Finance is the mechanism by which the administrators recruit their servants and keep then obedient, and there is evidence that its focus was in Germany, and has moved to the United States and Ireland.
The Jews were expelled from England
in A.D.1290, and the Knights-Templars in 1312. The Jews, who had
financed Cromwell through Manasseh-ben Israel, were re-admitted by
him, and it is at this time, circa 1660, that we first hear of English
Freemasonry. The Bank of England was founded in 1694, incredibly
camouflaged in its authorisation, by "The Tonnage Act".
Causes - Ultimate and Proximate
of World Unrest
ULTIMATELY, a compact organisation,
almost impossible to identify completely, possibly controlled at
the top by something the Churches call Satan. Freemasonry appears
to be the Church of this Body.
Times being what they are, it may
be necessary to insist that I have neither intention or desire to
apologise for General Franco, if he requires apology. What I do see
quite clearly is that, with his associates, he defeated a primary
attempt of Judaeo-Freemasonry, the Power that is using tradition
to destroy tradition; that he stands as a protagonist, and a not
unsuccessful protagonist, of the opposition to Judaeo-Masonic-Communism;
that the culture of the British Empire, and its traditional basis,
was a primary obstacle to the Masonic World Plan and that, whether
we like it or not, our natural ally in the present struggle is "Franco-Spain".
And perhaps one of the greatest services rendered by the Canadian
Royal Commission on Espionage was to uncover the existence of eg.
"who placed loyalty to a world Power above that which they owed to
their own country" - a situation with which General Franco had to,
and did, deal.
Increasing Separation of ownership
from Control - Shareholder at Mercy of Stock Market
However that may be, it is patent that the separation of ownership from control, which is a feature of stock dispersal and legal devices such as voting trusts (one of which has just been constituted by Sir Stafford Cripps, Minister of Aircraft Production, in respect of the arbitrary acquisition of Messrs. Short Bros.), proxies and other devices, is being pursued systematically in regard to industrial property, just as it is, under the agitation for "nationalisation" in regard to land and credit. Ibid.
It would take us too far afield
to pursue this aspect of the policy into its amazing ramifications.
But two results are significant. The first is that the shareholder
is at the mercy of the stock market. His connection with what was
originally his property is little more than the loose expectation
that a group of men, who have nothing to expect from him and little
to fear, will consider his interests which they are continually told
by the "B", B.C. and the Archbishops, are dubiously moral. Most shareholders
would agree that they don't get much consideration and will get less.
If his stock is not exchangeable for valuable considerations
The second is that he can have no say in the use that is made of "his" property. It becomes, in theory, the tool of a neutral technocracy, but anyone of ordinary common sense knows that it obeys the policy of whoever appoints the management. Let us say, capturing export trade. It is the International Banks who appoint the management. Ibid.
This systematic separation of control from ownership and responsibility began in Germany during the days of Ballin, Rathenau, Bleichroeder, Deutsch and others of the Jewish ring of bankers and industrialists who surrounded the Kaiser. It was transferred to the United States by the Warburgs, Schiffs and Strausses with such lawyers as Felix Frankfurter assisting. The core of the idea is power without responsibility. You cannot effectively punish a corporation or sue a Government Department. Ibid.
It should be noted that this technique was highly developed many years before either Bolshevism, Fascism, the New Deal, or P.E.P. were heard of. Bearing this in mind, we are in a position to follow the technique into governmental systems, and to consider the activities of various contemporary (if temporary) celebrities. Ibid.
RUSSIA - Some Observations
. Even taking the highest figures put forward by those concerned to support the idea that National Socialist Germany is anti-Jewish, the alleged atrocities against continental Jewry do not come within millions of those committed by the Soviet Government in one operation alone - the "collectivisation" of agriculture. But the world rings with the woes of the Chosen, while Russia is idolised by multitudes. Ibid.
Until recently, it was a commonplace of "labour" propaganda that war is a device of the "Capitalist". If you are careful to define your terms, and associate the word "capitalist" with the favourite Socialist ideal," internationalism", there is probably a great deal of truth in the statement. But Russia, the idol of the proletariat, is considered to have demonstrated the success of Socialism by first provoking, through a nonaggression pact with Germany, and then waging, war on an unprecedented scale. Even in this, a population of two hundred millions, embodying traditionally brave soldiers, would in all probability have been decisively and irrevocably defeated by a country, Germany, of eighty millions, unless assisted by Great Britain, a country, of forty-five millions which had withstood Germany single-handed for a year. Ibid.
