Delphi complete works of.., p.683
Delphi Complete Works of Stephen Leacock, page 683
But at least the technocrats showed that we are now dealing with the Economics of abundance not of scarcity. Presently Mr. Stuart Chase said it in his own inimitable way, and all the world heard it. Our only problem left is what we are going to do about it. Neither Stuart Chase, nor anyone else, outside of Alberta, knows that yet.
* * * * *
But the principle, immediate source of the Alberta doctrine are the various books of Major C. H. Douglas, a Scottish engineer, dealing with Credit and Democracy, — Economic Democracy, Social Credit, the Monopoly of Credit, etc. The gist of these, and pamphlets of similar topics have been gathered into a single Douglas Manual which contains all that is necessary for salvation.
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Major Douglas joins with Soddy in his views of banks and banking, and even dots the i’s and crosses the t’s of Soddy’s academic phrases. “As the situation stands at present,” he says, “the banker is in a unique position. He is probably the only known instance of the possibility of lending something without parting with anything, and making a profit on the transaction, obtaining in the first instance his commodity free.” The best thing that Douglas can say for the banker is, “There is no suggestion that bankers, as human beings, are in the main actuated by any anti-social policy.” No, the idea seems to be that the banker, as soon as he enters his office, ceases to be a human being and starts to growl. The interesting problem with Douglas is, why is a banker not worse? What holds him back? “It may be asked,” he says, “why a bank only pays a dividend of 25 per cent. or so. The answer is simple. Their real earnings are measured by the control over industry which they acquire, — earnings so rapid that in a few years the control will be absolute if not checked. The amount distributed in dividends is, or could be, any desired dividend of “this capital control”.
All of this anti-bank stuff seems to me as erroneous as it is harmful. But it makes a great appeal because it corresponds with what seems a queer phenomenon to everybody who borrows money from a bank and who is unable to trace further the economic meaning of what is happening. Apparently the banker is able to create money with a pen and ink. To make a loan he just writes an entry in a book. To make a payment from one customer to another he just makes a second entry. In other words he can make all the money he wants out of an ink bottle; spiders making thread aren’t in it with him: he can “create credit”: he almost qualifies, if Douglas and Soddy are right, for the first book of Genesis.
Elsewhere I have set the villain down in verse, thus: —
“He sits there in his tall silk hat,
A great big Ledger laid out flat,
A rounded Glass beside him set
With which to magnify a debt,
An Ink Eraser, short and stout
For rubbing a Deposit out,
Ink and a lovely ‘Banker’s’ Pen
With which to write it in again.
Soddy, you guessed it when you said it!
Hush! Watch him now, He’s ‘coining Credit’.
He doesn’t see us! Hold your Breath!
Look past his Arm and Underneath, —
See that last Flourish where he joined it,
The Thing is done! By George! He’s coined it.”
But does the banker really make money out of nothing? When John Smith, anxious to buy raw material for his business and to pay wages “borrows $5,000”, it is Smith, not the banker, who gets the goods and the services: Smith, not the banker, who sells the finished commodity to Jones: and when Jones pays Smith with a cheque it is the banker, not Jones, who has to make good the cheque. When the transaction is all over what does the banker get, — interest, that’s all and he deserves it just as much as Smith and Jones deserves a share (called profit) of the goods made by the labour of their employees. Did they make anything? Not a thing. They just sat there, on whatever they sit on, in their glass offices and let the men work. If you want to be a Marxian Socialist, be one; but don’t pick out the poor banker and crucify him alone. Hang up all the rest of us, and yourself, too.
“But,” says the Social Crediter, still perplexed, “can’t the government do what the banker does?” Answer, no, it can’t. It can, if you like, open a credit house on Jasper Avenue, Edmonton (rent to pay at once, notice): it can give a civil servant his month’s pay in the form of a credit in a book, and he can pay his grocer with a cheque on the credit house and they are, all three laughing together! At first sight it looks great! How far will it go? Next to nowhere. First, you can’t give him all his pay in credit. Some of it he’ll need for cash transactions. He can’t carry his bank round into the saloons when he buys a drink. Some of it he’ll need to make “outside” purchases of goods from other provinces, and some, let us hope, for investments in shares and stock of other places. If he buys a share in a gold mine, — as he will need to once if Soddy’s right, — then he needs cash. At first you would think that this only means that he must have part of his pay in cash. It means far more than that. It means that there is a perpetual leak in the credit house. It’s like a barrel of beer with a hole in it.
More than that: even if you get the barrel full, that’s all it will hold. When the credit house has made accounts enough to cover the level of transactions back and forward, — civil servant to grocer, grocer to farmer for eggs, farmer to grocer for tea, grocer and farmer for taxes, — you will find there is just so much and that’s all of it. You see, the taxes coming in this way are just a back-laugh on the government: just a “take-that-and-you’re-fooled.” If the taxpayer pays, as I do for my income tax, a real cheque on a real bank, the government gets something.... If it only gets a cheque on a Soddy-Douglas Credit Shop, it is merely being made to take its own medicine.
So much for passing cheques to and fro. Nothing in it: all the advantage wouldn’t pay the cost and the stationery and the furnace and the charwoman and the teller’s salary.
