Breaking the Bondage of Interest:
A Right Answer to Usury, Part 2

C. H. Douglas, founder of Social Credit

3,859 words

The Impetus from Catholic Social Doctrine

A significant impetus for financial and economic reconstruction was Catholic social doctrine. In many states such as Dollfuss’ Austria,[1] Salazar’s Portugal,[2] Franquist Spain, Vichy France, and as far away as Vargas’ Brazil, Papal Encyclicals provided the doctrinal foundations. The main feature of these “new states” was corporatist social and economic organization, replacing party parliaments with chambers representing all professions. Many other movements were inspired by Church doctrine to advocate the corporatist state, including O’Duffy’s Irish Blueshirts, Szálasi’s Hungarist Movement, Degrelle’s Rexist Movement, and Arcand’s National Unity Party in Canada. Generic fascism across the world also featured corporatist policies, based however more on its synthesis of Left-wing syndicalism with nationalism, a process that started in late 19th Century France[3] while Spain’s National Syndicalism of José Antonio Primo de Rivera drew from both Catholicism and syndicalism.[4] Even the New Zealand Legion had an embryonic corporatist style policy of forming an “Economic Council” to advise Government, drawn from all professions.[5]

In Britain the “Distributist” movement arose, whose most well known proponents were the authors Hillaire Belloc and G. K. Chesterton,[6] and the ex-Communist convert to Catholicism, Douglas Hyde.[7] Distributism is based on the premise that economic concentration, leading to tyranny, results from both monopolistic capitalism and communism. To answer economic problems and safeguard freedom, one must not eliminate private property but assure its widest possible distribution. Both the Distributists in the English-speaking world and the “clerical fascists” on the Continent and further afield drew their programs in particular from Pope Leo XIII’s 1891 encyclical letter Rerum Novarum.[8] Point 32 of the encyclical specifically alludes to the prohibition of usury. The corporate basis of society is expounded in point 72 where “private societies” existing within the State must be assured their sovereignty, while nonetheless being “many parts” of the State.

Sir Oswald Mosley’s Fascism

Sir Oswald Mosley

Generic fascism incorporated opposition to the banking system whether from syndicalist or Catholic sources or a synthesis of these. Any genuine national sovereignty must be predicated on the nation’s financial sovereignty, otherwise anything less is a fraud.

In 1938, Social Credit was advocated within Sir Oswald Mosley’s British Union of Fascists on the premise that the British Union sought to end usury, and the Douglas method was the way to do it. W. K. A. J. Chambers-Hunter was able to appeal to the British Union policy that had already been formulated by Mosley in Tomorrow We Live. Mosley’s policy began primarily as an economic one aiming to reject the international financial system, make the British Empire a self-sufficient trading bloc, and change the mechanism of finance to ensure that the whole of production could be consumed. Mosley stated that a “complete revolution in our financial system is required.” “A Financial Corporation would be constituted to control all organs of finance and credit, on the premise that British credit shall be used for British purposes.”[9] Mosley wrote:

Within such a system the supply of credit must be adequate to a system of greater production and greater consumption. The British credit system will rest on certain clear and basic principles:

That British credit created by the British people shall be used for British purposes alone;

That British credit shall be no monopoly in the hands of a few people, and often alien hands at that, but shall be held in high trusteeship for the British people as a whole;

That British credit shall be consciously used to promote within Britain the maximum production and consumption by the British of British goods;

That the credit system shall maintain a stable price level against which the purchasing power of the people is progressively raised in the development of higher wages.[10]

A. Raven Thomson, Policy Director of the British Union, in describing the money masters of Britain, pointed out that British fascists were well aware that merely nationalizing the Bank of England would not resolve the problem of the financial dictatorship exercised by the international bankers. He wrote that “Nationalisation of the mere mechanism of the Bank [of England], such as advocated by the Labour Party, will be of as little avail as the recent nationalisation of the Bank of France by M. Blum and the French Socialists, unless the ‘distant control’ over the Bank by finance houses and gold bullion brokers is also removed.”[11]

Thomson stated that the policy of the British Union would be to expand the home market by ensuring that the whole of production could be consumed by means of “commodity currency” based not on gold or private credit creation at usury, but on the supply of money “upon the production of useful goods and services offered for sale.” This would “make money, not the master, but the servant of industry.”[12]

Fascists and Social Crediters both aimed to take control of the credit mechanism away from usurers and return it to the people. There are major differences, as the Social Crediters in particular will point out, in their eagerness to distance themselves from Fascism. However, the aforementioned W. K. A. J. Chambers-Hunter was an adherent of both Social Credit and Mosleyite Fascism, as was the poet Ezra Pound.

