Kerry Bolton, "Breaking the Bondage of Interest: A Right Answer to Usury,"

Part 1

“Money is merely the medium of trade. It is not wealth. It is only the transportation system, as it were, by which wealth is carried from one person to another.” — Father Charles Coughlin (1935)

It is historically ironic that at the very time the world groans under the inexorable self-negation of the debt-finance system, nothing is offered by the Right as an alternative. Hilariously, the mighty USA is threatened with default on debt amounting to trillions of dollars. States across the world, from Greece to New Zealand are broke. Their debt is so mountainous it is no longer sustainable. The only answers – offered by those who have maintained the debt system – is to “tighten your belts” with “austerity measures,” sell off assets to transnational corporations, themselves a part of the international debt finance system – and establish a new world banking system that will empower the usurers more than ever.

The reaction of masses of people is reaching violent proportions. Individuals and families cannot “tighten their belts” until they are impoverished, while nothing is done to deal with those responsible for their plight. There is rioting in Greece and elsewhere. The rioting seems to be invariably led by the Left; especially with black masked anarchists in the forefront. Yet the Left has offered nothing at all other than the usually banality about “soaking the rich,” which at best would result in equality of impoverishment rather than assisting the masses of people an iota.

Where is the Right?

But where is the Right with leadership and alternatives? The Right seems to be invisible in issues affecting the inevitable results of the debt-finance system. Where financial matters are examined the policies put forward are as absurd as those of the Left: lower taxes, return to the gold standard, audit the Federal Reserve. None of this amounts to anything. The once impressive Social Credit movement, formulated by Maj. C. H. Douglas during the 1920s and 1930s, squabbles dogmatically over technicalities. Hence, Social Credit in New Zealand, for example, which several decades ago took 25% of the vote, is now about as popular as a neo-Nazi skinhead running for public office in South Auckland.

While focusing on immigration, Jews, holocaust revisionism, etc. the Right in general, and worldwide, now seems for the large part, oblivious to the very crucial issue of finance and banking. The banking system is the mechanism by which world control is exercised by the financial elites. Whether Jewish of Gentile, the system is the same and it is largely a moot point to argue about who invented it if one isn’t even aware of what to do about it.

How the System Functions

One of the most cogent descriptions I have read on the mechanism of the debt finance system was provided not by an economic theorist but by a liberal historian of impeccable Establishment credentials, Professor Carroll Quigley of Harvard University. Quigley’s book Tragedy & Hope[1] is often cited by Right-wing conspiracy theorists, and widely read books largely based on his revelations have been best sellers in the USA, including in particular W. Cleon Skousen’s The Naked Capitalist[2] and Gary Allen’s None Dare Call it Conspiracy.[3] Yet neither or these, nor seemingly any other material drawing on Quigley’s work, addresses any manner by which the problem of the financial system, which empowers these “international conspirators,” could be dealt with. Here is what Quigley stated:

The founding of the Bank of England by William Patterson and his friends in 1694 is one of the great dates in history. . . . It early became clear that gold need be held on hand only to a fraction of the certificates likely to be presented for payment. . . . In effect the creation of paper claims greater than the reserves available means that bankers were creating money out of nothing. The same thing could be done in another way. Deposit bankers discovered that orders and cheques drawn against deposits by depositors and given to a third person were often not cashed by the latter but were deposited in their own accounts. Accordingly it was necessary for the bankers to keep on hand in actual money no more than a fraction of deposits likely to be drawn upon and cashed, the rest could be used for loans, and if these loans were made by creating a deposit (account) for the borrower, who in turn would draw cheques upon it rather than withdraw money, such “created deposits” or loans could also be covered adequately by retaining reserves to only a fraction of their value. Such created deposits were also a creation of money out of nothing. . . . William Patterson however, on obtaining the Charter of the Bank of England in 1694, said: “the bank hath benefit of interest on all moneys which it creates out of nothing.”[4]

That, in a nutshell, is how the international banking system still works. It is fraud legalized by the states of the world that succumbed to financial wizardry. It is theft and parasitism par excellence insofar as it leeches off productive work that must pay usury on interest, as an individual, as a family, as a farm, business, state, and world. Describing how this operates in New Zealand, I have written that:

Banks and bankers are looked upon virtually as wizards and shamans who alone can conjure up “money” or more accurately credit, since most commerce is undertaken through credit rather than currency. For example, New Zealand has a mere $3 billion in Reserve Bank notes and coins in circulation. Of this the banks only hold half a billion NZ Dollars on deposit. However the total of all New Zealand bank deposits is $200 billion. The difference between the $200 billion in bank deposits and the half billion in bank cash is the amount of credit the banks have created out of nothing. Banks thereby reap huge profits in interest by creating credit that did not hitherto exist. This situation is the foundation of banking throughout the world.[5]

Since few banks are New Zealand owned, capital gained from interest is shipped out of New Zealand, and there is thereby a perpetual shortage of money or credit to consume the full value of production. It also explains the seemingly odd predicament where creditor nations are themselves bankrupt, because what “they” have is being lent to other states not as government credit, but as credit created by banks that happen to be headquartered in the so-called creditor states. A supposedly “American” bank such as Goldman Sachs can just as well pack up shop and relocate its headquarters to “The City of London” or to Beijing. As is well known among conservative and libertarian and sundry other circles, the US Federal Reserve Bank is owned by private bondholders; therefore such central banks do not issue “state credit” or currency but credit based on private lending.

The patriotic Congressman, Louis T. McFadden, himself a banker, Chairman of the House Banking & Currency Committee, and an example of those on the Right who – decades ago – understood the nature of banking very well, stated in Congress of the Federal Reserve:

Mr Chairman, we have in this Country one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board and the Federal Reserve Banks, hereinafter called the Fed. The Fed has cheated the Government of these United States and the people of the United States out of enough money to pay the Nation’s debt. The depredations and iniquities of the Fed has cost enough money to pay the National Debt several times over.

This evil institution has impoverished and ruined the people of these United States, has bankrupted itself, and has practically bankrupted our Government. It has done this through the defects of the law under which it operates, through the maladministration of that law by the Fed and through the corrupt practices of the moneyed vultures who control it.

