The Monopoly of Credit
By C H Douglas
Government by Finance
It cannot have escaped the observation of anyone interested in the welfare and orderly progress of society that, more especially in the years which have intervened since the close of the European War and the present time, the centre of gravity of world affairs has shifted fromParliaments and Embassies to Bank Parlours and Board Rooms. It is probable that this shifting is more apparent than real; that, in fact, Parliaments and Embassies have not for a long time been more than the salesmen of policies which were manufactured elsewhere. But the public is becoming increasingly dissatisfied with the goods; it has changed the window-dressers with disappointing results, and in consequence it is, perhaps for the first time, beginning to take an interest in matters of economics and finance which previously it had been content to leave to experts.
One of the first results of this awakening interest has been a demonstration of the distance which separates exact knowledge from popular understanding of the methods by which the ordinary necessities of life and the amenities of civilised existence are placed at the disposal of individuals in the modern world. If this ignorance were of a purely negative nature, the situation would be sufficiently disquieting. But unfortunately that is not the case. Particularly in regard to finance, which may be termed the nerve system of distribution, most people hold, with some persistence, ideas which are both incorrect and misleading, and are supported in their disinclination to change these views by sectional interests of great potency and ability in the attainment of their own objectives, which superficially seem well served by the prevailing ignorance.
No just appreciation of this situation is possible which does not take into consideration the
peculiar and perhaps unique, position occupied by finance in the organisation of modern society in every country. Finance, i.e. money, is the starting-point of every action which requires either the co-operation of the community or the use of its assets. If it be realised that control of its mechanism gives, to a major extent, control of both personal and organised activity, it is easy to see that education, publicity, and organised Intelligence (in the sense in
which the word ''Intelligence" is used in military circles) can be controlled, first to minimise the likelihood of criticism arising, and should it arise, depriving it of all the normal facilities for effective action. Finance can and does control policy, and as has been well said by an American writer, Charles Ferguson in his work Revolution Absolute, "control of credit and control of the news are concentric."
The results of this state of affairs can be seen somewhat sharply defined in the case of professional economists, necessarily in the direct or indirect employ of banks or insurance companies. It would, of course, be improper and probably unfair to attribute anything but intellectual honesty to these gentlemen. Moreover, such an assumption would deny due appreciation to the ability of their patrons. Their failure to make any noticeable contribution to the solution of the problems within their special field can, I think, be explained by the incompatibility of any effective solution with the credit monopoly which is at once their employer and critic.
The control of publicity renders it easy to circumscribe the reputation of the unorthodox. Modern organised publicity in its various forms is a product of costly machinery and is controlled by financial mechanism, so that, in general, any information circulated through such agencies is orthodox, while any authority recognised and advertised is a witness for the defence of things as they are, or as those at present in control of finance would desire them to be. It is therefore perhaps not astonishing that public opinion is in much the stage of economic enlightenment that we should expect as the result of the suppression and distortion of the essential facts. Most features of the social system, and many things which are not features of the social system, have in turn been blamed for its defects, with the exception of the money system. These alleged causes have been in the nature of private privileges, and it has not been difficult to manipulate popular clamour, or indeed to finance it, so as to cause the transfer of the privileges to an international plutocracy, undercover of their transfer to "the public" or "the nation".
Unable effectively to isolate the cause of the trouble, a large section of the general public, while recognising the increasing gravity of social maladjustment, has fallen back on the assumption that human nature is at fault—a comfortable theory which, while excusing the necessity for further mental effort, goes some distance towards assuring popularity in circles well able to reward it.
While all the more immediate difficulties which threaten us are in the nature of technical defects, requiring for their adjustment rather a change ahead than a change of heart, it is unwise to under-estimate the psychological obstacles which lie in the path of reconstruction. Probably that of fear is the most fundamental, fear of the unknown, fear of one's neighbour. The psychological process known as rationalisation clothes this fear in a number of moral forms, for instance, that it is immoral that John Smith should receive goods without working although I myself receive dividends.
Economic analysis, and still more, any constructive proposal, which does not at the same time envisage the dynamics of society is unlikely to achieve more than temporary success. The Greek word from which "economics" is derived, meaning household management, is much closer to the reality of the matter than the bloodless "inexorable economic laws" which are at once the propaganda and the nightmare of the international financier; laws which, in the main, are merely the statement of the results which accrue from the operation of a purely artificial money and accountancy system.