Chambers-Hunter, British Union organizer and prospective parliamentary candidate for Aberdeen, pitched his advocacy for Social Credit within British Fascism by showing its relevance to the policy of “British Credit” that had been explained by Mosley in Tomorrow We Live. Chambers-Hunter stated that when British Union assumed power the “best brains” would be brought in to implement the details of Mosley’s financial and economic program. One such expert would be Douglas, “that honoured pioneer of new thought in this sphere.” Chambers-Hunter wrote that, “It is as a member of the British Union, and also as a believer in the essential truth of Major Douglas’s theory, that I write this pamphlet.”[13]

There were some essential differences, however, including the perennial bugbears among Social Crediters as to whether the policy should be implemented by the state or by an independent credit authority, and the widespread suspicion of political parties of any type, even including Social Credit parties. However, Chambers-Hunter stated that “it is not only possible to believe in Social Credit and to belong to the British Union; I go further and say that if we believe in Social Credit we must realise that only through British Union have we any hope of an executive instrument, through which a nation ‘free of Usury’ can be built.” Chambers-Hunter was writing to explicate “proposals for the execution of British Union policy by Social Credit Method.”[14]

Chambers-Hunter begins with a fundamental Douglas premise: the amount of money in circulation is never equal to the ability to consume the whole of production. This different was explained by Douglas’ A + B Theorem. “A” equals the payments a producer makes to his employees; “B” represents the payments he makes outside his business. Only “A” is available as purchasing power, while “B” payments are not spent on consumption in any given week. Therefore prices cannot be less than the costs to the producer of A + B, but the purchasing power to consume those goods is only reflected in “A.” “Therefore there is a shortage of purchasing power by the amount of the B payments.” For the consumption of production to be adequate “there must be purchasing power equivalent to the “B” payments distributed from some other source.”[15] Social Credit advocates a “National Dividend” to make up for any shortfall of purchasing power, given to every citizen as a shareholder by birthright.

Chambers-Hunter explained the short-fall of the system in providing adequate finance for both production and consumption:

At present the power of creating, and destroying credit, which performs over 95% of the function of money is actually excised by the financial system on its own and is quite independent of industry, agriculture, or any of the people’s needs. Consumption, and consequently production are cut down to suit the purposes of this hidden power instead of the purposes of the people.[16]

Chambers-Hunter explains that to make up for this shortfall in consumer power, credit “will be created by the State alone and will be issued as required as a right and not as a debt.” The state credit issued by banks at local level to farmers, fishermen, industrialists, etc., would carry a minimal fee, perhaps of half a percent, but would nonetheless be sufficient to cover the costs of issuing credit.[17]

What might be said in summary of all such theories is that credit would be issued as a public service to facilitate the exchange of goods and services, and not as a profit-making commodity.

Ezra Pound on Economics

Ezra Pound

As mentioned, another exponent of both Fascism and Social Credit was Ezra Pound. Pound wrote a series of booklets on banking and history that are especially lucid. These include Social Credit: An Impact (1935), The Revolution Betrayed (British Union Quarterly, 1938), What is Money For? (1939), A Visiting Card (Rome, 1942), Gold & Work (Rapallo, 1944), An Introduction to the Economic Nature of the United States, and America, Roosevelt and the Causes of the Present War (Venice, 1944).[18] Also notable is his “With Usura,” one of the Pisan Cantos.

Pound met Douglas at an early stage (1917), with the guild-socialist A. R. Orage, who was a major influence in promoting both social reform and new literary talent through his journals The English Review and The New Age.[19] Indeed, Orange is said to have coined the term “Social Credit.”

