Bill Ryan has asked me to elaborate on this part
of my question to Martin:~
"Douglas seemed to be of the opinion that the
Provinces, while
constitutionally unable to issue
their own 'currency', very definitely
controlled
their own 'credit'."
Previously Martin had written:~ "Almost from the moment of Aberhart's election,
there was disagreement
between himself and Douglas as to the political
course to be taken,
arising from the difficulty that Aberhart
had no constitutional powers
over banking and currency, such legislation
being disallowed, and the
Douglas schemes requiring such
powers." (emphasis mine.)
I think the record seems to show that
Douglas, himself, didn't propose anything that indicated he was unaware of the
limitations to Provincial powers. It will be remembered that prior
to the Aberhart Social Credit government's election, Douglas had been engaged
as "Reconstruction Advisor" to the Government of Alberta by the United Farmers
of Alberta Party that then formed the government. And he made his
'First Interim Report" to that government.
In that report, Douglas stated, " The power of
printing legal tender money, or that which passes as money, undoubtedly
belongs to the Dominion, and has now been delegated to the Bank of
Canada. But it cannot be contended that this disposes of the question,
since, if it did, banks would be prohibited from issuing cheques, which quite
unquestionably pass as money, and are not Dominion or Bank of Canada
documents."
"Further than this, matters of property and Civil
Rights are the exclusive domain of the Provincial Government, and it is
difficult to contend that it is not a Civil Right for an individual to write
an order upon himself calling for the delivery of a portion of his
property. Such an order is effective demand. Further than this,
the Provinces are specifically granted the right to raise loans upon the sole
credit of the Province. Such loans are raised in money or credit
instruments, and have to be repaid in money or credit instruments, and the
interest paid upon them has to be paid by credit instruments.
Therefore, if it be contended that the Provinces have no power to issue credit
instruments, the phrase "the sole credit of the Province" has no financial
meaning, although it may have a realistic meaning."
A little further in that Report, Douglas goes on
to say, " It is clear, and all experience confirms this view, that if
credit instruments can be issued under the sanction of the constituted legal
authority, in this case the Province, no difficulty arises in obtaining their
universal acceptance within the range of the jurisdiction of the governing
body."
And it seems that the 'credit instrument' he was
referring to was a type of 'cheque'. For his first advice to Aberhart,
which Aberhart chose to ignore, was for the Alberta Government to seek a
'creation of credit' from a chartered Bank on behalf of the Province which
would be the property of the Government, not a 'loan'. And which
would be accessible by specially marked 'cheques', which couldn't be
'cashed' in the ordinary sense, only deposited in the issuing bank.
For its services that Bank would be paid a one time fee
for the 'credit creation', and further fees as necessary for
additional bookkeeping to administer it The special cheques
themselves were to be popularised by giving them a 5% premium in payment of
taxes, thereby encouraging their exchange for regular cheques payable at any
other bank without restriction.
Now it is a very interesting speculation whether
this would have avoided all the difficulties that the Aberhart government
found itself beset with when it chose to go a different route. And also
whether such a scheme would have actually worked, had one of the chartered
Banks actually been approached and agreed to co-operate.
But back to my original question. Douglas
contends, in a later letter to Aberhart, "As I see it, the raising of
Loans by the Provinces without protest by the Federal Government in the past
was an admission that the Provinces controlled their real
credit, and a denial of their right to issue financial credit is a
denial of their right to do their own bookkeeping."
Now there seems to be no doubt that Provinces can
raise loans on the ''sole credit of the Province'' still. Even abroad,
since much Provincial Government financing has been raised in New York, or
London. Nor is there any doubt they can do their own
bookkeeping. And even, as BC's WAC Bennett did by shifting
direct Provincial debt into 'contingent liabilities', establish their own
accounting conventions. So was any of the Alberta 'Social Credit'
legislation that was disallowed or declared unconstitutional by the Supreme
Court done so on grounds other than that of Provincial interference with
Banking administration and policy, an exclusive Federal
purview? In other words, if there was no legislative impingement into
areas of Federal jurisdiction, and the public of a Province agreed to it, is
there any LEGAL constraint preventing the development of Provincial
''Social Credit" using Provincially issued 'credit instruments' somewhat
in the manner Douglas originally had in mind ?
Elaboration--Re: Q
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