It should be recognised clearly that minority interests have acquired, and intend to retain, all the mechanisms of organised force of which the State disposes. The problem which faces the world, therefore, is not merely to recognise in Finance the major cause of its distress, but to devise means through which sufficient force may be brought to bear upon those agencies which alone can rectify the situation.
The Meaning of Disarmament
Perhaps the first step to an appreciation of the forces active in the modern world is to be gained by a consideration of the decline of moral religion.
It is easy to recognise the conflict of two systems of thought in many spheres of action, and not least in that of industry. Beyond question, the economic system which is dominated by the financial structure of banks and insurance companies is an unofficial and temporarily all- powerful government, neither elected nor subject to effective criticism, the embodiment of the concept that externally imposed restraint is the first condition of a stable society. The idea which is rising into prominence, and which is probably incompatible with the older conception, is that nations and races to some extent resemble individuals. A period of tutelage is necessary and desirable, but the extension of this period beyond pragmatic limits can only result in harm and discontent. On the other hand, to say that all peoples, or even all individuals, should be suddenly freed from the restraints imposed upon them by past generations is as absurd as to say that such restraints should be uniform and permanent.
The subject is of course both wide and deep, but for the purposes of the present analysis, it may be brought down to earth by emphasising its connection with English Common Law, which again, rests on the tradition of a millennium deriving its main principles from European Christianity, grafted onto Saxon custom.
Financial civilisation, to coin a phrase of doubtful homogeneity, rests on a different legal and moral system, primarily that of the so-called Old Testament.
Whether we consider the present state of society to arise from inertia and fear, or from a positive craving for power, the recognition of its existence suggests that those who embody it will be found engaged in a struggle for the control of social forces. This, I think, is the case, and in one form or another this struggle is similar to that which has taken place throughout recorded history. The prize may he termed the unearned increment of association.
It appears to be a fundamental instinct of conscious life, well developed even in the animal kingdom, that certain advantages can be gained by the association of individuals into a group, which cannot be attained in other ways. It is equally true that in a primitive state of existence the advantages of the group carry with them definite disadvantages to the individual. It is true that many hands make light work, but it is not less true that he travels the fastest who travels alone. The developments of modern industrial society, founded upon the division of labour and co-ordinated by the financial system, have at one and the same time increased this unearned increment of association, and still further subordinated the individual to the group. Only recently has it been recognised that the factor introduced into the progress of the industrial arts by the use of mechanical power in its various forms is a development not merely of degree but of kind. The advantages of the group can, as it were, be crystallised in machinery, and the human individuals receive their benefits while regaining the freedom of initiative, which has been temporarily surrendered.
While this is potentially true, it is very far from being actually so. The ingenious and subtle mechanism of the money system has obtained control of this unearned increment of association, and the modern struggle which has taken the place of the struggle for the leadership of armies is a financial struggle, with the industrial system and the world population which is dependent on it passive victims of the conflict.
On the other hand, it is doubtless a misconception to accuse financiers of deliberately planning wars, suicide waves, bankruptcies, and the many other tragedies associated with the existing state of affairs. They are in much the position of the immoderate drinker, whom it would be absurd to suppose desires delirium tremens. He will do everything possible to avoid delirium tremens—except stop drinking.
Since it cannot be expected that this annexation of the whole harvest of human invention and endeavour can be carried out without protest, the essentially military nature of the situation becomes evident. The existing financial executive, granted that intellectual and executive capacity of which it certainly disposes, must visualise a radical conflict of objective, and the strategy applicable to this situation is similar to that of any other power whose authority is challenged. The disarmament of its adversaries, and the concentration under its own control of irresistible forces, would appear to be primary necessities.
This disarmament is in the first place of a military character. It is probable that in the modern world there is only one force superior to that of finance, and that is military force; and the best brains of the financial system are well aware that whatever institutions may be saved from the next war, the present financial system will not be one of them.
Disarmament in a military sense, therefore, is a pressing requisite to a continuation of the present ascendancy of the banking system, and the sentimental pacifist is a valuable tool in its attainment. But the objective is centralisation of power, and economic disarmament is also a component of such a policy, since, while a high standard of living does not necessarily conflict with a world hegemony of finance, it is essential that the power to punish any sign of recalcitrancy on the part of the individual should exist. Personal property in the old sense seems incompatible with the objective, which contemplates the reduction of the individual to a state of powerlessness in comparison with the preponderance of a group organisation controlling the world, with omnipotent and irresponsible financiers at the head of it. The attack on personal property, which superficially would appear to proceed from the less fortunate strata of society, would never have become effective had it not been a perfect tool for the transfer of real property, both territorial and industrial, from the individual to the financial institution.