Pound considered Fascist Italy to be partially achieving Social Credit aims in breaking the power of the usurers over politics and culture, writing:

This will not content the Douglasites nor do I believe that Douglas’ credit proposals can permanently be refused or refuted, but given the possibilities of intelligence against prejudice in the year XI of the Fascist Era, what other government has got any further, or shows any corresponding interest in or care for the workers?[20]

In Social Credit: An Impact, Pound wrote of Fascism in relation to economic reform:

Fascism has saved Italy, and saving Italy bids fair to save part of Europe, but outside Italy no one has seen any fascism, only the parodies and gross counterfeits. Douglas for seventeen years has been working to build a new England and enlighten England’s ex- and still annexed colonies.[21]

Pound saw both Italy and Japan trying to throw off the system of usury, writing:

Japan and Italy, the two really alert, active nations are both engaged in proving fragments of the Douglas analysis, and in putting bits of his scheme into practice . . .[22]

The foregoing does not mean that Italy has gone “Social Credit.” And it does not mean that I want all Englishmen to eat macaroni and sing Neapolitan love songs. It does mean or ought to mean that Englishmen are just plain stupid to lag behind Italy, the western states of America and the British Dominions . . .[23]

Pound’s Canto XLV (“With Usura”) is a particularly cogent exposition on how the usury system infects social and cultural bodies, and is analogous to the New Zealand poet and Social Credit advocate Rex Fairburn’s Dominion.[24] Pound provides a note at the end defining usury as, “a charge for the use of purchasing power, levied without regard to production: often even without regard to the possibilities of production.”

With usura…
no picture is made to endure nor to live with
but it is made to sell and to sell quickly
with usura, sin against nature,
is thy bread ever more of stale rags
is thy bread dry as paper . . .
And no man can find site for his dwelling.
Stone cutter is kept from his stone
Weaver is kept from his loom
WITH USURA
Wool comes not to market
Sheep bring not gain with usura . . .
Usura rusteth the chisel
It rusteth the craft and the craftsman
It gnaweth the thread in the loom…
Usuru slayeth the child in the womb
It stayeth the young man’s courting
It hath brought palsey to bed, lyeth
Between the young bride and her bridegroom
CONTRA NATURAM
They have brought whores to Eleusis
Corpses are set to banquet
At behest of usura.[25]

“With Usura” precisely reflects Pound’s position that the financial system denies the cultural heritage and creativity of the people, creates poverty amidst plenty, and fails to act as a mechanism for the exchange of the productive and cultural heritage. Creativity either fails to reach its destination or is stillborn. We might with this poem in particular understand why Pound felt the problem of banking and credit to be of crucial concern for artists.

Note that Pound expounds upon the unnatural manner by which usury prevents creativity, whether in economics or in the arts, from reaching its social potential. Economically this was the phenomenon of “poverty amidst plenty,” dramatized during the Great Depression when for example, farmers in England and the USA were paid by the state to destroy produce while city dwellers starved, not for wont of production but for wont of purchasing power. It was a phenomenon remarked upon by the biographer of Fairburn:

Fairburn felt that New Zealand illustrated Douglas’ theories perfectly. Was there not here as elsewhere in the capitalist world, that maddening paradox: a surplus of goods combined with massive unemployment and hunger in the midst of plenty? Farmers hung on to their wool, hoping for a price that would justify their labour, while families without blankets shivered in the cities; thousands of urban poor went without meat because the Government was too hidebound by book-keeping to distribute it. Stock had to be slaughtered because farmers could not afford to carry it on their land. Livestock owners surrounding Auckland offered beasts free to the townspeople if the Government would meet the cost of transport. Scrimgeour[26] attempted to negotiate transport with the Minister of Railways. He was given a blanket refusal and told that the Government had to “think of our bondholders.”[27]

It is just such a situation that resulted during the Great Depression in masses of people across the world discussing economics and demanding banking reform. Despite the world debt crisis of today, their descendants are cretins who have no understanding of the issues. We have been dumbed down, while the remnants of financial reform have been maintained generally only in a very lackluster manner.

Father Coughlin & Social Justice

Father Charles Coughlin

During the Depression, one of the greatest movements against usury in the USA was led by Father Charles Coughlin who, in alliance with Senator Huey Long, had the potential to create a new America. That movement was aborted with the assassination of Long[28] and an order from the Church hierarchy that silenced Fr. Coughlin.