Money and Social Welfare
The second misapprehension is that
monetary "saving", either of the obvious kind, or via insurance,
was desirable under the pre-war system. More than anything over which
the ordinary individual had control, "saving" tended to unbalance
in favour of excessive production of non-consumable goods, a production
system already distorted by credit monopoly. At a time such as the
present, when the distortion of the production system to a maximum
of destruction, had reached almost its limit, it seems obvious that
sound finance involves the issue of non-saleable bonds, as wages,
such bonds bearing interest equivalent to the proportion that their
capital value bears to the consumable goods being produced. I am,
etc January 13, 1943.
Exports and Imports
If "Aqua Vitae" wishes to
get to the root of our political difficulty, he should insist or
being informed as to the undisclosed terms, as affecting the control
of the Bank of England, which were negotiated by Lord Reading in
Washington, as a condition of the entry of the United States into
the war in 1917.
Money Goods and Prices
The situation you describe was
the subject of fierce and in many cases unscrupulous controversy
during the Armistice years but is now closed. Technically, the point
at issue was, "is the orthodox financial system self-liquidating,
The Governments of this country
prior to 1945 were not, and did not pretend to be composed of experts.
They were advised and often very badly advised by experts but in
theory at least reached their decisions by the exercise of their
own judgement. But our present Government is radically otherwise.
It is a Government trained by the London School of Economics, claims,
in propria persona, to understand finance, and knows quite
well all that your excellent article would tell it.
Bretton Woods Proposals 'Worse
than Gold Standard'"
Let us agree that we require or desire certain imports. Obviously we pay for those imports in the currency of their origin, and we wish to pay as little as possible. We acquire that currency by selling goods in our own currency, and we desire to sell at the highest price so that we can acquire the maximum amount of foreign currency. But the exchange value of our currency depends on what it will buy, ie. the lower our prices the higher our exchange value. We have solved this elementary difficulty by giving away about five thousand millions of capital during the last 50 years.
Let us now insert a second hypothetical
value. We wish to remain an industrial Power, which appears to mean
full employment at high efficiency and consequently with an increasing
output of goods for sale. We are not alone in this. Accepting, for
the sake of brevity, the statement that the USA does not require
to export because she is self-supporting, it would be difficult to
argue that she does not want to remain an industrial Power, and therefore
will not compete for markets.
I am unable at the moment to recall any occasion on which Lord Keynes has been uniquely correct other than in his description of the gold Standard as "archaic". And the Bretton Woods proposals are considerably worse than the gold standard in that they place the United States Treasury in the remarkable position of being an alternative at will of the world's gold mines and gold stocks.
The fixation of the Finnish war
indemnity to Russia in dollars, not roubles or sterling, is evidence
of the intention to institute a financial world empire of a nature
for which it is difficult to believe that we have fought two world
It is not necessary to invoke the
authority of the Christian philosophy (although that is unequivocal
on the point) to realise that the relationship of the individual
to the group is not arguable. The group exists for the benefit of
the individual, in the same sense that the field exists for the benefit
of the flower, or the tree for the fruit. Groups of any kind, whether
called nations, business-systems, or any other associative label,
inevitably decay and disappear if they fail to foster a sufficient
number of excellent individuals, using those words in their precise
It is obvious that advantage is being taken of the orgy of waste through which we are passing to stampede us into mere units in an industrial-financial group. The case which the Society of Individualists has to make for itself, is, I think, less concerned with the value of individualism than with the methods by which it proposes to restore to the individual the opportunity of becoming excellent by the exercise of his possibly unique talent rather than by the life-long performance of a mechanical task.
I have read many of the attractive
writings of Sir Ernest Benn, who is prominent in the Individualist
movement, and they never fail to amuse and delight me. But I notice
that Sir Ernest is a stalwart supporter of the orthodox financial
system. And there is no more future for the genuine individualist
if the pre-war financial system is not radically modified in the
interest of the individual than there is for the deluded victims
of Karl Marx.
The following, which we reproduce
because of its general application, appeared in the "Dundee Courier
and Advertiser'' of April 21, 1945:
The intention of the policy is
world-wide, and the New Zealand Socialist-Labour party, the C.C.F.
(Co-operative Commonwealth Federation) in Canada, the Australian
Labour Party, the American New Dealers, "P.E.P" (The planners) in
Great Britain and, in fact, organisations in every country draw their
inspiration and support from the same source, which was originally
located in Germany.
There are 27 objectors, covering
most of the genuine interests of the district, to the Tummel-Garry
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