|Subject:||[socialcredit] The Alberta Presentation: Part 2.|
|Date:||Monday, February 21, 2005 11:45:48 (-0800)|
|From:||William B. Ryan <w_b_ryan @.....com>
Major Douglas's Alberta presentation was given over
days, April 6 and 10, 1934.
The following is the evidence given on April 10,
converted to text from the PDF document that Wally
Klinck circulated the other day.
I previously posted the April 6 evidence.
The entire evidence from April 6 and 10 in text format
is archived at
APRIL 10, 1934. Chairman: Mr. Claypool.
MAJOR DOUGLAS (RECALLED)
CHAIRMAN: I have taken the liberty of returning to
the members all of the questions that they handed in
the other day that were not asked.
Q. Hon. Mr. BAKER: I would like to ask Major Douglas,
assuming that a social credit scheme was applicable
to Alberta, and we put it in effect here, would it
increase the total amount of wealth we have annually
to distribute among the people of Alberta, and if so
when would that be done, and if it would not do that
what would be a benefit to us?
A. I think the answer to that falls into two parts.
The actual manipulation of the financial system
in itself, of course, simply confining the thing to
that manipulation, cannot possibly affect real
wealth. It is a ticketing transaction in earnings and
no ticketing transaction can in itself affect real
wealth. But if you have a state of affairs which I
believe to exist both in Alberta and elsewhere, where
you have the flow of wealth--and the production of
wealth in the modern world is essentially a flow, not
a static performance-where you have that flow damned
up by the inability of the general public to take off
the wealth from the producing organizations, then it
is possible to a certain extent, with a modification
to the financial system, that it can after a very
limited period increase the actual rate of flow of
Q. Mr. MacLACHLAN: Is there in existence any Douglas
plan for Alberta drawn up with your authority or
A. The answer to that is no.
Q. Have you seen this pamphlet, "The Douglas System
of Economics"; you have probably had it drawn to your
attention, and are you familiar with its contents?
A. I have seen it. I am not familiar with its
Q. Do you regard it as an interpretation of the
A. I, from my own knowledge, would find it quite
impossible to answer that
Q. Do you know whether the London secretariat has
considered that pamphlet?
A. I believe it has.
Q. Do you know what its official opinion was?
A. Yes, I do.
Q. Did they accept this as a correct interpretation
of the Douglas system?
A. No, they did not.
Q. Are you the chairman of that body?
A. Yes. I was not present in England when it was
examined. It was examined while I was abroad. I
have the general result of the examination. I do not
know the details.
Q. They have refused to accept it as an
interpretation of your scheme?
Q. Mr. GIBBS: I have three questions linked together
and I would like to put one after another if I might.
I may say at the beginning I heard the broadcast of
Major Douglas and read his speeches in the paper, and
it is because I have read these somewhat carefully
that I am putting these questions. They are rather in
the form of a statement than questions. You are not
so much concerned in advocating any rigid plan as in
urging us to recapture complete constitutional and
legal control over all the institutions that sell
currency or credit so that the issue of the tickets
by means of which, alone, goods and services can
circulate, will be subject to public policies of
general welfare rather than to considerations of
private profit. That is the first statement and I
would like it if Major Douglas would say yes or no to
A. Broadly speaking, subject to reading it carefully,
I should agree with that statement.
Q. The second question is this: You believe that any
plan of financial reform must be based on (1) the
right of all citizens of 21 years and over to receive
dividends from the productivity of our industrial
plant as an inherent right; (2) the necessity of
distributing the tickets of purchasing power in such
quantities as will correspond to the price volume of
consumable goods available and in such a way that
they will actually be used in the purchase and
consumption of these goods?
A. Of course, you will realize you are reading
something out of me which quite obviously I do not
want to be bound by on short notice, but I have no
very strong objection to anything you say. The
question of whether the age is placed at 21 or
something of that kind--all these things are
questions of expediency, not questions of principle,
but I see nothing fundamental to object to in what
Q. As far as the principle is concerned you believe
these two principles are fundamental. The question of
age or the question of right as far as nationality is
concerned are details to be worked out. The
fundamental principle is the people have an inherent
and inherited right to participate in all dividends
resulting from productivity?
A. It is a question of sovereign policy as to whether
they have or have not. It is quite obviously not a
question to be decided by some secondary interest.
You see the difference? It is quite certainly not
something which some purely technical system, which
is what in effect the financial system is, can
decided off its own bat.
Q. In other words, it is desirable on the part of
public policy in view of the age of plenty in which
we live that there should be a distribution of
national dividends to people as an inherited right?
A. Once again for the purpose of clarifying what you
say with which I am in general agreement. If it is
not desirable that should be the case then a11 the
efforts which we make to diversify and increase
production are misdirected effort. We ought to
realize the position and choose to make that effort.
Q, I am not entirely in agreement with these
statements as I am putting them down. You and I think
the same to a tremendous extent and I think that is
very encouraging to myself at any rate. The third
question is this: h a system. based upon having a
$1.00 ticket in the hands of a consumer for every
dollar's worth of consumable goods, will it not be
necessary for the producers of consumable goods to
adhere to a scientifically prepared annual plan--a
production budget rather than a consumption budget as
we have now?
CONTROL OF PRODUCTION
A. I recognize at once the extreme importance of that
question. The first object obviously is to make the
financial system reflect the facts of the production
system. When you do that the present function, which
is in my opinion quite incorrectly exercised by
finance, that of controlling production, quite
obviously ceases to be effective. You have to have a
direct control of production instead of indirect
control as you have at present, the indirect control
being ascertained from almost every possible point of
view. I could elaborate that at some length. Then the
question comes up of how are you going to prevent an
absolutely uninterrupted state of all sorts of
production, which is what might quite reasonably be
expected to happen. I think you can go about that in
several ways. One of the ways is indicated in the
model plan for Scotland, and that is by controlling
the use which is made of land. It is practically
impossible to produce anything without the use of
land; even if you use it for a factory site you want
some land. You will notice in the model scheme, what
you might call a scheme for discussion that has been
put forward in regard to Scotland, there is a clause
which says that while no hindrance is placed on the
arrangements for the transfer of land, every transfer
of land has to be ratified through the land office,
which in Great Britain, as no doubt here in Canada,
exists already. At the present time the redemption of
title is the application of a rubber stamp, plus
payment of the tax. There is no reason why that
should not be the case, but you can control the
volume of production quite effectively by controlling
the land, and also preserve the amenities of the
country which is desirable at the present time. In my
opinion that is more likely to be a suitable method
of controlling production than by issuing direct
orders to producing organizations to produce just so
much, because in that way certainly if you do not do
it by slow and well thought out steps you tend
immediately to a great deal of over-centralization.
One of the inherent difficulties of administrative
control of large quantity is to prevent over-
centralization, and I believe that can be done.
Generally speaking then, answering your question,
some sort of direct control of production would
probably be the result of means of this kind, but I
do not think what is very frequently called "packing"
is the right way to do it.
Q. This is my last question: This is a new,
undeveloped country. While we have a very efficient
industrial plant, we are short of such things as
paved roads, bridges, good houses, modern
conveniences on the farm, complete educational
facilities, etc. In spite of technocracy, we suffer
from no lack of work to be done. We could put all our
able-bodied men to work between the ages of 25 and
55. Should not this be our objective rather than the
payment of national dividends? Should we not pay good
wages, good superannuation, pensions, etc., rather
than national dividends?