Some people think that the Federal Reserve Banks are United States Government institutions. But they are private monopolies which prey upon the people of these United States for the benefit of themselves and their foreign customers; foreign and domestic speculators and swindlers; and rich and predatory moneylenders. In that dark crew of financial pirates there are those who would cut a man’s throat to get a dollar out of his pocket; there are those who send money into states to buy votes to control our legislatures; there are those who maintain International propaganda for the purpose of deceiving us into granting of new concessions which will permit them to cover up their past misdeeds and set again in motion their gigantic train of crime.[6]

Someone in the present Congress could have with equal validity quoted McFadden’s speech of eighty years ago as being relevant for the 2011 brouhaha over the US debt crisis.

The same is true of nationalized banks such as the New Zealand Reserve Bank or any other. The NZ Reserve Bank was established at the instigation of the Bank of London, as a private corporation. In 1935 the First Labour Government nationalized it. However, the only time the Bank issued state credit was for funding the iconic state housing project, and then mainly due to the pressure of the popular Labour Member of Parliament John A. Lee. This will be examined later.

Movements for Banking Reform

As one would expect, the methods of credit and banking were major issues of the Depression Era. Our grandparents were acutely aware of such matters. They were discussed in factories, offices, pubs, and homes. Now few among even the well informed are aware of the issues. Yet banking reform was more an issue of the Right than the Left, the latter hedging their bets on the “nationalization of the means of production,” or on graduated income tax, as they still do. As even hard-line communist states have shown, nationalization of industry, and even an internal credit system operating through state banks, does not necessarily extricate one from the international banking system, as witnessed by the mountain of debt that was incurred by the USSR. Even Vietnam is part of the World Bank, and has embarked on a policy of privatization, which it euphemistically (or dialectically?) calls a “socialist-oriented market economy.”[7]

When economic crisis hit the world during the 1920s, unlike today there was no shortage of programs and movements advocating realistic solutions. Significant impetus came in the English-speaking world from the Scottish engineer Maj. C. H. Douglas who formulated Social Credit. This principle calls for the issuing of credit according to sound accounting principles, based on the productivity of a nation. Douglas wrote his seminal Social Credit book Economic Democracy in 1919, followed by Credit-Power and Democracy (1920), The Control and Distribution of Production (1922), Social Credit (1924), and The Monopoly of Credit (1931), among others. Interestingly, he had discerned the nature of the problem prior to the Great Depression. In 1933, he established as an educational institute, the Social Credit Secretariat, which still exists.[8] The fundamental premise remains: “Money is not Wealth but only its token, and tokens cost next to nothing to produce. So what is physically possible and socially desirable can certainly be made financially possible.”[9]

Another significant impetus came form traditional Catholic Social Doctrine, with the Church’s historic enmity towards usury.

Green Shirts of England

In Depression Era Britain Social Credit assumed a refreshingly militant form with the Green Shirts for Social Credit, led by John Hargrave. Readers might recall the enigmatic dedication in Ezra Pound’s booklet Social Credit: An Impact, to “the Green Shirts of England.”[10] Hargrave had led a woodcraft youth movement emerging from the Boy Scouts movement, called Kibbo Kift, from archaic Kentish, meaning “a proof of great strength.” Like the Wandervogel in Germany, it had folkish interests which harked back to Medievalism and the Saxon heritage. Folk moots and Althings were organized, and the movement’s units were called Clans and Tribes. The movement had support from the Fabian socialists, but at the 1924 Althing a socialist faction attempted to take over and was expelled by Hargrave.

Hargrave met Douglas in 1923 and recognized Social Credit as the means of purging civilization of corruption just as his woodcraft movement helped the individual with that aim. Hargrave stated: “Half our problem is psychological and the other half economic. The psychological complex of industrial mankind can only be released by solving the economic impasse.” By 1927 Hargrave had converted most of the leadership of Kibbo Kift to Social Credit and was able to add a Social Credit plank to the movement’s principles. In 1930 a Legion of the Unemployed was establish in Coventry. In 1930 the Legion adopted a paramilitary style green shirt and beret. Soon the Legion was affiliated with Kibbo Kift and in 1932 the woodsmen adopted the green shirt and changed their name to the Green Shirt Movement for Social Credit.

The movement adopted the attitude of the spiritual soldier and a militancy that is now difficult to imagine from most Social Credit organizations. In 1932 Harbrave had stated at the Althing that breaking the power of the “money mongers” could not be done through parliament but only through a movement that was based on “that absolute, that religious, that military devotion to duty without which no great cause was ever brought to a successful issue.” Hargrave advocated a militant campaign that would break the media blackout, something from which the present day adherents could learn. The Green Shirts took to the streets on marches, behind drums and banners, held street corner meetings, and sold newspapers in the street delivering the Social Credit message in a cogent manner. Facing the violent opposition of the Left, they were noted for their discipline in the face of provocation. They led hunger marches, demonstrations of the unemployed, and thousands of open air meetings. They were also noted for throwing green painted bricks through the windows of banks and using the consequent court cases to publicize their views.

In 1936 Hargrave was appointed economic adviser to the new Social Credit Government in Alberta, Canada, and drew up the “Hargrave Plan.” Not surprisingly, Alberta was prevented from properly implementing the Social credit policy due to the interference of the central government.

A post-war campaign for Social Credit continued under the National Social Credit Evangel, along with the Social Credit Party. The movement eventually fizzled, although in 1976 there was even a stage musical about the Green Shirts and Hargrave was popularly welcomed when he attended the performance.[11]

The New Zealand Legion

In New Zealand a conservative reaction to the Left formed around the New Zealand National Movement under Maj. Gen. J. V. R. Sherston. The popular physician Campbell Begg soon assumed leadership, and was renamed the New Zealand Legion. The movement reached 20,000 members and also adopted a Green Shirt uniform. In 1934 C. H. Douglas undertook a lecture tour of New Zealand, which had significant results. Begg met Douglas twice,[12] and the NZ Legion adopted state credit as a means of securing social justice without recourse to socialism. For a conservative reaction to socialism, comprised mainly of adherents from the middle class and veterans, albeit with support from the National Union of Unemployed Workers, the NZ Legion was the most genuinely radical movement in terms of its “Begg Plan.” It was therefore opposed by orthodox elements of the Left which called the NZ Legion “fascist” and a reactionary ploy of the bosses, and by the “Right” which was aghast at the Legion’s radical platform. One of the 12 points of the Legion program was the “control of currency by the state.”[13] Eventually the Legion was undermined from within, with a possibly predominant faction rejecting Begg’s aim for the Legion to put up candidates for Parliament, while many were uneasy at the seemingly “socialistic” policies. Begg withdrew from leadership and settled in South Africa. Those candidates for the Legion who stood in local body elections as Independents did well.