Coughlin had been an adviser to Roosevelt and thought the “New Deal” would implement Catholic Social Doctrine. He had broadcast a childrens’ radio broadcast for four years every Sunday from his Church of the Little Flower in Royal Oak, Michigan.

But one broadcast on October 30, 1930 was addressed to the parents on the subject of the “money changers.” Such was the immediate support that he organized his listeners into the Radio League of the Little Flower. Soon after his first broadcast denouncing usury Coughlin was receiving 50,000 letters a week.

The broadcasts were extended via the CBS network, and had an estimated 10,000,000 listeners. He organized to assist the poor in Detroit, and in 1932 campaigned for Roosevelt under threw slogan “Roosevelt or Ruin.” By the time of the presidential race in 1932 he was reaching up to 45,000,000 listeners.[29] He was strongly supported by Bishop Michael Gallagher of Detroit. There is thought to have been a letter to Coughlin from Pope Pius XI thanking him for promoting the ideas of Rerum Novarum.

However, Coughlin was also attracting powerful; opposition and in 1933 CBS refused to renew his contract unless they were able to approve his sermons in advance. Coughlin refused and created his own radio network.[30] In 1934 the Church of the Little Flower was extended into a considerable administration center with a large staff. That year marked Coughlin’s rejection of the “New Deal” and his creation of the National Union for Social Justice.[31] But Coughlin now started receiving opposition from the Church hierarchy, at first from Cardinal O’Connell of Boston, whom Coughlin rebuffed as lacking jurisdiction.

The 16 Point Social Justice program was a cogent expression of Catholic Social Doctrine that upheld private property within the framework of economic and financial reform based on opposition to usury:

6. Abolition of private banking, and the institution of a central government bank.

7. The return to Congress of the right to coin and regulate money.

8. Control of the cost of living and the value of money by the central government bank.[32]

In 1936 Coughlin founded the newspaper, Social Justice, which was sold on the streets by Irish lads contending with Jewish communists. In 1938, for self-defense the Social Justice salesmen were organized into platoons of 25 under the banner of the Christian Front. However, with the death of Bishop Gallagher the way was open to close down Coughlin through maneuvers by the New Dealers and the Church hierarchy.

By this time, “there was hardly a section of even the Catholic press . . . which defended him.”[33] In October 1939, after the outbreak of war in Europe, the National Association of Broadcasters changed regulations, and by April 1940 Coughlin’s broadcasts were finished. As events heated up in Europe, the street fighting in the USA intensified. In 1942, after Pearl Harbor, Social Justice was banned from the mails.

Gerald Smith relates that he was told by Coughlin that in seeking diplomatic relations with Washington, the Pope had agreed to get Coughlin silenced on political matters. Smith remarks: “From that time on Fr. Coughlin descended into a state of semi-retirement and frustration and I always had the feeling that he suffered from a broken heart.”[34]

However, one of the most zealous and longest-running organizations that continue to battle usury is a Catholic organization run from Canada, Coughlin’s land of birth.

Louis Even, who had seen Social Credit as the means of implementing Catholic Social Doctrine, started the movement in Quebec in 1935. A French language journal was established in 1939. The English language newspaper Michael was founded in 1953, with subsequent editions in other languages, and the organization took the name Pilgrims of St. Michael in 1961. Louis Even wrote of the crucial issue of finance:

It is because every economic problem, and almost every political problem, is above all a money problem. We never say that the money question is the only one to be solved, or the only one that must be dealt with. We do not even say that it is the highest one, but it is certainly the most urgent one to solve, because all the other issues come up against this money problem.[35]

There is a wealth of material on the banking system on the movement’s website. There is even a reprint of Fr. Coughlin’s Money Questions & Answers,[xxxvi] that Louis Even included as an appendix in his book, This Age of Plenty. The Pilgrims of St. Michael continue with a crusading zeal seldom seen among Social Crediters since the 1930s.

Notes

1. Fr J Messner, Dollfuss: Austrian Patriot (Norfolk, Virginia: Gates of Vienna Press, 2004), pp. 107-115.