A. I should never think of traversing that statement.
A plan might be suitable for highly
industrialized countries like Great Britain, and it
might not be so suitable for a province like Alberta,
but you have the principle. You cannot go straight
ahead an a scheme of that sort under present
conditions even if you had to do that sort of thing
without interest, cutting off interest--free loans;
there is no question but under the existing state of
affairs you would be running up a tremendous debt,
which we do at the present time by public works. You
would still have a fundamental difficulty to face
with the large amount of purchasing power which would
be released. Releasing the nonmarketable goods, the
goods at any rate not bought specifically over the
counter, would invariably produce a very rapid and
probably devastating rise in prices in regard to
goods, and you would land yourself in a technical
difficulty very rapidly if you plowed straight ahead
on these lines. If on investigation it was found you
wanted to apply the social credit of Alberta to the
development of the province of Alberta (and I might
interlope--I think you want to leave a little to
posterity), but even assuming that is the case, you
still want to take very definite measures in regard
to the price question.
Q. We would adopt, I imagine, your idea of the just
A. The compensated price.
Q. All this purchasing power we could put into
circulation as a result of nonmarketable goods will
not be very much in any year, but what happens when
you give national dividends?
A. Just the same thing.
Q. If your compensated price can handle that
difficulty, I think we can handle the difficulty in
the same way.
Q. Mr. ENZENAUER; Can your social credit issued in
the amount of tickets to equal the volume of goods at
a price be maintained at that ratio while continuing
to honour the priority claim on production held by
A. Quite clearly the sound and proper answer to that
question has to be based on real figures, which is a
quantitative not qualitative question, but my general
feeling is the question of debts, while it is
becoming increasingly momentous, is only so
overwhelming because of the failure to monetize a
great deal of real wealth which exists. If you had in
a proper and scientific manner monetized the real
wealth, the potential wealth which exists at the
present time, even the debt question would be reduced
to much greater proportions than it is at the present
time, and the correct answer would have to be based
Q. Mr. MacLEOD: In placing this matter before us the
other day, Major Douglas explained, and I think I was
able to follow him fairly well, that money is nothing
but a ticket system, and then he explained wherein in
the beginning of things, in the development of money
power, the owner of the cattle distributed the
payment. What reason is there to expect that the
individuals who at present own and control the goods
that are for sale in Canada and the means by which
they are produced, and who in the aggregate also have
the purchasing power to buy these goods, will part
with them when presented with tickets issued by the
PRODUCERS DO NOT OWN THEIR PRODUCT
A. There are a great many things taken to be
axiomatic that are not axiomatic. In the first place,
I do not agree that these people who own and control
the goods have the purchasing power to buy these
goods, not they themselves. That is part of the
proposition. They in most cases, broadly speaking,
produce these goods with borrowed money. They do not
own these goods at all, they simply produce them, and
when they have purchased them, with borrowed money
they have either to dispose of these goods or the
money they have borrowed forms a mortgage on their
residual assets and they go out of business, so I am
afraid the question is based on a misapprehension of
what is the case. The question of the so-called
awning of the means of production is of course the
cause of a great deal of misunderstanding. In my
conception of the modern production system the so-
called capitalist, the man who is generally referred
to as the capitalist, the administrator of the
production plant, is an administrator and nothing
else. He is paid in various forms for his services as
administrator, if he is paid. During the last 10 or
12 years he generally has not been paid, but when he
is paid it would generally be out of reserves of the
so-called ordinary capital, but he is simply the
administrator paid in some particular form, sometimes
paid too much and sometimes undoubtedly paid much too
little. There is no doubt he is always paid by the
financial token, which is a quite separate process
from the production of goods, so there is no question
at all, in answering this question, that he would be
delighted to part with goods for purchasing power
created by anybody. He is not in business to keep
goods but to exchange goods for purchasing power
tokens to enable him to keep an producing more goods,
and to enable him to get a legitimate or an
unreasonable rake-off. We can easily deal with an
unreasonable rake-off, but the general answer is he
would undoubtedly accept these terms.
Q. I wish I could understand what is involved in this
administrator feature Major Douglas so often speaks
of. It seems to me there could be no real authority
in administration unless the control amounts to
ownership. The banks of today, and the insurance
companies of today, are getting away with the use of
social credit that does not belong to them, but the
question is fundamental. Anyone who wishes tickets
must have tickets, and if cities who have nothing
else but a limited taxing power should proceed to
issue tickets I think very soon his tickets would be
called into serious question.
A. The question seems to arise from the suggestion
there is nothing tangible behind money. There is just
as much behind it as at the present time. The only
question is, at the present time these tickets are
issued under the assumption that this demand is
vested in, and is owned by, the organization which
issues the tickets. Now that is quite obviously an
assumption which, to the actual owners of the
monopoly, only has value if there is something real
on which this credit rests. It does rest on the
productive capacity of the unit. That is what it does
rest on, and therefore the effective demand, so far
from being the exclusive right of some specialized
organization, quite obviously belongs to that unit
which has productive capacity. There seems to be no
possibility of misunderstanding that. The only thing
involved is the question of ownership of effective
Q. You use the word "owned'"?
A. The production is not owned by the unit. The
production of a large producing undertaking is not
owned by these individuals unless they buy it. It is
not owned because they produce it. They do not
produce for their own ownership. They produce for
sale and the moment they are unable to sell as we
know quite well, they go out of business, which is
complete proof that they do not own that production.
Q. Mr. BROWNLEE: I think you suggested last night
that a series of questions might be asked, and I will
take the liberty of asking a number of questions to
see whether I have fully understood you in your
comments on Friday. In the first place I understand,
Major Douglas, that your whole plan of social credit
is based on your belief that constitutional methods
are always to be preferred to revolutionary methods?
Q. Therefore, in a country like Canada, where we have
a very definite constitution laid down, we should
follow the course of trying to change that
constitution rather than embark upon any extreme
measures of defying the constitution?
Q. The next question is, can you sum up your
definition of social credit in one or two sentences
for us so as clearly to indicate just what you mean
by social credit?
A. I think I can do that very shortly. Social credit
in its essence is a correct estimate of the
productive capacity of a given unit based upon that
which is the real social credit of the unit. You
have something which we call financial credit which
can also be made to be the reflection of this real
social credit, and that I should say can be defined
as the power of monetizing, to any extent desirable,
the real wealth of the unit so it can be freely
Q. Referring to the term "productive wealth," that
would not mean the ultimate capacity to produce our
natural resources but it must have some relation to
available markets and the ability to sell the
products on the markets available?
A. Either internal or by proper arrangements
Q. It has been estimated in this province the coal
resources could supply the whole Dominion of Canada
for the next two thousand years, but from the
standpoint of the function of productive wealth we
would have to limit our estimate to that portion of
coal we could sell in the markets of this province
and outside markets from year to year?
A. Yes; but by proper use of your own credit in the
world where proper use is not made of certain credit
you could without difficulty command the markets of
Q. That is, we might, by proper use of our own credit
in Canada, even export coal into the United States
where they also have more coal than they use, but
that would in turn only lead to one thing, they would
quickly adopt measures which would still put them in
competition with our coal? '
A. Yes. I agree, but in doing that you would increase
the width of the general field for the use of coal.
Q. This must be obviously true in the ultimate result
when the various nations have a11 adopted the
socialization of credit that there comes a distinct
limit to which any country can go?
A. You then reach the limit.
Q. The statement is true, dividends on products we
have becomes limited to the reasonable availability
of markets and the use of that natural resource,
whatever it may be, wheat or coal?
A, In the last analysis, it is limited by the
consumptive power; that is right.
Q.' Suppose we take a unit such as Alberta, it will
become a progressive effort to increase that
Q. But in the meantime, we are still in the position
that our productive wealth is measured by consumptive
A. In the last analysis your success in commanding
markets is mainly putting to use your own credit.