There had been from the start a dichotomy between reactionaries who saw the Legion as nothing more than a reaction against the Labour Party and what was seen as its proximity to Bolshevism, and those around Begg who advocated a social policy that would overcome economic dislocation without the need for socialism, but whose program went so far as to advocate the state control of land development. However, as will be considered below, the 1935 Labour Government – under the impress of the mass demand for monetary reform – did enact a state credit policy that, although half-hearted, was sufficient to eliminate most unemployment during the Great Depression, while Roosevelt’s New Deal was only able to achieve that result by recourse to war.

Notes

1. C. Quigley, Tragedy & Hope (New York: The Macmillan Company, 1966).

2. W. Cleon Skousen, The Naked Capitalist: A Review & Commentary on Dr. Carroll Quigley’s Book Tragedy & Hope (Salt Lake City, 1971).

3. G. Allen, None Dare Call it Conspiracy (Seal Beach, California: Concord Press, 1972).

4. Quigley, Tragedy & Hope, pp. 48–49.

5. K. R. Bolton, “The Global Debt Finance System: The ‘Inexorability of its Own Negation,” Veritas, Australia, Vol. 2, no. 1, December 2010.

6. L. T. McFadden, United States Congressional Record, June 10, 1932.

7. K. R. Bolton, “Has Vietnam Lost the Struggle for Freedom?” Foreign Policy Journal, June 10, 2010, http://www.foreignpolicyjournal.com/2010/06/10/has-vietnam-lost-the-struggle-for-freedom/all/1

8. Social Credit Secretariat, http://douglassocialcredit.com/

9. Social Credit Secretariat, http://douglassocialcredit.com/

10. E. Pound, Social Credit: An Impact, 1935; reprinted by Peter Russell, London, 1951. All the Pound pamphlets cited herein are available from this writer.

11. K. R. Bolton, John Hargrave & the Green Shirt Movement (Paraparaumu Beach, New Zealand: Renaissance Press, 2003). K. R. Bolton, “State Credit and Reconstruction: The First New Zealand Labour Government,” International Journal of Social Economics (London: Emerald Publishing Group) Vol. 3, No. 1, 2011.

12. M. C. Pugh, “The New Zealand Legion & Conservative Protest During the Great Depression,” MA Thesis, (Auckland University, 1969), pp. 128–29.

13. C. Begg, “The Legion’s 12 Points,” National Opinion, Wellington, New Zealand, Vol. 2, No. 14, 1934, p. 1.

Part 2

C. H. Douglas, founder of Social Credit

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.

2. FC C Egerton, Salazar: Rebuilder of Portugal (London: Hodder & Stoughton, 1943), pp. 202-203.

3. Z Sternhell, Neither Left Nor Right: Fascist Ideology in France (Princeton, New Jersey, Princeton University Press, 1986), passim.

4. For a survey, albeit antagonistic, of “clerical fascism” across Europe during World War II see: Avro Manhattan, The Catholic Church Against the Twentieth Century (London: Watts & co., 1947).

5. C Begg, op. cit.

6. The Chesterbelloc Mandate, http://distributist.blogspot.com/2007/01/distributivism-of-hilaire-belloc.html

7. D Hyde, I Believed: How Communism Works in this Country (London: William Heinemann Ltd., 1951).

8. Pope Leo XIII, Rerum Novarum: On the Condition of the Working Classes, May 15, 1891.

9. O Mosley, Tomorrow We Live (London: Greater Britain, 1938, 1939), p. 50. Available from this writer.

10. O Mosley, ibid., p. 52.

11. A Raven Thomson, Our Financial Masters (London: British Union of Fascists, 1937), p. 15. Available from this writer.

12. A Raven Thomson, ibid., p. 16.

13. W K A J Chambers-Hunter, British Union & Social Credit (London: British Union of Fascists, 1938), p. 4. Available from this writer.

14. W K A J Chambers-Hunter, ibid., p. 4.

15. W K A J Chambers-Hunter, ibid., pp. 5-6.

16. W K A J Chambers-Hunter, ibid., p. 11.

17. W K A J Chambers-Hunter, ibid.

18. All the Pound pamphlets are available from this writer.

19. K R Bolton, Artists of the Right (Counter-Currents Publishing, upcoming), Chapter 8: “Ezra Pound.”

20. Ezra Pound, Jefferson and/or Mussolini, 1935 (New York: Liveright, 1970), p. 126.

21. E Pound, Social Credit: An Impact, 1935; reprinted by Peter Russell, London, 1951, p. 7.

22. E Pound, Social Credit: An Impact, ibid., p. 19.

23. A reference to the use of state credit in New Zealand, Australia and Canada.

It will probably surprise most that Japan was heavily influenced by Douglas’ thinking. This will be considered below.

24. K R Bolton, Artists of the Right, op. cit., Chapter 12, “Rex Fairburn.”

25. Ezra Pound: Selected Poems 1908-1959 (London: Faber & Faber, 1975), “Canto XLV: With Usura,” pp. 147-148.

26. “Uncle Scrim,” popular Depression Era New Zealand radio minister.

27. D Trussell, Fairburn (Auckland: Auckland University Press, 1984), p. 133.

28. Sen. Long’s deputy, Gerald L K Smith, who became a leading American Nationalist for many years after Long’s death, relates that the foundation was being laid for the Senator to contend against Roosevelt for the Presidency. Long was killed in September 1935. The month previously he had inserted into the Congressional Record a report on a murder plot that had been hatched against him. G L K Smith, Besieged Patriot: Gerald L K Smith (Eureka Springs, Christian Nationalist Crusade, 1978). pp. 120-126.

