The doubts that haunted me regarding the practicability of National Guilds (or, as it was sometimes called without my approval, guild socialism) were concerned with something more important than the viability of the idea.   The rank and file of the trade unions were under lock and key of their officials, the latter were hot on quite another scent from ours – namely, their social ambition by the political agency of their unions – and the general public, as always, whatever its attitude toward guilds, was without organs – rather like an amoeba that can function only in rare states of excitement.   But had these circumstances been altogether otherwise and quite favourable, my embarrassment would have been infinitely greater.   Called upon, like the boys at Dotheboys Hall, to clean the “winder” I had spelled, my suspicion of its mis-spelling would have been confirmed.  For the truth is that I knew, without being able exactly to diagnose it, that the whole idea of National Guilds, as formulated by Mr S. G. Hobson and myself, and elaborated by Messrs. Cole, Reckitt and others, was wanting in some vital part.   Somehow or other it would not “work” in my mind; the idea did not inspire my confidence.   And the trouble was always of the same nature – the relation of the whole scheme to the existing, or any prospective, system of money.

Many were the discussions between Mr Hobson and myself during the drafting of the first official exposition of National Guilds; and the chapter on the finance of the guilds was, I remember, a torture to us both.   Mr Hobson, with his eager mind, was disposed to trust to the washing, so to speak.   Everything would work out in practice that we could not clearly see in theory.   After all, we must leave something to be done!   But I was not satisfied that we had even the principle correct; and my conscience would not allow me to sleep in faith of the future.   I read all my economic literature again with special attention to the problems of money.   Every “crank” on the subject was eagerly welcome to my time and consideration.   Still the solution eluded me; and in the end I decided to remain neutral as regards both the textbook itself and the National Guilds League that was founded on it.

The Great War put an end to many things and many ideas; and among the latter was undoubtedly guild socialism.  We woke from the evil dream shortly after the Armistice; and in the horrible light of morning we began to count our losses.   For me personally the realisation of the complete disappearance of the guild idea as a living potency brought no sense of disappointment, but rather of relief.  My former  colleagues, however, were only disappointed; they were not, as yet, in despair.  On the other hand, it was difficult to carry on a journal that lived by ideas in the absence of any living idea; and between two worlds, one dead and the other powerless to be born, the editorship of the political section of THE NEW AGE became extremely irksome.   My mind functioned on events with the monotony of a recurring decimal; and my only relief from the situation was interest in the literary style of my political notes.   And assuredly that would not last me very long.

One day, about a year before the Armistice, there came to my office, with a personal introduction from my ex-colleague, Mr Holbrook Jackson, a man who was destined to effect a beneficent revolution in my state of mind.   Major C. H. Douglas, so it soon appeared, had been already for nearly a year engaged in trying his ideas upon various persons and personages, political and journalistic.   His ideas concerned the problems of finance; and I quickly gathered that they were difficult to understand and had been “turned down” or refused a patient hearing wherever Major Douglas had adventured them.   This was nothing to me, who had often boasted that THE NEW AGE owed its “brilliance” to the rejected stones of the ordinary builders; and everything about Major Douglas made him personally and intellectually attractive.  He had been assistant-director of the Government aircraft factory during the war; he was a first-rate engineer; he had encountered financial problems practically as well as theoretically; and he appeared and proved to be the most perfect gentleman I had ever met.  His knowledge of economics was extraordinary; and from our very first conversation, everything he said concerning finance in its relation to industry – and indeed, to industrial civilisation as a whole – gave me the impression of a master- mind perfectly informed upon its special subject.   After years of the closest association with him, my first impression has only been intensified.

The subject itself, however, even in the hands of a master, is not exactly easy; an, in fact, it compares in economics with, let us say, time and space in physics.   By the same token, Douglas is the Einstein of economics; and in my judgment as little likely to be comprehended practically.   In other words, a good deal of sweat is necessary to understand Douglas; and, with our absurd modern habit of assuming that any theory clearly stated must be immediately intelligible to the meanest and  laziest intellect, very few will be the minds to devote the necessary time and labour to the matter.   I was in all respects exceptionally favourably placed to make a fairly quick response.  I had time, and from my long experience with literary geniuses, almost illimitable patience; I was vitally interested in the subject, having not only exhausted every other, but been convinced that the key to my difficulties lay in it; and above all, Douglas himself was actively interested in my instruction.   He said many things in our first talk that blinded me with light; and thereafter I lost no opportunity of talking with him, listening to him talk, reading new and old works on finance, with all the zest of an enthusiastic pupil.   Even with these advantages, it was a slowish business; and my reflections on the stupidity of the present-day students of Douglas are generously tempered by the recollection of my own.   It was a full year from beginning to study his ideas before I arrived at complete understanding.   Then all my time and labour were justified.