Q. In your suggestion of the use of tickets, there
was never anything to convey the idea that in a
community such as Alberta we could issue these
tickets to any extent whatever regardless of our
ability to find either markets or increase
A. Absolutely, of course not.
Q. So any scheme that starts out with the arbitrary
idea that the state might issue the tickets to the
extent of $25 or $50 or $100 a month to the
individual is erroneous because it is not based upon
any scientific measurement of our natural productive
capacity and our available markets?
A. That, I think, is subject to a certain amount of
modification. To get a clear idea of that imagine
yourself to issue to the available population a
definite amount of increased purchasing power and
seeing, or assuming in your mind whether that will
produce a priority problem on the supplying the
producing organization you have in the country.
Supposing for the sake of argument, you gave to the
people abiding in Alberta, over 21, each $500--I am
not saying it is possible, but take that amount. It
is presumed what he does is to rush off to the stores
and spend it. Do the stores become empty and fail to
refill or don't they? If they refill by means of the
factories behind the stores, if they refill through
any source would they increase the stream of
purchasing power going to them.
Q. From the standpoint of the state, supposing we did
tomorrow issue tickets to the extent of so much per
capita in this province, would it not be essential
for us as a state to have some medium of clearing
these tickets? They must come back to be cleared in
A. Obviously they have. They are issued just as money
is at present, which broadly speaking is cancelled on
purchase of commodities and returned to the place
from which it emanated. That is what happens at the
Q. The different schemes you have suggested,
particularly the New Zealand scheme, is based on the
idea that whether we turn to the state, the banks,
the insurance companies or other persons to honour
tickets, there must be some medium of honouring these
A. The natural conception one can acquire. We are now
told under the money system, money is taken and
destroyed when the article to which it refers has
Q. If that token is issued under the authority of the
state, then the state must have the wherewithal to
cancel it when it finally comes back?
A. It does automatically under the existing credit
Q. Under the existing credit system? Thus when it
comes back, the supreme authority controls the
financial destiny of the country and the Dominion?
A. That is right.
Q, May I ask a few questions about the New Zealand
scheme without going into details. As I understand
it, it is based upon an assumption, or an accounting
of the value of the assets of the banks and the
insurance companies of New Zealand?
Q. Certain surpluses which have been earned. First of
all you suggest limitation of the dividend which the
banks of New Zealand can pay the shareholders to six
per cent. Your suggestion is that the six per cent
limitation is based upon the original capital of the
banks of New Zealand, or the present capitalization
of the banks?
A. Do I understand by that question the subscribed
Q. The original subscribed capital, or the present
capitalization, what ever it may be. In Canada there
is a great difference between the original subscribed
par value of the shares of the banks and the present
shares, according to their market value.
A. That does not affect the capitalization.
Q. Assuming that the original par value of the share
was $100, and the average market price at present is
$200, is your limitation based on the original par
value or market?
A. The original par value.
Q. Then when the difference is taken between the
original or book value, or whatever the basis of the
banks and insurance companies, I understand you would
take that difference out of shares account and
A. May I elaborate that a little? If you do not limit
the dividend, then on the promulgation of any
proposal of this kind, the directors of the bank
would meet together and say, "We will at once
distribute these reserves, and proceed to pay about
500 per cent."
Q. Is this a correct statement? Your plan in New
Zealand is based upon the taking away of values that
have been created in the interest of the few and
distribute them generally in the interests of the
A. No. It is based on that fact that for the purpose
of retaining control of the situation, certain, in
fact the majority, of existing values, as represented
on the balance sheet of the banks, are written down
to sums which do not in any way represent their
original cost. I gave an instance of that--I forget
whether it was here or not. I believe it to be true--
I have had it stated to me on very good authority
that most of the war loan, of which a large amount
was held by British banks of which the market value
was anywhere from $100 to $105, stood on the books of
the banks between 10 and 15--that is writing down of
assets and demonetizing of hidden reserves which the
banks themselves can monetize at any time to anybody
Q. Is it not true in the proper working out of the
financial system these items are all taken into
account in market value of shares of these banks as
listed on the exchange, not accurately but
A. Yes, the fact that the banks return 3 1/2 or 4 per
cent is an assumption on the part of the public that
there are many hidden reserves or assets. In the New
Zealand scheme they are putting into effect a
dividend limited to six per cent.
Q. Would it not work out that those who hold at the
present time their private wealth in the shape of
bank shares, would find these shares had greatly
depreciated in value? You are distributing that
wealth to those who at the present time have none?
A. That is true and a very reasonable comment. I am
going to give you a pragmatical answer. The dividend
of the Bank of England is six per cent.
Q. Personally, I am sympathetic that the bank should
be considered a public utility.
A. I think it desirable not to penalize anybody.
Q. Dealing with the insurance companies, your New
Zealand scheme involves taking certain profits,
earned by the insurance company and also using this
as a basis of distributing credit?
A, You have to be very careful, I think, in the
meaning you attach to the word "profit." In that case
the essence of the thing is you are distributing
something which nobody gets at the present time, not
even the shareholders of the banks or insurance
Q. Nor the policyholders?
A. Nor the policyholders. They are absolutely dormant
and unutilized reserves.
Q. Is your scheme in New Zealand based on the idea
the hidden and undistributed wealth largely held by
these institutions constitutes the greater part of
the fiscal system of the banks and insurance
Q. Would this be fair: Some of us are afraid that the
extent that any community has not the power of
controlling, managing, disciplining or penalizing
these institutions that constitute the major part of
the financial institutions, to that extent they are
handicapped in trying to bring in a system of social
A. I agree absolutely.
Q. So that if a community, such as one of our
Canadian provinces, is bound by the constitution
which practically, according to the privy council
decision, takes away any vestige of power to manage,
control, discipline or penalize these major
institutions, these major parts of our financial
system, just to that extent the constitution has,
theoretically at least, taken away the power to
institute a system of social credit?
A. On the status quo.
Q. In as much as your argument presages we shall work
by constitutional method, then is it correct to
suggest that our task becomes one of propaganda, and
using what influence we can by constitutional methods
to change that constitution, and until we have done
that fairly well, submit to things as they may be?
A. But things may be thrust on you. You are not a
sovereign state, and that is the power of a sovereign
Q. This may not seem to be a pertinent question, but
it arises from a question asked by Mr. Gibbs, that
having regard to the fact we are a new province, and
there is still a tremendous field for the development
of those things we feel are necessary for a desirable
standard of living, that it might be better for us to
utilize our wealth in putting people to work to
supply these things. Again, coming back to the idea
of the sovereign state, if the only way in which we,
as a province, can obtain the tokens of money far the
purpose of doing these things is by borrowing and
increasing our capital debt, would you say that is a
healthy way of proceeding?
A. Well, it is only a healthy way on the assumption
that you are not going to pay your debts.
Q. So that if we still maintain the idea we are going
to pay our debts, it becomes limited to the extent we
can go on that program of borrowed money to pay
A. And pay interest; yes.
Q. Looking at Canada as a unit, rather than as
provinces, you would consider--I would like to get
your opinion of this because it is one on which I
know there are differences of opinion--would you
consider that the idea of the Dominion simply issuing
new currency for the purpose of building public works
is a method of carrying into effect in any way the
idea of social credit?
A. It would be absolutely catastrophic.
Q. You are in accord with that school of economists
who believe unrestrained inflation is a disastrous
thing to any country?
Q. Mr. GIBBS: Might I suggest as part of your
question, to get a bit closer, what is unrestrained
inflation in a country with such tremendous
potentialities of production?
Mr. BROWNLEE: I will leave you to ask that question.
