March 8, 1938 (18th Parliament, 3rd Session)


John Horne Blackmore

Social Credit


May I have the question? Very well. I am glad to answer questions; we might just as well take them up as they arise, because that is what I am here for. I delight greatly in questions.
First of all, then, we have decided on a definition of what is money; what is currency (tags); what is credit-figures-in-a-book. If hon. members do not agree with my definition- good. If they do, we are together thus far. The next question we shall take up is, where does money come from? Is the money which the bank, for example, lends to you if your credit is good, money which somebody put into that bank, or is it money which the banker creates at the moment and lends you? If the answer to the latter question is yes, a tremendous possibility opens up. Where does money come from? The contention of the whole social credit movement is that the banker creates that money as he lends it to you. There is a real clash there, some bankers maintaining it is not so, and increasingly many bankers and great authorities contending and declaring that it is so-and the latter are not all social erediters, by any means. We say that bankers lend credit and not currency. Some evidence that that is true is to be found in a quotation which I shall read. May I say that when I first heard this four or five years ago I considered it was the most idiotic thing I had ever heard of, and not until I was completely convinced that bankers do create the money they lend was I ready to listen to the social credit proposals.
Here is a quotation from a source which I think all hon. members must respect. It comes from the London Economist of August 15, 1936.
The most obvious and significant fact which emerges is that no single major country has overcome the great depression without undertaking a policy of monetary expansion of one kind or another.
Which indicates that money is the root of the difficulty.
It is, of course, open to anyone to maintain that recovery would have come without positive expansionist policies if only the countries concerned had waited long enough. In fact, however, it never did. Holland and Switzerland are waiting still.
Hon. members can find this letter in 'volume 124, July to September, 1936, page 292. The article goes on to say that the monetary expansion is accomplished, not out of savings, but by the creation of fresh credit. That agrees exactly with our contention. There are many other quotations that could be cited. I am going to direct the attention of the house to the London Chamber of Commerce report of July, 1932. I quote:
It is upon the base of currency (money without physical existence) that the structure of bank or credit money is built. This credit money is many times greater in quantity than the currency, and having no physical existence, it is conveyed from account to account by cheque. At the present time the banks are working to a ratio of ten per cent cash of their total deposits-i.e., they are lending ten credit pounds for every one pound cash holding.
That is, they are lending ten credit pounds for every one pound of cash held. I would submit that statement to any man in Canada and ask him to explain how on earth that is true unless the banks, holding one pound of money, can create and lend ten credit pounds out of nothing. As I say, there are plenty of quotations that I could give; I have them in great number. But these are enough.
Where does the money come from? If all the money that this government could borrow in Canada were obtained in Canada, if it had to come out of past savings of the Canadian people, out of life insurance and trust companies and the like, then, of course, we should be prepared to pay interest, on that money and consider ourselves in debt for it. We should have to pay it back and have our descendants for generations pay interest on it. Ultimately, if they could liquidate it, they would. But if the money originally was created out of nothing why should we have to pay interest on it? Why should we be in debt and bleed the country white to pay it back? That is manifestly a revolting prospect.
The next question is, what gives money value? The Minister of Finance has said, very wisely and quite correctly, confidence. Surely it is confidence. And what makes confidence? Is it not first of all the certainty that the person to whom you present money will deliver to you goods and services as when and where required? Does anything else matter at all? Undoubtedly the conclusion must be drawn that if in a country you have plenty of goods and services so that people are able to deliver these goods and services as, when and where required, then to the
Use of Canada's Financial Resources
extent to which you have goods and services you can have money. That is a social credit contention put in another way.
The thing that attaches confidence to money is government backing. This Dominion of Canada has created millions upon millions of dollar bills. Did they cause inflation? Surely not. Were they good money? Surely they were. Did they always have gold behind them? Surely not. Just consider for a few minutes Sir Thomas White's excellent pamphlet, How Canada Financed the War. Many of these principles are set out clearly. Consider the way in which Britain financed the ' war. Britain went into debt to the extent of seven billion pounds. One of these billions she borrowed from the United States and two of them she borrowed from her people, raising it by loans and taxation. But the other four billion pounds were not in England before she went into the war. Where did they come from? If they were created by banking institutions in England, why in the name of common sense should the English people and their children to the last generation be loaded with a burden of debt which they must pay back, paying interest to an extent that ruins the country, just as we are doing now? The money was created out of nothing by the banking institutions of Great Britain, and ten per cent of it was created by the British government itself in treasury bills. And after a pound of treasury bills was created and handed to the bank the banker could immediately make ten pounds of his own credit money and lend it back to the government. Such a situation must surely present itself to any thinking man as an incongruity, a monstrosity, an absurdity. The thing that gives money value is the power of the people behind the government that creates that money-the power of those people to deliver goods and services as, when and where required. It is not gold. This principle must be laid down; if the hon. members challenge it we must clear the matter up. If the people's productivity backs and makes possible the money, then the money certainly ought to be theirs.
There is in the minds of people generally throughout Canada and the British world, and in the United States as well, great confusion as to the backing of money. Practically everyone has the idea that there must be gold behind the money. Thirty or forty years ago it was generally thought that money was better if it was made of gold. We never see gold to-day; we never even ask for it, nor do we trouble ourselves about it. Is it gold that gives value to our money? Let me hasten to say, I fully grant that you must
have gold to back your exchange. But that is another matter that must be considered in its place; if we go into it on this occasion we shall not cover the other aspect of the question. Apart from exchange, however, is there any reason at all why the question whether there is gold in Canada or not should affect the value of Canada's money?

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