For anything like a full presentation of the Douglas ideas, students looking for a long row to hoe may be directed to the increasing body of literature on the subject inaugurated by the volume in which I more or less collaborated with Douglas himself – “Economic Democracy.”   There followed Douglas’s “Credit-Power and Democracy,” and several others; and, later, a host of summaries and discussions. Furthermore, THE NEW AGE under my successor more than admirably continues the weekly exposition which I had begun and carried on for three years.   Certainly there is no lack of light on the subject today; but only the usual poverty of eyes and understanding.

At the outset, and after inspiring my confidence in his ability to give me more than he took away, Major Douglas set himself, as it were, to dispose of three of the enormous fallacies under which I and my colleagues (and, let me add, the vast majority of social reformers of every school) had been labouring. The first concerned the limitations of production.  Hand on your hearts, do you not take it as a matter of course that the predominant practical problem of civilisation is production, and how to keep it increasing step by step with the increasing demands of civilisation?   Be sincere; is not every proposal, Socialist, Labour, or Progressive, for better distribution haunted by the spectre of a limited and possibly diminishing production?   It is perfectly certain that such is the case, and the fiasco of the Labour Government in England, as well as of every attempt to equalise distribution, is sufficient evidence of the power of the spectre of limited production.

Major Douglas did nothing to theorise the spectre away; he simply confronted it with facts; and the facts did the rest.   For instance, he pointed to what was obvious to everybody in the actual statistics of war production.   With millions of the best workmen absent in the Army, with an incredible consumption of supplies, not only everybody in England during the was better off than ever before, but the surplus stocks of perfectly good materials remaining after the war were a mountain of menace to the restoration of the pre-war industrial system.   It was calculated, in fact, that with all the handicaps of the war, production in England increased many hundreds per cent. Lest it be imagined that this was due to imported goods, procured on credit, it may be said that England’s exports and re-exports during this period were vastly in excess of its imports.   In other words the net output of England at war exceeded its peace output by several times.   But the war was a special occasion, it may be said; and I did not fail to make the objection to Major Douglas; whereupon he directed attention to the normal facts of peaceful industry.   So far from production being limited by nature or by invention, there appears to be an unconscious but active conspiracy on the part of the industrial system artificially to restrict it.   At any given moment only a percentage of our resources is being employed.  Fields, factories, and workshops, all competent to produce, stand idle at the very same time that the labour and invention to utilise them are idle too.

The world habitually produces only a tithe of what we have actually in hand the means to produce; and the world’s powers of production are increasing simultaneously with the reduction of the world’s actual output.   Sabotage, limitation of production, and all the other devices for restricting output go along side by side with the old complaint that production is our chief difficulty.   Not production, as every business man or economist will admit, is truly our practical difficulty – but how to limit it to a diminishing demand without falling out of the frying-pan into the fire.  How the deuce are we to safeguard industries, established upon a certain price-basis, against discoveries and inventions calculated to increase supply and reduce prices? 

That, not the fear of a limit to productivity, is the actuality of the ghost in question.  In other words, the popular ghost of a natural limitation upon production is only a  superstition to conceal the real spectre of a naturally unlimited production.   It would be fatal to the existing system to have it realised that in actual fact there is enough and to spare for a world of millionaires – such is the proven abundance of nature and the proven invention of man

This realisation, which I owed to Major Douglas, threw a devastating light on many of my previous working hypotheses.   Most of them, in fact, would not work any longer; and my attitude toward economics and politics began to change rapidly.   The guild idea, based upon the paramount necessity of increased production, lost one of its limbs; and another was doomed to disappear with Major Douglas’s demonstration that individual work is not a just prior condition of individual income; in short, that every member of the community, as such, is justly entitled to a social dividend, work or no work.