Major DOUGLAS: May I be allowed to answer? I once
defined inflation as being anything the bankers did
not want done, but there is an accurate definition of
it and that is, an increase in the number of monetary
tokens accompanied by a similar, equal or greater
increase in the general level of prices. That is true
inflation. Inflation in the number of tokens not
accompanied by an increased demand is not necessarily
Q. Mr. BROWNLEE: Probably a more correct answer to my
question would be, it might be possible for a
sovereign state like Canada to issue new currency to
a certain point, provided it does not go beyond the
point where it immediately would bring about rising
A. Yes, but where you have the price level based on
the proposed price of the article, not what it will
fetch, it is quite impossible to raise the amount of
tokens beyond the existing level without getting
subsequently a raise of price, because the moment you
have more money about, everybody says, "We will have
a little of it ourselves."
Q. In order to formulate a system of social credit
for the province of Alberta, am I right in assuming
that you would have to have before you for
considerable study first a complete picture of our
economic position and an inventory of the natural
wealth of the province, that is, the things which we
produce, as well as a complete understanding of the
constitutional limitations as between the Dominion
and the province, both with respect to internal
trade, and particularly with respect to control of
the major financial institutions such as banks and
insurance companies, and only upon having these
things before you, and complete opportunity to study
these, could you, or anyone else, lay down a
sufficiently considered scheme of social credit for
A. I should agree with that.
Q. Is it a fair interpretation of your social credit
ideas that the ability to distribute wealth would
probably be much greater in one of the older and more
developed communities such as Ontario, where there is
a greater accumulation of undistributed wealth than
in a new province where we have no banks, no
insurance companies, and very few people who have
reached the position where they may be considered
even fairly wealthy, and very few corporations?
Undoubtedly there are greater opportunities in a
province such as Ontario or Quebec, than in Alberta.
A. I should be obliged to agree with that. The whole
situation arises out of modernization of the whole
productive system. Of course I should qualify that by
saying that a good deal of the consumption of Alberta
is the production of other communities and that you
have to monetize if possible whatever production you
have in order to obtain that production from
elsewhere so that there is a pressing need, even in a
comparatively undeveloped country.
Q. We might come to this conclusion as the result of
the whole study: Quite conceivably our task in this
province is to try and change the existing structure
so as to get a greater control over major financial
institutions which may involve a period of propaganda
and strategy, rather than immediate administrative
A. I am obliged to agree with that.
Q,. Mr. ROSS: Pursuing certain inquiries made by the
Premier in regard to the wealth of the country being
dependent upon its ability to dispose of its surplus,
either in internal or external markets and in view of
the tremendous increase in the productivity of
industry and agriculture due to the extension of the
use of machinery and power, does this mean this
country, and other countries will have to diversify
their industries and occupations within the country
to a greater extent? Do you agree with that?
A. 1 do.
Q. Does it mean necessarily to a considerable extent
the trade as between nations will necessarily be
restricted to a greater and greater degree to those
things that cannot economically be produced by
A. I do, most strongly.
Q. Does that mean in Canada we will have as one means
to putting in such a scheme, you have a further
decentralization of industry?
A. That should be the objective.
Q. The amount you mentioned in your price system, the
object would 'be the continual lowering of prices?
A. That would be rather the effect than the object.
Q. And l understand that you were quite in favour of
retention of private ownership of poverty, and
bearing in mind the measurement of the value of money
is this purchasing power, does it not absolutely
follow that a constant lowering of prices is giving
to the flow of money an increased and unearned
increment in that value?
A. I do not agree with the obvious explanation; I
would say he has a right to that. He has a right just
like anybody else to a dividend in the constantly
increasing assets of the general community which he
gets by lowering prices.
Q. The question arises whether he shall have that
dividend from the use of production or the use of
A. Will you define what you mean by "capital"?
Q. Let us say I am reminded of the Biblical story of
our Saviour who gave the talents to the people and
one man wrapped his in a napkin and put it away. In
this case with that increase of price level the man
who wrapped his talent in the napkin would have had
the increase in value?
A. I should like at once to take the discussion on to
a slightly different plane without the introduction
of any moral consideration whatever into this
Q. The constant level of prices means with increased
productivity the ability to constantly distribute the
larger percentage of that to those engaged in
production; in other words, if you are not going to
lower the price, you must if necessary raise the
price and other rewards to those engaged in
A. I do not see the sequence at all of what you say.
You can of course quite obviously distribute the
national dividend in one or two or three ways. You
can distribute the national dividend by the single
process of lowering prices below cost, but the minute
you lower prices below the cost, you are distributing
the national dividend to everybody who owns anything,
by that lowering of price. You combine that with the
distribution of national dividend directly in the
form of additional purchasing power. What I do not
believe is you can effectively distribute national
dividend in any form without effectively dealing with
price, and if you fix prices you immediately remove
all incentive to improve the process, because a man
who produces an article by a bad process is just as
well off as a man who produced by a good process. On
the other hand you lower prices by the device of the
compensated price. You are distributing national
dividends and you have the most effective weapon by
which you can remove the producer. You can remove him
from operation by the compensated price and he cannot
possibly sell in competition with those in possession
of the compensated price.
Q. I take it you are endeavouring to lower prices
rather than stabilize prices?
Q. One difficulty regarding debts in this country is
they are being asked to repay debts by means of
production when it takes two or three times as much
to pay the debt than it did at the time it was
incurred. For instance, take wheat. Your suggestion
does not take into account the matter of debts,
because the farmer has increasing cost?
A. I am quite convinced, to a very large extent it is
pure abstraction. The major owners of the debt of the
world do not want it settled in wheat; they do not
want it settled in anything tangible at all but
merely want it settled in form of more monetary
instruments. The major owners of the debts that we
have are the financial institutions and the financial
institutions do not take delivery or payment of it in
Q. You do not agree then that a great deal of the
instability is due to the fluctuating price level?
A. What is absolutely vital is the conflicting price
level and not an absolutely equivalent fluctuation in
the amount of purchasing power.
Q. And, if you had a slightly advanced price level,
as some people suggest, that would be, in other
words, another way of paying that dividend, wouldn't
A. No. On the contrary, if you had a slightly
advancing price to the means that everybody has, that
purchasing power is lessened at an inverse rate.
Q. Unless they are obtaining a greater rate for their
A. They cannot be receiving that, if their purchasing
power is falling all the time.
Q. Take the farmer. His wealth is, to a large extent,
in this province, wheat?
A. From his point of view, wheat is nothing whatever
except something for which he exchanges purchasing
power. He doesn't grow, from his point of view, any
wealth at all. From the world's point of view he
does, but, from his point of view, if he is left with
the whole of his wheat on hand, he has no wealth.
Q. In other words, if the exchange possibility for
his wheat for other things remains constant? That is
what you are aiming at?
A, No. We are looking at the problem from a
diametrically different point of view. The point of
view that I have is that the function of money is no
longer that of a medium of exchange.
Q. I agree with you in that entirely, that money is
simply the means of transferring real wealth from one
person to another.
A. No; that is exactly what it is not.
Q. You state it is like a ticket on the railway that
enables you to get transportation from one place to
another. I will take that view, that money is a
means of transfer for that transportation.
A. That is not the correct interpretation of money.
The only correct one is, I believe, that all wealth
at the present time is produced by synthetic
purposes: that the wheat that the farmer grows does
not produce any wealth at all; that the manufacturer
of motor cars does not produce any wealth at all.
Those things only become wealth by reason of the fact
that somebody else produces roads, and somebody else
bakes the farmer's wheat, and a number of such
things. So it is impossible to say that anyone, at
the present time, produces wealth, except considered
in the light of what everybody else is doing at the
present time. Under those conditions, wealth is a
central pool into which everybody is contributing,
and the proper function of money is not to
interchange between those separate producers of
wealth, but to give the general community, by whom
the wealth is produced, the necessary power to draw
from the central pool of wealth.