But what about making loans? Can it do that? Oh, indeed it can, — free loans like free lunch. It can lend comrade Smith, — who hasn’t a nickel and hasn’t worked since he was old enough to drink, — a thousand dollars a day. Who’s to stop it? A real bank has to think, will Comrade pay it back? The Soddy-Douglas-House simply answers, what the hell if he doesn’t? Fetch another cheque book.
Honestly, my Social Credit friends, your bank is off. I can sympathize with social help, social effort, social anything. But when it comes to a social destruction, I quit.
Pass on to the next item, — the famous “purchasing power” doctrine. Major Douglas has stated the basis of it with such exquisite accuracy; such scientific nicety, — that I can’t understand a word of it. Here it is in the following passage under the name of the A+B Theorem. I first read the passage years ago: have read it again and again since: I have, as the clergy like to put it when they get a call, prayed for light. I have never got any. I don’t know, shall never know what it means.
THE A+B THEOREM
Rates of Flow of Prices and Purchasing Power.
(An Extract from “Credit Power and Democracy”).
A factory or other productive organization has, beside its economic function as a producer of goods, a financial aspect — it may be regarded, on the one hand as a device for the distribution of purchasing-power to individuals through the media of wages, salaries, and dividends; and on the other hand as a manufactory of prices — financial values. From this viewpoint its payments may be divided into two groups:
Group A — All payments made to individuals (wages, salaries, and dividends).
Group B — All payments made to other organizations (raw materials, bank charges, and other external costs).
Now the rate of flow of purchasing power to individuals is represented by A, but since all payments go into prices, the rate of flow of prices cannot be less than A+B. The product of any factory may be considered as something which the public ought to be able to buy, although in many cases it is an intermediate product of no use to individuals but only to a subsequent manufacture; but since A will not purchase A+B, a proportion of the product at least equivalent to B must be distributed by a form of purchasing power which is not comprised in the descriptions grouped under A. It will be necessary at a later stage to show that this additional purchasing power is provided by loan credit (bank overdrafts) or export credit.
* * * * *
Based somehow on this is the idea of supplying “purchasing power” to the mass of the people. But what the people want is physical goods not bits of paper. Physical goods are only got by labour. The people, collectively, make them. Their ‘wages’ means the share they get in what is made. In other words, the true “social dividend” means work for all at good wages, and agriculture for all at good prices. People can’t eat paper.
Along with these arguments goes a muddy discussion, the ‘just price’ theory, — a problem as old as the middle ages. There is nothing new in the enquiry. It is only the solution that we want. Everybody who has even tried to study the political economy of our times knows, — everybody with a brain not ossified by wealth or deliberated by high birth, — that we live in an unjust world: that wages and salaries correspond neither to moral worth nor economic contribution: that free, utterly free, competition far from leading to social justice, favours the strong, oppresses the weak, creates the slums, submerges the labour class. It is only when the principle is held in check by the organization of labour, and by legislative interference through wages-laws, trust-laws, etc., that the wholesome basis of it, — every man for himself and his own, — can still animate society. What we need is not a new game but a new set of rules. Dimly they are taking shape. But all this lies outside of mere Alberta politics and Mr. Aberhart has no monopoly on human salvation.
Last remains the Social Heritage idea, the claim that we own the world in common, that we have all about us a world filled with accumulated contrivances and structures, altered and improved by labour, animated by ideas and operated by knowledge, — which is not the creation of the living, but of the past generations who built it up for us.
Douglas speaks of the “social nature of the heritage of civilization”. I fully agree with the idea. He cites with approval Thorstein Veblen’s phrase “the progress of the industrial arts”, as meaning something that we possess in common. “No one person,” he says, “can have a monopoly share in this: it is a legacy of countless numbers of men and women ... a cultural legacy .... and the general community as a whole .... are its proper legatees.”
This is a sound principle, a sound outlook on society. We already act on it to some extent in our new post-war application of ‘relief’ and the ‘dole’. The Victorians let the poor starve and shed tears over their graves: we swear at them and feed them.
It is a point that would stand a lot of discussion. It would lead us to the interesting proposal for “free maintenance” as set forth by Bertrand Russell in his Proposed Roads to Freedom and by many others, including, in all modesty, myself. The general idea is that we might expand our present system of free meals for school children, free meals for people out of work, free meals for people in emergency distress, — into a general social institution of free meals for those who care to eat them. Imagine in your home town a bright, clean building, painted white, and inside it something as between a Rotary Club and a Ladies Church Social in full action. Eat there if you like, rich or poor, it’s always there. After all people only eat three meals a day. They can’t get away with more than their share without a stomach ache, and if you begin dimly to get the idea of free clothes, — just plain suits, — one each, — well, you can soon dissolve all relief and public doles and all the rest of it into a sort of free community life as the basis of super-industry.
And the loafer? Let him loaf. If that’s all he asks of life, his free meal and his burlap overcoat, — let him have it. He can sit and write poetry or play the banjo. We don’t care. Meantime the busy energetic clever people, thus set free, would be better off than ever.