29. I Leighton (ed.) The Aspirin Age 1919-1941 (London: The Bodley Head, 1950), W Stegner, “The Radio Priest & his Little Flock,” pp. 234-236. Stegner’s chapter, as one would expect, is a mean-spirited polemic, but nonetheless informative, if read critically. For example Stegner incorrectly alludes to Coughlin’s reference to an “American Secret Service” report on the link between Jewish Communists and Jewish banks as being untrue and an invention of Nazi Germany’s “World Press Service.” Stegner also states that a reference to Jewish involvement in the Bolshevik revolution allegedly published in a British White Paper is false. In reality, the American Secret Service report exists and is entitled “Judaism and Bolshevism”, November 13, 1918, State Department Decimal File (861.00/5339). The report is cited by Dr Antony Sutton, Wall Street & the Bolshevik Revolution (New York: Arlington House, 1974), pp. 186-187.Likewise the supposedly fraudulent passage on Jews and the Bolshevik revolution in the British White Paper, although censored from a subsequent edition, appears in the original. The statement was from Oudendyk, Minister of The Netherlands in Petrograd, who was acting for British interests after the murder of Capt. Cromie by the Bolsheviks. A photostatic reproduction of the cover of the original White Paper is given by R Gostick, The Architects Behind the World Communist Conspiracy(Ontario: Canadian Intelligence Publications, 1968), ii. The White Paper is entitled A Collection of Reports on Bolshevism in Russia (London: His Majesty’s Stationery Office, 1919) Russia No. 1 (1919). The passage in question is reprinted on p. 5 of Gostick’s book.

30. W Stegner, op. cit.., p. 237.

31. W Stegner, ibid., p. 239.

31. W Stegner, ibid., pp. 240-241.

32. W Stegner, ibid., p. 251.

34. G L K Smith, op. cit., p. 71-72.

35. “What is Michael?”, http://michaeljournal.org/aboutus.htm

36. http://michaeljournal.org/appenC.htm

Hieronymous Bosch, “Death and the Miser,” detail

Part 3

States that Broke the Bondage of Interest

Any efforts to advocate alternatives to banking that might extricate nations from the grip of the money-changers are dismissed as “funny money” by defenders of a system that has for centuries resulted in nothing but “poverty amidst plenty,” cycles of economic bust and war, and servitude at every level. Yet there are many examples of states that have broken free and implemented alternative forms of banking that have brought well-being while others have languished in stagnation at best, while paying their hidden masters for the privilege via usury.

Of course it is not in the interest of the financial and economic status quothat any light be shed upon these historical examples, and they are sent down the Memory Hole, or the nature of their financial systems are obscured by focusing entirely on other factors. Hence, while many financial reformers are aware of the way Lincoln funded his war partly through the issue of Greenbacks, few even among banking reformers realize that the Confederacy was also funded with state credit called Graybacks, and that system is obscured by focusing on questions of slavery. Likewise, few understand much about the manner by which Germany extricated itself from socio-economic misery through a new financial system, and the matter is buried by focusing on the Holocaust or the war, and Germany’s reconstruction it is reduced merely to rearmament.

It took a poet, Ezra Pound to explain the history of money more cogently than economists and historians. Pound stated that:

The history of usury begins with the loans of seed-corn in Babylon in the third millennium BC. The first mention I know of a state monetary policy refers to the year 1766 BC when an Emperor of China, in order to alleviate distress caused by famine and aggravated by grain monopolizers, opened a copper mine and coined discs of metal perforated with a square hole. We read that he gave this money to the starving, and that they could then buy grain where the grain was.[1]

Nearly four thousand years later, politicians either do not have the wisdom or the courage to adopt a similar policy for getting food on the table during the Great Depression, or for dealing with the present global debt crisis without getting into further debt and implementing “austerity measures.”

Pound wrote of the Medici bank the Monte di Paschi that had been founded in 1600 and remained standing in his own time: “Siena was flat on her back, without money after the Florentine conquest.” Cosimo, first duke of Tuscany, guaranteed the capital of the bank, using grazing lands as collateral. He underwrote 200,000 ducats, paying 5% to shareholders and lending at 5½%, with minimum overheads and salaries, and profits going back into hospitals and public works.[2]

Of the American Colonies Pound wrote that, “The Colony of Pennsylvania lent its colonial paper money to the farmers, to be repaid in annual instalments of ten percent, and the prosperity that resulted was renowned throughout the western world.”[3] He writes that in 1750 there were sanctions imposed (by the Bank of England) forbidding Pennsylvania from issuing its own scrip, which played its role in fomenting the American revolt.[4]

Guernsey

One of the most successful and enduring examples of usury-free state credit has been that of Guernsey, British Channel Islands, whose banking experiment was initiated in 1820. Guernsey’s banking system was prompted by dire need, the island being in serious financial trouble from the beginning of the 19th Century. Guernsey’s town was undeveloped, the roads were cart-tracks, and there was no prospect for employment. The most serious problem, however, was the encroaching sea that was washing away large tracts of land because of the disrepair of the dykes. Neither tax increases nor further loans were practicable.

However, it was the need to upgrade the Public Market that prompted a committee to report back with a solution in 1816 to issue £6000 worth of States Notes.[5] The committee also recommended that the States Notes be used not only for the new market, but also for Torteval Church, road construction, and other State expenses. The notes’ issue was started in 1820, and was followed by other issues, until by 1837 £55,000 of the Notes were in circulation, debt-free and having created prosperity and development, which in turn stimulated visitors to the island.[6]

Of course there were complaints to the Privy Council that such debt-free issues were being made, but the States Financial Committee gave such good account of the island that the objections were unsuccessful. However, two banks on the island flooded Guernsey with their own notes to undermine the State Notes, and for reasons unknown it was the Island that agreed to limit the issue of its Notes.[7] Just such a tactic used by the North to undermine the Graybacks of the South during the American Civil War caused inflationary problems, but these maneuvers do not discredit the efficacy of state credit. With the outbreak of war in 1914, Guernsey restarted the State Notes issue according to requirements. While State Notes continue to circulate alongside British Pounds Sterling, there has never been inflation, and the prosperity of the island continues as it has since 1820,[8] operating on minimal taxation.[9]

As mentioned, Lincoln had recourse to the issuing of the Greenbacks during the Civil War. Not so well known is the issue of Graybacks by the Confederate States, backed by cotton. Despite the claim that the Confederacy was under the thrall of the Rothschilds via the Confederate Secretary of State Judah P. Benjamin, nothing could be further from the truth, and the South was at no time beholden to international finance, nor was Benjamin anything less than a patriotic Southerner. As the subject of Confederate finance has been dealt with at length elsewhere I shall not repeat it here.[10]

New Zealand

The election of a Labour Government largely centered on its platform of nationalizing the Reserve Bank and issuing state credit. The 1934 tour by Douglas had a major impact, with organizations such as the Auckland Farmers’ Union and the NZ Legion adopting Social Credit, but in particular the flamboyant, one armed war veteran John A. Lee kept up a continuous agitation for the Party to fulfill its election promises despite the resistance of Prime Minister Joseph Savage and his Finance Minister Walter Nash. Lee had written several pamphlets on banking reform which should serve today as seminal references for banking reformers, but are forgotten, or transgress orthodox Douglasite principles.