Q. Well, you mentioned a few moments ago, did you
not, a definition? Would you mind defining that
again? If I understood you correctly, you defined
inflation of money as only being inflation when it is
accompanied by an equivalent or higher inflation of
A. I agree.
Q. And, on the contrary, a deflation is not a
deflation until it is accompanied by----
A. Oh, I didn't define that. Deflation is a reduction
in the number of the tokens of purchasing power which
is accompanied by a fall of prices up to the point
when the cost of production is reached. A further
reduction of the number of monetary tokens in
circulation is not accompanied necessarily by a
further fall of prices, but is accompanied by a
reduction of production, accompanied by the
bankruptcy of the producer. That is quite a different
thing. It is not the converse of inflation; it is
something quite different.
Q. Then, recognizing that both inflation and
deflation are bad, which would you define as the
A. That reminds me of asking which is the better of
two rotten apples. They are both bad.
Q. Is it not true that deflation affects your
production, whereas inflation only affects the
transference of ownership of wealth? Isn't that what
A. No. I could give you strings of consequences of
both inflation and deflation; but inflation is
exactly what I said it was, I think, and deflation is
exactly what I said it was. The consequences are
quite a separate matter.
Q. Have you any suggestion, in a practical way, for
anything we can do in this province at the present
A. Yes, I have, broadly speaking. That is, first of
all, obtain for yourselves a clear conception of your
major objective in policy. That has not, so far as I
know, been formulated. For instance, I mean it is not
formulated when you say you want to relieve the
unemployment problem or anything of that sort. If
that is your objective, then the means to that
objective are quite different to the questions of
credit and so on. The first point is to obtain a
conception of your objective; the second point is to
determine what is preventing you from achieving your
objective, and, in considering that, you have to
consider what means to apply to remove that obstacle.
That is the direct sequence. The third thing to find
is the means available to you to remove the obstacle
to obtaining your objective. And the final thing, and
only the final thing, after those things have been
considered, is your plan to put into operation. It is
not the slightest use considering a final plan until
you have considered what is the objective, what are
the obstacles to attaining your objective, what are
the means of overcoming those obstacles, and how to
go about it.
Q. Getting down to practical details of the matter.
Many people in this country think that perhaps the
first thing we should do is to have a differently
organized central bank, so credit will be handled in
a little better way than it perhaps has been and may
be. Have you any suggestions along that line?
A. Well, I think what I have just said is a comment
on that. I should want a clear definition of
objective. I think I can see at once what the
objection of the farmer to a central bank is, at the
present time. I have no doubt whatever that its
private objective is to rivet the private financial
system of Canada more firmly to the international
Q. Capt. DAKIN: Is it correct to assume that, under
the Douglas social credit plan, the credit of the
nation will be directly related to the wealth or
production of the nation?
A. The answer to that is: No.
Q, If the Douglas plan were applied to Canada, but
not to other countries, would not our production,
and, therefore, our wealth, be influenced by world
prices and world conditions pretty much as at
A. The short answer to that is: No. Your production
would go up, and your general prosperity would go up,
even though it was not accompanied by the same plan
Q. If both of these questions are answered in the
affirmative, would not the dividends payable to
individuals or families under the Douglas plan
fluctuate in value or amount, in more or less direct
relationship with the value of our products? In other
words, if wheat goes down in price, will the dividend
also go down in value, or amount, and if wheat goes
up, does the dividend also go up?
A. Not in value. Questions of price are purely
questions of figures on a ticket. Quite obviously,
supposing you take a bushel of wheat and you put it
in an elevator, and wheat goes up from 60 to 9© cents
a bushel, nothing whatever has happened to the wheat;
the wheat is exactly the same wheat as it was before,
and nothing has happened to the real wealth of the
country. The whole thing is nothing but a figure on
Q. If question three is answered in the negative,
please explain what maintains the dividend at a
A. The maintenance of the dividend at a permanent
level can only possibly depend on the actual
production of the country, including in the world
production; for the purposes of this calculation,
imports, and subtracting from the wealth of the
country, for the purposes of this calculation,
exports. Exports are a loss to the real wealth of the
country; imports are a gain.
Q. If question two is answered in the negative,
please explain how our production can escape being
influenced by world prices and world conditions as at
A. There is, I think, of course, running all through
this set of questions, a slight over-emphasis on the
mere figures of finance. Our production being
influenced by world prices does not convey anything
to me, or need not, I think, necessarily convey
anything to anybody, unless you are going to assume
that you are going to allow world prices to control
your internal distribution of wealth, and that is not
a necessity. It is a condition of the domination of
the world by international finance at the present
time, but it is not in the least fundamentally
necessary, though very difficult to escape; but it is
not fundamentally necessary that Canada, or any other
country, should be dominated by international
Q. Mr. BUCKLEY: How would you provide funds for
national dividends? Could they be recovered by income
A. No. The provision of funds, of course, presents no
difficulty, as you realize. The provision of funds at
the present time, under the banking system, is purely
a bookkeeping transaction, and presents no
difficulties. The recall of those funds is of course
essentially a problem of making figures represent
facts in evidence. That is to say, if you have the
wealth of the country increasing continuously, which,
broadly speaking, is the case with nearly every
country, in actual fact, then you want to recall less
money than you issue, so as to leave a balance, which
represents the net increase in the value of the
wealth of the country. For instance, the idea that a
balanced budget is a fundamentally and scientifically
correct state of affairs is entirely fallacious,
except on the assumption that the country never gets
any richer, which is obviously a fallacy. The
creation of the recall is accomplished automatically,
through the agency of prices.
When an article is purchased for consumption, even at
the present time, the money passes from the consumer
to the retailer, from the retailer to the wholesaler,
from the wholesaler to the producer, and, in nine
cases out of ten, fundamentally, from the producer to
the bank, where it is automatically cancelled by the
repayment of the loan.
There is another way by which it can be done, which I
think will probably form part of any workable scheme;
and that is, if you take the balance sheet of any
producing company, you will find, on the assets side,
the cash deposited with the bank and that sort of
thing, on the same side of the balance sheet as the
real physical assets. You will find on the assets
side, plant, buildings, debts receivable, cash in
bank and things of that sort, as if money and goods
were the same thing--as if money and real wealth were
the same thing, which they are not.
You will find that, in a national balance sheet, so
far as there is such a thing as a national balance
sheet, they are on opposite sides. The cash creations
of a nation are represented by national debt. The
assets, which stand against the creation of the
national debt, are the real assets of the country.
So, in the case of a national balance sheet, you will
find cash and real assets on opposite sides of the
Now you can recall issues of purchasing power by a
process something like this, which is a perfectly
Certainly in Great Britain, and I have no doubt in
Canada, every balance sheet of a public company has
to be audited by a public auditor, and he insists
that the real assets, the capital assets, and the
physical assets: plant, buildings and that sort of
thing; that the figures attached to them in the
balance sheet, shall be written down.
You must realize that those figures of real assets,
in the balance sheet, are simply price tags attached
to the things which are in the possession of the
producing company; but they are not money, although
they are lumped together, on the asset side, with
Now you can, and do at the present time, write down
the physical assets of a company, but you never write
down the money assets. Money is supposed to be
indestructible, according to your theory, but the
real assets, which money represents, are written down
by an auditor.
Suppose you issue $10,000 worth of stock, and you put
up a factory. The physical process of depreciation
takes place; it is always insisted upon by your
auditor, and your figures are written down. You ought
to have a transfer back into purchasing power of
those figures which are written down, because you
have used your plant for the production of something
which is sold to the public.
Now you can write down those physical assets, and
apply some of the issues of the money to re-
transferring into cash the physical assets which are
written down, and that disposes of quite a
considerable amount of the money which is issued.