What a rumpus THE NEW AGE created in the Socialist and Labour camps when first this defence of dividends for everybody, irrespective of work, made its appearance.  Mr & Mrs Sidney Webb were touched to their puritanic quick.   Never, they said, would they countenance a proposal to give every citizen his birthright of an annual share of the communal production.  Such a distribution would make future social reforms unnecessary; and where would the Fabians be then, poor things?

Mr George Bernard Shaw, with his workhouse scheme of a universal dividend in return for a universal industrial service, was silently contemptuous of Douglas.  As a matter of fact, perhaps, he had long ceased to feel in any possible need of a new idea; and his juggling with his old ideas was sufficiently skilful to continue to deceive his public that he was still learning.

But the most bitter objection came, of course, from the Labour officials and the class- Socialists whose bread of life depended upon diatribes against “unearned incomes.”  Our simple little proposal to put everybody upon an “unearned income” threatened to take the bread out of their mouths; and tart and many were the comments we drew from them.

Nevertheless, the idea when considered without an axe to grind is obvious enough.  The community is not only the ultimately legitimate owner, partly by inheritance and partly by current labour, of its whole productive mechanism; but, though it may be true that every individual must be ready to work if called upon, it is absurd to require, as a condition of receiving his share of his own, that every individual shall work, even in the absence of any demand for his services.  What!  Is Industry to be compelled by society to employ men who are unfit, only because society refuses an income to its members unless they are employed?    Not to exaggerate, it is probable that a greater output – that is, more for everybody – could be obtained today by restricting the right to “work” to the fit half of those now employed, retiring the rest on a liberal annual dividend to join the army of the so-called privileged classes.   At any rate, that is what I came clearly to see under the influence of Major Douglas’s ideas; and such is my conviction today. 

These blows to my previous opinions, however, were only preliminary to the blow that shattered the faith upon which, it appears to me, the whole of the Socialist, the whole of the Labour, and the whole of the progressive case rests – namely, the belief that economically there is any magic in ownership.   The poor old world has been misled by personal associations and by phrases into the fatal error of mistaking ownership for control. Only the extremely able few who own nothing and control everything know better.   In this respect, I confess that when beginning the formulation of National Guilds we took the current misconception for granted.  The wage –earners were slaves because they had no property in their employers’ industry; and having no proprietary interest in the business they were, on that account alone, excluded from both its management and its control.

The extension of ownership to management and control was logical; and our only originality lay in thinking that we could acquire a share in practical ownership by demanding at the outset a share in practical control and management.   Here again, Major Douglas depended for his case upon no counter-theory; but upon accessible, intelligible, and, indeed, obvious facts.   If ownership spells control, then why do not owners of fields, factories, and workshops control at least their own production?  Having the equipment, the materials, and the labour, why do their factories ever stand idle, their fields go out of cultivation, and their workshops rust for want of use?   Or, again, why with so many offers open to them of complete ownership, have the trade unions steadily refused (and more wisely than they knew) to exercise its alleged privileges and powers?   The answer is, of course, to be found in the fact that ownership of a means of production gives control to the degree that the product is in economic demand; and this, in turn, obviously depends upon price.  Since neither any single manufacturer nor any combination of manufacturers, as such, can or does control prices, their ownership of the means of production has only a contingent value.   Real control of the market, and hence of the means of production, lies elsewhere. 

I must defer to a final occasion even a brief outline of the Douglas case for the reference of control to the financial system.   At present it is enough to say that with my Socialist king-pin of faith in the sovereignty of ownership knocked out, my whole elaborate structure of National Guilds fell all to pieces.  A fragment, perhaps, escaped the catastrophe with its life; there is an idea in guilds that will probably always seek incarnation.

But all the rest of the social invention appeared both theoretically and practically worthless. Not only would the wage earners never obtain ownership of the communal means of production, but it would not do them the slightest good if they did. No more than the present owners could they control demand; no more than the present owners could they control prices; and no more, in consequence, than the present owners could they guarantee either production or work or wages. Farewell the dream of a Socialist state erected, even with all modern improvements, upon the pathetic fallacy of Marx!  Every serious attempt to realise it must end in a Bolshevik nightmare.