The first of Lee’s pamphlets, Money Power for the People, outlined what he hoped the Labour Government would adopt as legislative policy, based upon what the party had presented to voters at the 1935 General Election as official party policy.[11] This was the demand for the “immediate control by the State of the entire banking system,” including the “state issue of credit for production and distribution of commodities”[12] The party’s manifesto for the 1935 election stated:

A planned economy will be of little use if the Government has not the power to carry its plans into effect. Such power will require the control of credit which, if it remains in private hands, can be used to thwart the will of the Government.[13]

As I have remarked upon previously, the Great Depression was a period in which, unlike today with our supposedly more educated populations, people were all talking about the question of finance and banking reform. Lee recalled that the largest political meetings in New Zealand history had been held throughout New Zealand, and the question to the fore was that of money. He vividly related, “Wherever people were gathered,” whether on street corner, in the factory, stock yard or on a tram, “there was discussion about banking and money.”[14]

In Money Power for the People which might be seen as a reminder to the party Caucus of its election pledges, Lee states that the first meeting of the Labour Cabinet in Office in 1936 reaffirmed its commitment to “winning complete financial power as the first move toward a new social order.” Parliament met in March and the following month the Government introduced the Reserve Bank of New Zealand Amendment Bill.[15] The Bill was supposed reform the Reserve Bank that had been established in 1933 on the prompting of the Bank of England as a corporation that included private stockholders, with the directors being a mix of those nominated by the state and those elected by the stockholders. The bank was independent from the State, despite theoretically being a State Bank, at least in the popular imagination, like the Federal Reserve Bank in the USA or the Bank of England. This 1936 Bank amendment bought the private stockholders out “at a handsome profit,” the bank came under State control, and the Board of Directors became “the direct servant of the Government of the day,” who were obliged to fulfill the policies of Government and were subject to removal. The Bank’s function set out in Section 1 of the Act was to “regulate and control credit and currency in New Zealand” for the “economic and social welfare of New Zealand.”[16]

The second part of Lee’s 1937 pamphlet deals with what the Labour Government had achieved over the past year. Lee stated that the Government’s powers had been used cautiously, but that state credit was being provided to the dairy industry account, which worked with the state’s control of the marketing of produce (through marketing boards), and hence there was a guaranteed price for farmers.[17] The Reserve Bank issued the dairy industry state credit, at minor profit, where hitherto the private banks had gained through interest, with the additional factor that the profits that were made by the State on these advances were placed back into a Consolidated Fund. The aim was to eventually reduce the amount of interest to a charge for costs.[18]

Nonetheless, despite these great reforms, the Government was still borrowing from overseas moneylenders, a matter that was never resolved. Lee warned that unless the State assumed sole responsibility for creating and issuing credit, “the debt will be compounded forever” and that “at some future date the Capitalist bailiff will liquidate New Zealand’s social experiment.” That is precisely what happened, ironically, when a “free market revolution” proceeded decades later under a Labour Government, in a typical example of socialists playing lackey to international finance. New Zealand is still in the process of divesting itself of what few state assets remain to pay off debt.

However, there was a great achievement in the funding of the iconic state housing project with Reserve Bank state credit, this one measure being sufficient to resolve 75% of unemployment in the midst of the Great Depression. Lee commented in his 1937 assessment that so far the State Housing project was the only program on which the State had availed itself the prerogative to issue its own credit. An initial £5,000,000[19] of state credit through the Reserve Bank was issued for housing via the Housing Account of the State Advances Corporation.[20] Lee cites Finance Minister Nash as stating to Parliament that the credit would be state issued in entirety as “new money” on which the interest earned in its entirety would return to the State as profit, while the houses would remain in State ownership. In a Government document over a decade later the project was explained as follows:

Reserve Bank Credit: To finance its comprehensive proposals, the Government adopted the somewhat unusual course of using Reserve Bank credit, thus recognizing that the most important factor in housing costs is the price of money – interest is the heaviest portion in the composition of ordinary rent. The newly created Department was able therefore to obtain the use of funds at the lowest possible rate of interest, the rate being 1% for the first £10 million advanced, and one and a half percent on further advances. The sums advanced by the Reserve Bank were not subscribed or underwritten by other financial institutions. This action shaped the Government’s intention to demonstrate that it is possible for the State to use the country’s credit in creating new assets for the country.[21]

Canada

Canada was another British Dominion that had recourse to state credit, and for a much longer period than most others. Canada maintained this state credit system into the 1970s. The state owned Bank of Canada issued up to half of all new money at low interest, which in turn forced the commercial banks to keep interest rates low. This resulted in decades of prosperity. Now the Bank of Canada creates just 2% of the credit. From 1935–1939 the Bank of Canada was issuing most of the nation’s credit, and 62% of the credit during the last years of the War. Until the mid 1970s the Canadian Government continued to create enough new state money to monetarize 20% to 30% of the state deficit.

That ratio is now only 7.5%. While the money supply increases by $22 billion annually, the Bank of Canada now issues less than 2% of that money. It has been estimated that if the Canadian Government had continued to operate such a financial system as she had for around three decades, that nation would today be operating with a surplus of $13 billion.[22]

Notes

1. E. Pound, America, Roosevelt & the Causes of the Present War, op. cit., p. 6.

2. E. Pound, Social Credit: An Impact, op. cit., p. 8.

3. E. Pound, A Visiting Card, op. cit., p. 16.

4. E. Pound, ibid., p. 10.

5. Olive and Jan Grubiak, The Guernsey Experiment (ca. 1960), 7.

6. Ibid. 8–9.

7. Ibid., 10.

8. According to World Travel Guide, Guernsey Exchange Rate, “Guernsey has its own currency… Channel Islands notes and coins are not accepted in the UK, although they can be converted in parity at UK banks.” http://www.worldtravelguide.net/country/108/money/Europe/Guernsey.html

9. Ibid. 11.

10. K. R. Bolton, “Was the Confederacy a Tool of International Finance?”, https://www.counter-currents.com/2010/10/was-the-confederacy-a-tool-of-international-finance-1/