Q. Mr. MATHESON: There is, just one of your answers
that I would like to clear up, for my own
information. You said, in answer to the Premier, that
the issuance of currency by the Dominion for public
works would bring about inflation. Isn't the interest
on interest-bearing bonds which double themselves
every eight years or so, capital?
A. Well, it is ultimately so, but it is not the same
Q. Why not?
A. Because it does not increase the available
purchasing power in the form of liquid money to any
appreciable extent. It merely diverts some of the
purchasing power from the general public to the
bondholder. You understand I am not supporting this,
but at the same time, the two things are not the
Q. When the war started, and they started to issue
currency in England, with no base of gold, and made
currency more plentiful, wasn't the prosperity of the
ordinary individual in the country much greater?
A. Yes, it was; but it was accompanied by a very
rapid rise in prices, which heavily penalized
everybody who was not in receipt of constantly
increasing wages. It set into operation a most
undesirable state of affairs. A constantly rising
price level must of course be accompanied by a
constant wrangle about wages and things of that sort.
Q. In Canada, we have been subjected for five years
to a process of deflation, withdrawing of credit and
currency in the country; and the consequence is that
the debts created by the inflationary process have to
be repaid at the rate of five to one. Would it be a
sensible thing for Canada to do, as a great exporting
country, to follow that course until the price level
of the producer in the country gets into some correct
relation to the price level at which he created the
A. I don't think so. I am quite familiar with the
line of argument that you are following at this time.
It is based on a continual crossing over in your mind
between cost and purchasing power. I answered a great
deal of it in regard to the question of the
honourable member on my left. As to the delusion that
the debts are actually paid in wheat, they are not
paid in wheat. And I might say that the very last
thing that normally the real creators of the debts of
the world which are undoubtedly the financial
institutions--the last thing they want is the
repayment of the debts. They want merely to take all
they can get under any consideration---all that they
want, if you like, and keep the general public in
debt. This may be quite unconscious--we will say it
is unconscious, I don't want to be uncharitable--but
the general behaviour is: "Let us always keep the
general public in the literal possession of the
bonds." The bondholder, which is the general public,
will be left in possession of the bond; and, under
those conditions, the very last thing that they want
is to have the bond paid off. So that, in any ease, I
don't think you need worry, under that financial
system, that, even if you raise the price of wheat to
anything you like, the bonds will be paid off.
Q, I agree with all that, but that does not answer my
question. We are not looking at this fundamentally,
for the present moment, because we recognize our
inability to deal with fundamentals in a country such
as this. Now, seeing that you said that inflation
was something the bankers didn't want, which is
something I agree with, would it not be good for the
VALUE OF INFLATION
A. Well, I haven't got any great tenderness for the
bankers, but I don't think a sweeping assertion of
that sort is necessary. I cannot see, looking at the
question from a broad point of view, where general
inflation can ever be an advantage, I can, of course,
see quite well that there are quite a number o'
technical reasons why inflation can produce a
temporary advantage. That is beyond all question.
There are two or three very obvious reasons for that.
One is that you get a distinct lag in the rise of
prices behind increase of purchasing power, so while
that lag is in operation, you have a real increase of
purchasing power, but only while that lag is in
operation. The general impression is that, in order
to keep that lag, you have to inflate faster and
faster and faster, or, if you stop for any time, the
price level overshoots the level of purchasing power
and you get the opposite result. But, in addition to
that, if the whole population were required to
produce the goods necessary for the use of the
public, I can imagine the inflation might work as a
policy; but the real fact is that, except in time of
war--and I shouldn't be inclined to wholly qualify
this for Canada; it is certainly true in Great
Britain and the United States--in times of peace, you
do not require the production of the whole of the
population at any one time; so that, the moment you
begin to decrease the purchasing power of those who
are not employed in the producing process, which is
necessarily an increasing number of people, and you
decrease the purchasing power of those who are not
employed immediately you begin to inflate, because
you raise prices, and you decrease the purchasing
power of the wages of those who are employed, you get
into two difficulties straight away: You get into the
difficulty that you decrease the purchasing power of
those not employed, and therefore they draw less from
the production system; and you decrease the
purchasing power of the wages of those who are
employed, so you get involved straight away into an
unending wrangle as to what is the correct rate of
wages. You either have to base your wages on a
composite price level, which means that the wage
level is increasing or decreasing, is changing every
minute, or you have a great deal of industrial
trouble. So, to summarize it, I do not agree with
Q. Is there any reason why inflation should be
unrestrained? Could that not be regulated by the
government of the country?
A. If you will eliminate the word "inflation," and
tell me that you don't want a rising price level,
then you can do it by compensated price, without
doubt; but, the moment that you increase your money
tokens, and at the same time have a rising price
level, that is true inflation, according to the
Q. Then may I ask: In Great Britain at the present
time (I was over there last year) there is an
increase in employment, an increase in circulation of
currency, and are not conditions there better at the
present time than they were say two years ago?
A. I will answer that question quite shortly, by
saying that practically the whole increase in
employment centres around the munitions area.
Q. I agree with that. But is there not a difference
between such a country as Canada, which must export a
great surplus, and an industrial country such as
Great Britain, where the number of men receiving
wages is proportionately large--greater than in
A. If you are asking only for an increase in the
price of wheat in Canada, then you get into an almost
endless discussion about world prices and so on. If
you merely raise the price of wheat in Canada, by any
device at all, then, other things being equal, and
taking things as they are, it simply means you get
less of the world's market for wheat, because your
price will be higher.
Q. If we wish to raise the price of wheat in Canada,
that price is at present regulated by the Liverpool
market, and we must have some inflationary process to
A. My answer to that is that you ought not to want to
raise the price of wheat in Canada. What you ought to
do is to enable the producer of wheat in Canada to
lower the price of wheat and at the same time make a
Q. That may be true, but do you admit that we can by
inflation raise the price of wheat in Canada?
A. I don't think so.
Q. Even temporarily?
A. I don't think so, because the minute you raise the
price of wheat in Canada by one cent above the world
price, the rest of the world will then buy wheat from
other countries up to their producing level.
Q. If a farm in Canada is worth five dollars at one
time, and only three at another time, surely at the
time when the farm is worth five dollars in Canada,
the producer gets more for his wheat?
A. In other wards, you want to internally raise the
price level by depreciating the purchasing price of
the Canadian dollar.
A. Well, everybody wants to do that at the present
Q. But they don't do it?
A. I don't say it is a desirable thing to do, but
everybody is trying to do that. Of course, the effect
of that is that it is only effective as long as you
are yourselves the only people who do it, and you may
take it for granted that there are quite enough
people in the world who understand that trick.
Q. They all do except the Canadians, apparently.
Q. Mr. DUGGAN: Major Douglas, I would like to say,
just before I leave the chamber, which I have to do
in a few moments, that I feel very indebted to you
for the statement you have made. I must say that, as
I see it, our inquiry pretty well collapsed at the
end of the Premier's questioning--that is, as far as
this legislature is concerned. Most of our time has
been spent in a general discussion of economic
theories, and theories relating to social credit;
and, of course, what we are primarily interested in
as a legislature is the application of any proven
system. We all recognize--even those of us who have
the misfortune to be called Conservatives--we are all
interested in the reform of our present financial
system, vitally interested, and I think we all agree
that reformation must take place. Now you have told
us very definitely that, on account of our limited
powers as a province, the application of your scheme
would not work.
A. Owing to your limited powers. I should say it is
not a question that my system would not work, but you
cannot put it, at the moment, into operation, but I
should not like to be quoted as saying that that
prevents it from going into operation.
Q. You made one statement the other day; I think you
said that the citadel of our present system should
not be swept away with one cataclysm of cyclonic
force, or something of that kind?