CHAPTER NINE
MONARCHY IN THE WEST
ABDICATION IN SASKATCHEWAN — The West and Monarchy — More British than the East — The Bogey of “Americanization.”
I was in Saskatoon, Saskatchewan, when Edward VIII, at 3 o’clock in the Saskatoon afternoon, December 11, 1936, broadcasted his abdication as King of Saskatchewan. I was in the Bessborough Hotel. The clerk at the desk said, “The King is to broadcast at three. That won’t interfere with you as you don’t go on the air till seven. You can hear him in the lounge.”
There I heard him. There were just five or six of us, strangers to one another and without talk. We listened as did other groups all over the world, to half a century of world history, going by in nine minutes.
The abdication of Richard the Second in 1299 A.D. carried as its sequel and consequence a long string of murders and executions that left a track of blood over half a century of history. The murders and executions were largely family affairs, as between the royal family and the noble houses, all closely related. First of all, the abdication of the King was ‘ratified’ by murdering him. That led to a protest from some of the relations and friends and so the new King, Henry IV, executed five of them the day after the protest. The Duke of York, who had already murdered his brother, the Duke of Gloucester, anxious to try to please the new King, murdered his own brother-in-law, Lord Spencer, and sent his head on a pole as a present to Henry. Henry was delighted with it. The executions went on and on, till the axe grew blunt. The historians say that the “flower” of the nobility perished in the conflicts that followed. Those of us left are just weeds.
Even when James the Second abdicated, or rather was informed that he had abdicated, things remained fairly lively for fifty-six years. There were a couple of ‘world-wars’ (1692 and 1701), two Scottish rebellions and plenty of executions, including as the finale the beheading of Lord Lovat in the Tower (1747), the last beheading in England; the block and axe still kept in the Tower as an exhibit.
Abdication, as heard in Saskatchewan, was much quieter. Apparently it was all over in nine minutes. But it may be that the sequel is still to come. At the moment there was nothing in particular. The six strangers in the lounge got up and went away. Round the town people listening in their offices said, “That’s too bad, eh?” Just that, in most cases— “That’s too bad, eh!” One man, indeed, told me that his stenographer cried. That’s nothing. They always do. I heard one who cried when Governor Landon didn’t get elected president. Very likely one of them cried for Richard the Second. Stenographers have to cry to show that they are still women.
But, mostly, people didn’t say anything much about the abdication and mostly haven’t yet. The waiter at my dinner table said, “Too bad about the King, Sir! Table d’hôte? The gold-eyes are good.” And the porter on the train that night said, “Too bad about the King, judge. Will I make it up now?”
The point is that the people, — the ex-King’s subjects, — didn’t know just how they felt, and don’t know yet. Are their feelings just scratched, or are they stricken to the heart? Pain, it is said, lies chiefly on the surface. Men stricken with a deep, mortal wound often feel next to nothing, still walk and talk, and then fall down and die. It is perhaps something like that with us.
* * * * *
People who know nothing about it always imagine that the West of Canada is far less British than the East. Apart from the Maritime Provinces this is not so. It is even the reverse of truth. The West, as classified in our census into ‘racial origins’, has a weird look. But they don’t act that way. They only ask to forget it. Even the high percentage of ‘Americans’ who moved over in the ‘invasion’ of 1905-14 makes no great difference as to the British connection and British institutions. Americans who were originally British, turn back again into British people. What do a few generations matter to a McGregor or a Howard or a Smith? And Americans who were not of British stock, but were German or Scandinavian or something else, — were never really Americans anyway, and can still turn into anything. A Scandinavian is an Anglo-Saxon already, one who missed coming with Hengist and Horsa. The truth is, though it is a mean thing to say, there is no such thing, racially, as an American, except an Indian: just as there is no such thing as a South African — except a black one: and no such thing, racially, as a Canadian. There is no American stock: ‘stock’ takes longer in the cooking than that. Hence, people of the second, and children now the third generation in the prairies, lapse back easily a generation or two, purged of American sin, and turn again to McKays and McGregors and Bakers and Smiths.
It used to be said that the last shot fired in defence of British institutions in America would be fired by a French-Canadian. It looks now as if there would be one more shot after his. It will be from the gun of an American whose name will be something like John Bull McGregor. His people will have been among the McGregors of Mississippi and the Bulls of the New York police: so he won’t miss what he shoots at.
What is true of Americans is true, though in a lesser degree, of the numerous ‘aliens’, the European foreigners of the West. If one were to take mere tables of census statistics one could make out an apparently alarming case about the ‘foreign’ aspect of the prairie provinces. For example, The Bishop of London is reported to have implied just this kind of danger in speaking in the House of Lords (March 3, 1937) on the new Empire Settlement Bill. He said that a Canadian had told him that Canada needed 10,000,000 more Britishers, — a sentiment as sound as it is true. He should have made it 20,000,000. But he is reported to have added that as things are now, the North-west is in danger of becoming foreign. ‘In Edmonton’, he said, ‘thirty languages are spoken’. We might answer so they are in London. The Bishop was using a false argument in a good cause, a thing that Bishops must often be tempted to do.