11. J. A. Lee, Money Power for the People (Auckland: Lee, 1937).

12. J. A. Lee, A Letter which Every New Zealander Should Read (Auckland: A B Parker, 1939), p. 7.

13. J. A. Lee, ibid., p. 8.

14. J. A. Lee, Money Power for the People, op. cit. p. 1.

15. J. A. Lee, ibid., p. 5.

16. J. A. Lee, ibid., p. 6.

17. J. A. Lee, ibid., p. 8.

18. J. A. Lee, ibid.

19. E. Olssen, John A Lee (Dunedin, New Zealand: Otago University Press, 1977), p. 93.

20. J. A. Lee, Money Power for the People, op. cit. p. 10. Lee’s pamphlets are available from this writer.

21. C. Firth and G. Wilson, State Housing in New Zealand (Wellington: Government Printing Office, 1949).

22. Harold Chorney, Assoc. Professor of Political Economy and Public Policy, Concordia University, Montreal; John Hotson, Professor of Economics, University of Waterloo; Mario Seccareccia, Assoc. Professor of Economics, University of Ottawa; The Deficit Made Me Do It!, “Introduction,” CCPA Popular Economics Series, Editor: Ed Finn, Canadian Centre For Policy Alternatives, 2010. http://lists.topica.com/lists/VOW/read/message.html?mid=813781210&sort=d&start=6327

Part 4

National Socialist Germany

Propaganda rather than scholarship has dominated studies on National Socialist Germany. Hence, the manner by which certain socio-economic achievements were attained is buried amidst histories that focus on war, the Holocaust, and racial theories. Where the economic recovery of Germany during the Depression era is noted at all, it is simplistically accounted for by spending on rearming, which by itself explains nothing.

If the British Commonwealth states had their C. H. Douglas, the pre-eminent advocate of Germany’s liberation from usury was Gottfried Feder. The National Socialist party just happened to be the movement that was the vehicle for advocating Feder’s views. His theories might have been enacted by the Weimer regime, which showed interest, if they had had the determination. Feder was a lecturer for the military, and it is in that capacity that he was heard by Hitler.[1]

As early as 1917 – that is, about the same time that Douglas had first formulated Social Credit – Feder started advocating banking reform and formed the Fighting League Against Interest Slavery.[2] Feder’s Manifesto for the Breaking of the Bondage of Interest was published the following year. In this he stated that the source of the power of the international banking system “is the effortless and infinite multiplication of wealth which is created by interest.” He recommended that the “drones” “living off productive peoples and their labor” be eliminated by “breaking the bondage of interest”:

Money is not and must not be anything but an exchange for labor; that to be sure any highly developed country does need money as a medium of exchange, but that this exhausts the function of money, and can in no case give to money, through interest, a supernatural power to reproduce itself at the costs of productive labor.[3]

Feder had been a founder-member of the German Workers’ Party prior to Hitler’s recruitment. The earliest policy document of the German Workers’ Party[4] shows opposition to usury to have been a premise of the group from the start. The party rejected socialization of production in favor of “profit-sharing” and co-operatives. To the question “who is the DAP fighting against?” the reply was:

The DAP is fighting with all its strength against usury and the forcing up of prices. Against all those who create no values, who make high profits without any mental or physical work.[5]

The German Workers’ Party, in common with other Rightists and conservative revolutionaries such as Oswald Spengler, recognized from the start the nexus between international finance and the Left, including the communists. Another early treatise, “To All Working People!” Was written by the eminent playwright Dietrich Eckart, who became the mentor of Alfred Rosenberg and Hitler. At the time of the creation of the Munich Soviet, Eckart distributed his essay as a leaflet on the streets in an effort to win the masses away from the Soviet Republic. The leaflet was republished in 1924, and by Feder in 1933, when he identified himself as co-author.[6] The leaflet of Eckart and Feder is therefore obviously an important and cogently brief document. Eckart and Feder point out that despite the revolutionary tumult created by the Marxists:

Only one thing isn’t mentioned, you never hear a word about it, never a syllable, and there is nothing in the world which is such a curse on humanity. I mean

LOAN CAPITAL!

This was the primary issue, and it was ignored by the Marxists in the clamor for nationalization of private enterprise. But “loan capital” and “nothing but this!” is the cause of a nation’s and an individual’s burden. They continued:

Loan capital brings in money without work, brings it in through interest. I repeat: without lifting a finger the capitalist increases his wealth by lending his money. It grows by itself. No matter how lazy one is, if one has money enough and lends it out at interest, one can live high and one’s children don’t need to work either, or one’s grandchildren, or one’s great-great grandchildren, and so on to eternity! How unjust this is, how shameless – doesn’t everyone feel it?

To infinity it grows, this loan capital . . .

But who provides them [the House of Rothschild] and their like with such an enormous amount of money? Interest has to come from somewhere after all, somewhere these billions and more billions have to be produced by hard labor! Who does this? You do it, nobody but you! That’s right, it is your money, hard earned through care and sorrow, which is as if magnetically drawn into the coffers of these insatiable people . . .[7]

The twenty-five point “Program of the NSDAP,” formulated the following year, again reflected the doctrines of Feder. Among these points are:

10. It must be the duty of every citizen to work either mentally or physically. The activities of the individual may not conflict with the interests of the general public but must be carried on within the framework of the whole and for the good of all.

WE THEREFORE DEMAND

11. Abolition of income unearned by labor or effort;

BREAKING THE BONDAGE OF INTEREST.[8]

It was after hearing an address by Feder to the political agents of the army that Hitler stated: “Right after listening to Feder’s first lecture, the thought ran through my head that I had now found the way to one of the most essential premises for the foundation of a new party.”[9]

It is a pity that groups and individuals on the Right do not recall or know this, and cannot get beyond “white power” or “anti-Semitism.” By inane obsessions the Right is missing the historical boat at the very juncture that the global system of “loan capital”  should be fought most vigorously.