Q. That suggests that it must be done by progressive
steps; I presume that is the interpretation?
Q. Now, having accepted your statement as to the
difficulties before this province, with our present
limited powers, I would like to know if you can
suggest to us two, or three, or four practical
progressive steps in which eventually this system, or
some improved system of social credit, can be brought
about. That, I think, would help us immeasurably. I
mean to say that we must take full cognizance of our
limited powers, but we naturally want to move
forward; we naturally want to take advantage of any
step that will contribute to remedying the situation;
but we are very practical people, after all, and it
does not make very much difference what our views
are, theoretically; we want to step forward in a
practical way, having full regard to the position we
occupy, and full respect of the other provinces in
Canada, and so on. But, in that situation as we find
ourselves, I would like to feel that we have got a
practical, progressive programme, under which we can
make a substantial contribution to an improved
financial position here; and I don't know whether you
can set this out for us, in very clear fashion, so
that one step might be taken this year, and another
step next year and so on, but have an objective; and
I would like to see those steps taken in a practical
and progressive way. Now can you help us?
A. I gather from Mr. Duggan that he is a particular
Conservative. Now I am a Tory. There can be no
greater possible mistake than to assume that this is
a class system. I am devoting a great deal of
attention at the present time to emphasizing that.
And I can assure Mr. Duggan that he is in good Tory
company, that more attention is being paid, if
possible, to my theory by Conservatives in Great
Britain than by any other party, and the whole
question, in fact all over the world, has the
attention of all parties. I think he has stated the
situation quite clearly, and I have only been able to
talk to you about generalities, because I am only
generally familiar with the situation here. What he
asks me to do, which I do not think is beyond
reasonable capacity, requires the consideration of
accurate facts, of which I am not in possession at
the present time. On the possession of those facts, I
believe it would be possible to inaugurate
progressive steps to produce a result which, from my
point of view, is to the advantage of everybody, with
the single exception that it takes away power, not
necessarily of the money or wealth, but it takes away
power from those institutions which I think is very
radically and very improperly used. But, beyond that,
I see no reason why any reasonable individual
anywhere should be penalized by any such system.
Q : I interpret your answer to this effect: that,
without a fuller knowledge of our general situation
here, we can hardly expect you to set down a plan,
but, with a fuller study of the situation, you think
that a practical, progressive programme could be
A. I do.
Q. Col. JAMIESON: There is just one question I wish
to ask Major Douglas. He has made it very clear that,
in his opinion, this province cannot take final
action to introduce such a system of social credit,
owing to our constitutional limitations. It would be
exceedingly interesting to know if he has studied the
question as to whether the Dominion could put such a
system into force in Canada, keeping in view that our
constitutional act gives to the provinces the
exclusive right to legislate, and consequently
administer, within the field of property and civil
rights, except in so far as the Dominion may encroach
thereon in dealing with certain specific subjects
such as currency (and currency, strictly speaking, in
Canada means legal money, currency, legal tender),
banks and banking, and the issue of paper money; and
bearing in mind that, in pursuance of those powers,
the Dominion has created banks, and also created
financial institutions with Dominion charters, and
that, under the interpretation placed upon the
constitution by the judiciary committee of the privy
council, the provinces must not take such steps as
will interfere with those companies carrying on their
business in this province. In this province, we have
not gone far along that line yet, but there is one
thing to be considered, that some financial
institutions of considerable importance have been
instituted in this province, and in the older
provinces there are many large and important
institutions carrying on business. Then would it be
possible for the Dominion to put such a scheme into
A. There again I can only give a general answer, and
that is that I have no reasonable grounds to doubt
that the best brains of the world, far a very
considerable period during the past, have been
engaged in quietly erecting defences to the
international world money system, and, as I think I
said in public somewhere in Canada quite recently,
that the general feeling that one has is that, if a
matter is referred from Alberta to Ottawa, that
Ottawa would have to refer it to London and London to
Basle, or something of that sort, and therefore I
think that you have to break into that vicious circle
somewhere. My own feeling is that one would possibly
find that the beginning need not be by any means
international in this matter, and that is why it is
necessary, I believe, to start somewhere, and I
believe the small locality is the place in which to
start to take some steps. I believe that final steps
are at present impossible, but to realize what you
are up against, to really formulate your objective,
and to begin to move in that direction, I believe is
possible even in Alberta, but certainly not the final
steps; and I don't believe it is much more possible
in Ottawa than it is in Alberta, for the reasons I
have just stated.
Q. Mr. LANG: Some reference was made to a pamphlet or
pamphlets published, giving information regarding
your system of a social credit. Would you recommend
to us, or would you state to us, what publications
can be had, and where, that we might know that we
were studying the system with your authority?
A. Yes. We have an organization in London, of which
the address is 68 X Street, Strand, W.C. 2, and the
title is the Social Credit Secretariat; -and that has
a publication committee, and there is a perfect fund
of literature on this subject at the present time;
and every publication can be submitted to that
committee, and can be carefully read over, and be
said to be either correct or incorrect. Any
publication that is recommended from that source, you
may assume, is sound, technically speaking, and has
been submitted to the best authorities available.
Q, Mr. MacLACHLAN: May I refer back to my previous
question? It has been pointed out to me that I did
not follow that to its proper conclusion. I ask this
because of the fact that Mr. Aberhart, a few days
ago, before this committee, dealt at some length with
this question. In answer to this question, he made
this statement: "One of our group went to the old
country, and interviewed Major Douglas and had a talk
with him, and presented to him this pamphlet. After
looking it over, he put on the outside his autograph:
`With kindest regards, C. H. Douglas,' and told the
man in general outline it covers his principles."
Those were his words. It was my own opinion that you
answered fully, that you said, "It is not correct."
Would you just answer again, and say that that
statement is incorrect?
A. I shouldn't like to state it in exactly that way.
What did happen: A Canadian whose name was Monger
came and saw me, and we had a talk, and he told me of
the most admirable work that Mr. Aberhart was doing.
He has, as far as I can see, raised the query; he has
developed a most lively interest in this subject, and
I think the very greatest credit is due to Mr.
Aberhart for that. This pamphlet was presented to me,
or was shown to me, by Mr. Monger, and he said that
he felt sure that Mr. Aberhart would be very much
gratified if I would sign it, and I did sign it, as I
write my autograph in a great many places, even in
hotel registers, not turning over the pages. I have
some recollection of saying something like this: that
I had no doubt that it served a very admirable
purpose, under the circumstances for which it was
designed. It was in no sense a criticism or otherwise
of the book; I have no recollection of the contents
whatever. In consequence of that, this booklet was
submitted to the secretariat, not by me, and the
verdict of the publication committee was that it was
technically unsound. That is the position.
Q. Mr. BOWLEN: I would like to ask Major Douglas if
his system is in operation now in any country. I
understand that it is in Scotland; is that so?
A. As there is no home rule in Scotland, the scheme
is not in operation there.
Q. Mr. BROWNLEE: Does your scheme, to be put into
effect in Scotland, require home rule?
A. To be put into effect in Scotland, and not
England. But there have been various applications.
There was a very interesting application, to which I
referred in the House of Commons at Ottawa in 1923,
which was in operation in Austria for about two or
three months, an operation of the compensated price,
and during that period Austria experienced the most
tremendous boom that has ever taken place there. She
was then put under the tutelage of the League of
Nations, and the results of that are now history. I
think I predicted exactly what would happen in regard
to that, in Ottawa, in 1923, and my evidence is on
record there. That was one illustration of the
operation of compensated price. Another application
of it, in my opinion, although I cannot speak so
positively on that, is in the situation in Japan at
the present moment. I have very little doubt that
Japan is systematically applying, wherever necessary,
and wherever desirable, her national credit to
capture external markets in one industry after
another; and the prices that Japan is able and does
quote in business in the world markets at the present
time, are not due specifically to very low cost,
although her costs may be low, but are primarily due
to the use of a compensated price.