How then did Germany “break the bondage of interest”? Few now know. Rearmament is not a sufficient explanation. Prof. A. J. P. Taylor, the eminent British historian, and hardly a Nazi sympathizer, writes:

Fascism, it was claimed, represented the last aggressive stage of capitalism in decline, and its momentum could be sustained only by war. There was an element of truth in this, but not much. The full employment which Nazi Germany was the first European country to possess, depended in large part on the production of armaments; but it could have been provided equally well (and was to some extent) by other forms of public works from roads to great buildings. The Nazi secret was not armament production; it was freedom from the then orthodox principles of economics . . . the argument for war did not work even if the Nazi system had relied on armaments production alone. Nazi Germany was not choking in a flood of arms. On the contrary, the German Generals insists unanimously in 1939 that they were not equipped for war and that many years must pass before “rearmament in depth” had been completed.[10]

Yet even Taylor, whose book is interesting in its repudiation of the “sole war guilt” doctrine, fails to understand exactly how Germany achieved recovery. Despite what Taylor states about Hitler lacking a consistent policy, the views on loan capital and the stock exchange were features of his speeches before and after assuming Government. Hitler’s speech of January 30, 1939 to the Reichstag is perhaps the most informative he made on the principles upon which Germany was being reconstructed. Answering predictions of ruin by orthodox economists throughout the world, Hitler explained that Germany had not withdrawn from world trade but had bypassed the international financial system by means of barter, stating:

If certain countries combat the German system this is done in the first instance because through the German method of trading their tricks of international currency and Bourse speculations have been abolished in favor of honest business transactions. . . . We are buyers of good foodstuff and raw materials and suppliers of equally good commodities![11]

Taylor comments on German trade barter:

Germany was not short of markets. On the contrary, Schacht used bilateral agreements to give Germany practically a monopoly of trade with south-eastern Europe; and similar plans were being prepared for the economic conquest of South America when the outbreak of war interrupted them.[12]

Hitler next explained precisely the foundations of the new economic and financial system:

If ever need makes humans see clearly it has made the German people do so. Under the compulsion of this need we have learned in the first place to take full account of the most essential capital of a nation, namely, its capacity to work. All thoughts of a gold reserves and foreign exchange fade before the industry and efficiency of well-planned national productive resources. We can smile today at an age when economists were seriously of the opinion that the value of currency was determined by the reserves of gold and foreign exchange lying in the vaults of the national banks and, above all, was guaranteed by them. Instead of that we have learned to realize that the value of a currency lies in a nation’s power of production, that an increasing volume of production sustains a currency, and could possibly raise its value, whereas a decreasing production must, sooner or later, lead to a compulsory devaluation.[13]

One of the few places where National Socialist Germany’s economic policies were plainly explained was in New Zealand, and it might be observed that, as uncomfortable as this is for most, the banking policies of the two states were similar. Henry Kelliher, later knighted as “Sir Henry,” was a wealthy businessman and arts patron who served on the board of the Bank of New Zealand. He is known to New Zealanders primarily as the head of Dominion Breweries and as the initiator of the iconic milk-in-schools program that lasted for decades. Kelliher was also an avid campaigner for banking reform.[14] He was publisher of a home journal, The Mirror, a magazine that was head and shoulders intellectually above the plethora of current magazines for the “liberated woman.” Kelliher’s campaign for economic reform assisted the Labour Party in assuming Government.[15] Therefore, when consulting Kelliher’s Mirror for a description of Germany’s economic policies, we are looking at something other than a “Nazi” propaganda sheet.

In 1938 The Mirror ran an article by its European correspondent, Bertram de Colonna: “Germany could not produce gold, but real wealth from land and forest, fields and factories. Labour was also available in plenty. In fact the unemployed totalled around seven million at the time.”[16] Capital was not available either domestically or internationally, and gold reserves were only sufficient to cover 10% of the currency in circulation. De Colonna writes that, “The result was a decision by the government to issue and assume control of currency and credit.” One million marks of state credit were issued to finance public works including state housing. “The bankers prophesied speedy bankruptcy. Those prophecies proved utterly wrong . . .” Newly created state banks issued state credit. “The new money backed by the credit of the nation was gradually absorbed by the open money market.” This in turn brought a big increase in state revenue without the need for increasing taxation. Private banks were placed under state supervision and “the rate of interest was limited by law.”

De Colonna pointed out that the state money was in no way inflationary (a frequent objection against such schemes by orthodox economists). The issue of credit and new money “is based upon the actual production of real wealth;” through greater industrial output. De Colonna stated that after five years of pursuing this policy it had proven its worth in keeping money in constant circulation; “after all that is the only use of money – to circulate and exchange the wealth produced by the nation.”[17]

More recently a professional economist, Henry C K Liu[18], who can hardly be suspected of Hitlerism, analyzed the methods by which Germany emerged from the Depression:

The Nazis came to power in Germany in 1933, at a time when its economy was in total collapse, with ruinous war-reparation obligations and zero prospects for foreign investment or credit. Yet through an independent monetary policy of sovereign credit and a full-employment public-works program, the Third Reich was able to turn a bankrupt Germany, stripped of overseas colonies it could exploit, into the strongest economy in Europe within four years, even before armament spending began. In fact, German economic recovery preceded and later enabled German rearmament, in contrast to the US economy, where constitutional roadblocks placed by the US Supreme Court on the New Deal delayed economic recovery until US entry to World War II put the US market economy on a war footing. While this observation is not an endorsement for Nazi philosophy, the effectiveness of German economic policy in this period, some of which had been started during the last phase of the Weimar Republic, is undeniable.[19]

Henry Liu adds an interesting comment regarding communist China by way of comparison. It is instructive for us today in that Marxism has failed historically as an alternative to capitalism — as both Spengler and Eckart pointed out — especially with its inability to address the world financial system upon which monopoly capitalism is predicated. Liu writes:

After two and a half decades of economic reform toward neo-liberal market economy, China is still unable to accomplish in economic reconstruction what Nazi Germany managed in four years after coming to power, i.e., full employment with a vibrant economy financed with sovereign credit without the need to export, which would challenge that of Britain, the then superpower. This is because China made the mistake of relying on foreign investment instead of using its own sovereign credit.[20]

It is more than possible that Germany’s currency and trade systems explain more about the causes of World War II than the invasion of Poland. This was the opinion of the well-informed Hasting W. S. Russell, Marquis of Tavistock, and later the 12th Duke of Bedford, who was a pacifist and a monetary reformer. He wrote at the start of the war that it is

A war of financiers and fools, though most people, on the allied side at any rate, do not yet see very clearly how financiers come into it. . . . Financiers also desired war as a means of overthrowing their rivals and consolidating still further the immense power. . . . Hitler not only engaged in barter trade which meant no discount profits for bankers arranging bills of Exchange, but he even went so far as to declare that a country’s real wealth consisted in its ability to produce goods; nor, when men and material were available, would he ever allow lack of money to be an obstacle in the way of any project which he considered to be in his country’s interests. This was rank heresy in the eyes of the financiers of Britain and America, a heresy which, if allowed to spread, would blow the gaff on the whole financial racket.[21]

Japan

What is even less known is that in 1929 Maj. Douglas toured Japan. As in New Zealand, Douglas was enthusiastically received, and his books were published in Japan more than in any other country. The Bank of Japan, formed in 1882, had from its start the Imperial House as the major shareholder. However in 1932 it was reorganized specifically as a state bank. Stephen M. Goodson, a financial consultant, founder of the Abolition of Income Tax and Usury Party, and a director on the board of South Africa’s Reserve Bank[22] has stated of the Japanese banking system:

The reform of the central bank was completed in February 1942 when the Bank of Japan Law as remodeled on the Reichsbank Act of Germany of 1939. Credit would be issued by the bank as the interests and productivity of Japan required.