Q. Mr. WHITE: A little while ago, referring to the
banking system, you mentioned that the central bank
was riveted to the international system. What is your
objection to public ownership of the banking system?
A. Well I should say, broadly speaking, that the
question of so-called ownership has almost nothing to
do with it. The question is: What is the policy which
is pursued by that bank? Now the question as to
whether you can get a publicly owned bank to carry
out a policy in the general interests of the public,
has, I think, only one experimental effort to rest
upon--there may be another, but I don't know it--and
that is the Australian Commonwealth Bank. The
Australian Commonwealth Bank was a publicly owned
state bank, and so far as I know may be that at the
present time; there has been no change in the
constitution, so far as I know; but there has been no
single institution which has had more devastating
effect, working in conjunction with the joint stock
banks of Australia, on the Australian people, than
the Commonwealth Bank. The Commonwealth Bank,
although a so-called publicly owned bank, and a
national bank, has consistently worked in the
interests of international financiers.
Q. That is on account of its objective, of course?
A. That is on account of its objective, and the whole
question is the objective, and not the so-called
Q. In reply to a question by Mr. DUGGAN, you said
that you didn't want to be misunderstood, that there
was something that Alberta could do. Did you
subsequently make a statement of what could be done?
A. No. What I said was that one could only, in
discussion of these matters, deal in generalities,
unless one was in possession of concrete facts. The
question of just what is the best to do, in the
circumstances, from the point of view of Alberta,
requires a consideration of concrete facts, and I
have not so far given those facts consideration.
Q. Mr. SHIELDS: Relative to the questions that were
put forward by Mr. Matheson, with regard to the price
of wheat, I got an understanding of your thought in
that regard to be that the just price of wheat would
be a fair average return, or would include that?
A. It would most unquestionably include that, and it
would include, of course, a compensated price.
Q. That brings me to the next question, of the
difference between the just price and the sale price.
Would that be made up by compensation taken out of
the national credit?
A. In all probability, but I shouldn't like to be
quoted as having said that that would be the
technical method by which it would be done.
Q. The just price would not have, possibly, any
relation to the market price of wheat?
Q. And you would consider that it would be a more
scientific method--some plan along those lines would
be a more scientific method than subsidizing export
by depreciation of national currency?
A. I do.
Q. And that selling price, that would be in the
national interest, aside from the just price, to
maintain the selling price at the point that would be
best calculated to induce a large amount of
Q. Mr. RONNING: Major Douglas, you outlined to us
how, during the past decade, the financial powers
have quietly succeeded in getting various civilized
nations to formulate laws, and have made it very
difficult for us to put into effect such new ideas as
have been outlined by you. Would you then consider
that a preliminary step toward the establishment of
the social credit idea would be the elimination of
this mass of constitutional difficulties, before
anything can be done?
A. Well, I don't say before anything can be done, but
it is quite possible that action along those lines
might be very desirable.
Q. Then one other question, and I am asking this
question because, for a number of years I have been
very much interested in Major Douglas' principle of
social credit, and I am very desirous, when an
experiment along that line is tried, that it should
have every possibility of success. Would you consider
that, in view of the constitutional set-up, the
experiment would stand a greater chance of success if
instituted in the Dominion, instead of in the
A. I really cannot give you a flat answer to that. It
is not an answer which ought to be given except on an
exact knowledge of all the facts. The general answer
is that I do not think the Dominion is much less
under the control of international finance than
Q. Mr. WHITE: When Mr. Aberhart was here, he had
quite a chart. Have you seen that chart of his?
A. No. What kind of a chart was it?
Q. It was showing how the credit would be
established, and how it would circulate in what he
called the blood stream, in order to take the
purchasing power to the consumer and the return to
A. I haven't seen it.
Q. Mr. GIBBS; You told us that the international
bankers, or the people interested in maintaining and
conserving this financial system, have been busy
building trenches around their privileges for quite a
time. I was wondering if that was perhaps an
explanation of the fact that, according to your
statement, the Conservatives are taking such an
interest in this scheme of yours?
A. No, I don't think it is. I shouldn't like to be
put in the position of defending the Conservatives or
anybody else. But there is a very interesting fact,
that about 1790 or something of that sort, there was
a debate in the British House of Commons which lasted
for several years; and I am informed--I don't state
this as a fact, but I am informed that it is very
difficult indeed to find any record of that debate,
except by very prolonged research; and it was
initiated by the Tories, who for four or five years
attacked the Bank of England. I don't want to raise
any party feeling about the matter, but it is a fact
that the Whig Party in England has always been
associated with finance. The real history of the
Cromwellian episode is really the introduction of
finance from the low countries into England; the real
history of the struggle between what we may call the
power of the Crown and the power of the Bank of
England, because those are the present real powers,
dates from that time; and I notice quite a strong
feeling among the more conservative elements in Great
Britain that they have been led by the nose for a
very long time, over this thing. It is not confined
to the Conservatives by any means; we have friends in
all parties, I am glad to say, but we have quite as
many friends among what would normally perhaps be
called the reactionary parties as we have in the most
advanced parties, and there is perhaps a very direct
technical reason for that: The banking system, as a
system, is all in favour of a tax on anybody. Now, if
you can get a popular agitation against any
particular section of the population, and if you will
study the history of the last hundred years you will
find that one section or the other has been the cause
of all the trouble; first it was the landowners, then
the big manufacturer, then the shop-keeper, and so
forth. Now what happens is this: that those people
are taxed, as a result of that agitation. Now who
gets the taxes? The people who complain don't get
the taxes. The taxes, for the major part, go directly
into the coffers of the financial system, because
they are the bondholders, they are the people who
create war, and the national debts, and so forth. The
national debt is created by a technical process,
which inevitably in the first place puts it into the
hands of the financial authorities, and the service
of that national debt requires taxation. Any popular
cry against anything except financial institutions,
will always be supported by high finance, because it
provides the taxes to serve those interests.
The PREMIER: Mr. Chairman, I am sure that the Major
must be somewhat weary as the result of the
discussion so far this morning. It is rather a strain
to sit for two hours and a half and deal with these
questions. He has to leave this afternoon--I believe,
on the seven o'clock Canadian National train. I would
like to take this opportunity, in the event that he
does not appear before the committee again, to extend
to him, on behalf of the members, our most sincere
appreciation for the courtesy and good nature which
he has shown in meeting us and speaking to us, as
well as in answering the questions put to him by the
various members. I am sure we will remember for some
time the visit that he has paid to us, and I am sure
that our very best wishes go with him on his journey
on through Canada and back home. (Applause.)
I would suggest that the committee remain for a
while, and you can decide for yourselves whether or
not you would like to have the house adjourn a little
earlier this afternoon, in order that, if you still
wish to propound any more questions, you will have an
opportunity of doing so, or you can decide just how
you wish to follow up the inquiry that has so far
taken place, but I am sure the Major would feel that
he would like a little interval before continuing, at
Major DOUGLAS; I should very much like the afternoon
off, if I can be allowed it.
The PREMIER: Well, I think that will conclude the
session this morning, as far as the Major is
concerned, and I am sure you will, as you have
already, express your appreciation of his courtesy in
coming to us. (Continued applause.)
Hon. Mr. HOADLEY: Before we adjourn, is it definite
that the committee is of the opinion that it is not
necessary to have any more sittings? I presume we
have all the information that is necessary? I am
speaking only of Major Douglas. Is that correct?
The CHAIRMAN: Then the committee will stand adjourned
till ten o'clock tomorrow morning.
This concluded the taking of evidence on the Douglas
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