During the 1931–41 period manufacturing output and industrial production increased by 140% and 136% respectively, while national income and Gross National Product (GNP) were up by 241% and 259% respectively. These remarkable increases exceeded by a wide margin the economic growth of the rest of the industrialized world.

In the labor market unemployment declined from 5.3% in 1930 to 3.0% in 1938. Industrial disputes decreased with the number of stoppages down from 998 in 1931 to 159 in 1941.[23]

Conclusions

Usury is the “Hidden Hand” in history. It is behind wars and revolutions, booms and busts, and the travesty termed “poverty amidst plenty.” It causes civil wars and class wars. Many problems of the world could be resolved with clarity once the dust the money-lenders throw in one’s eyes is removed. The financial system is the means by which power politics functions at all levels.

As one historical example of the “hidden hand” at work: How many Anglophobic Irishmen understand the real reasons for the “potato famine”? Henry Kelliher wrote that anecdotes were told to him of the harrowing starvation of the Irish. It was subsequently that he found the Irish famine was the result not of over-population, as claimed at that time among some quarters – nor even due to food shortages, since it was only the potato crop that failed. In 1845 (while the famine was to claim the lives of 1,029,000) 779,000 quarters of wheat and flour, 93,000 quarters of barley, and 2,353,000 quarters of oats – enough to feed for a year every person who died of starvation, nearly four times over – were exported from Ireland.[24] Kelliher commented:

When the true story of Ireland is written it will be found that all that stood between starvation and the available plenty, was the crushing interest burden that had to be paid to outside money-lenders, that the country was not suffering from famine, but from what we choose today to call “depression.” A famine is the absence of food caused by a lack of food; a depression is the absence of food caused by a lack of food, caused by a deficiency in the medium of exchange – money.[25]

How many are aware that a major cause of the French Revolution, the epochal event that was one of the first victories of Money Power over Tradition, was caused not by the masses yearning to overthrow the tyranny of Monarchy, but by the economic dislocations caused by debt, when 50% of state expenditure went to pay interest to money-lenders? And so we might continue, up to the present: how much of the aggravation between Islam and the West is caused (apart from the betrayal of the Arabs dating back to the Balfour Declaration and the Sykes-Picot Agreement) by the aim of international finance to control the Islamic world, where usury is regarded as “sin,” as it once was by Western Christendom? Remove the “Hidden Hand” of usury and once the perspective becomes clear, issues might be resolved with justice between many that are presently at each others’ throats while the real culprits remain invisible.

Notes

1. J. Toland, Adolf Hitler (New York: Doubleday, 1970), p. 83.

2. B. M. Lane and L. J. Rupp, Nazi Ideology Before 1933 (Manchester University Press, 1978), p. 148.

3. Gottfried Feder, “Manifesto for Breaking the Bondage of Interest,” reprinted in B M Lane and L J Rupp, ibid., p. 27–30. A copy of the Manifesto is available from this writer.

4. Deutsche Arbeiterpartei (DAP).

5. “Guideline of the German Workers’ Party,” January 5, 1919. B. M. Lane and L. J. Rupp, op. cit., p. 10.

6. B. M. Lane and L. J. Rupp, ibid., p. 30.

7. D. Eckart and G. Feder, “To all Working People,” Munich, April 5, 1919; B. M. Lane and L. J. Rupp, ibid., pp. 30–31.

8. “The Program of the NSDAP,” February 24, 1920. B. M. Lane and L. J. Rupp, ibid., p. 42.

9. J. Toland, op. cit., pp. 83–84.

10. A. J. P. Taylor, The Origins of the Second World War (New York: Fawcett Premier, 1961), pp. 103–104.

11. A. Hitler, Reichstag speech, January 30, 1939. R de Roussy de Sales (ed.) Adolf Hitler: My New Order, (London: Angus and Robertson, 1942), p. 457.

12. A. J. P. Taylor, op. cit. 105.

13. A. Hitler, Reichstag speech, January 30, 1939. R de Roussy de Sales (ed.) op. cit., pp. 457–458.

14. H. J. Kelliher, New Zealand at the Cross-Roads (Auckland, 1936).

15. Prime Minister Joseph Savage acknowledged the support of Kelliher in a “Message to the People”: “I offer my congratulations and thanks to the ‘Mirror’ for the monumental part that it played in laying the foundation of great economic changes for the benefit of the people, and trust that it will meet with deserving support in its progressive and fearless policy.” H. J. Kelliher ibid., between pp. 56 and 57.

16. Bertram de Colonna, “The Truth About Germany,” The Mirror, Auckland, 1938.

17. Bertram de Colonna, ibid.

18. Henry C. K. Liu is chairman of the New York-based Liu Investment Group, and has been a professor at University of California L.A., Harvard, and Columbia.

19. Henry C K Liu, “Nazism and the German economic miracle,” Asia Times Online, 24 May 2005, http://www.atimes.com/atimes/Global_Economy/GE24Dj01.html

20. Ibid.

21. H. W. S. Russell, The Duke of Bedford, Propaganda for Proper Geese(England, ca. 1939), pp. 3–4. Available from this writer.

Bedford formed the British People’s Party to campaign for peace and Social Credit, and a front, the People’s Campaign Against War and Usury. See: K. Thomson, “Hastings William Sackville Russell, The 12th Duke of Bedford & the Fight for Peace & Justice,” Ab Aeterno, Issue no. 7, April–June 2011, (Academy of Social & Political Research), pp. 40–4 3.

22. Through a revolt of shareholders.

23. Stephen M. Goodson, “Why the USA forced the Empire of Japan into World War II,” Abolition of Usury and Taxation Party. http://www.aitup.org.za/

24. H. J. Kelliher, op. cit., p. 147.

25. H. J. Kelliher, ibid.