C. H. Douglas
Encyclopedia
Major C. H. Douglas MIMechE, MIEE, (20 January 1879 – 29 September 1952), was a British engineer
and pioneer of the Social Credit
economic reform movement.
or Manchester
, the son of Hugh Douglas and Louisa Hordern. Few details are known about his early life and training; he probably served an engineering apprentice
ship before building an engineering career that brought him to locations throughout the British Empire
in the employ of electric companies, railroads, and other institutions. He taught at Stockport Grammar School
. After a period in industry he went to Cambridge University
at the age of 31 but stayed only four terms and left without graduating. He worked for the Westinghouse Electric Corporation of America and claimed to have been the Reconstruction Engineer for the British Westinghouse Company in India (the company has no record of him ever working there ), deputy Chief Engineer of the Buenos Aires and Pacific Railway Company, Railway Engineer of the London Post Office (Tube) Railway
and Assistant Superintendent of the Royal Aircraft Factory Farnborough
during World War I
.
during World War I that Douglas noticed that the weekly total costs of goods produced was greater than the sums paid out to workers for wages, salaries and dividends. This seemed to contradict the theory put forth by classic Ricardian economics
, that all costs are distributed simultaneously as purchasing power.
Troubled by the seeming disconnect between the way money flowed and the objectives of industry ("delivery of goods and services", in his view), Douglas set out to apply engineering methods to the economic system.
Douglas collected data from over a hundred large British businesses and found that in every case, except that of companies heading for bankruptcy
, the sums paid out in salaries, wages and dividends were always less than the total costs of goods and services produced each week: the workers were not paid enough to buy back what they had made. He published his observations and conclusions in an article in the English Review where he suggested: "That we are living under a system of accountancy which renders the delivery of the nation's goods and services to itself a technical impossibility." The reason, Douglas concluded, was that the economic system was organized to maximize profits for those with economic power by creating unnecessary scarcity. Between 1916 and 1920, he developed his economic ideas, publishing two books in 1920, Economic Democracy and Credit-Power and Democracy, followed in 1924 by Social Credit.
Freeing workers from this system by bringing purchasing power in line with production became the basis of Douglas's reform ideas that became known as Social Credit
. There were two main elements to Douglas's reform program: a National Dividend to distribute money (debt free credit) equally to all citizens, over and above their earnings, to help bridge the gap between purchasing power and prices; also a price adjustment mechanism, called the Just Price, which would forestall any possibility of inflation. The Just Price would effectively reduce retail prices by a percentage that reflected the physical efficiency of the production system.
Douglas observed that the cost of production is consumption; meaning the exact physical cost of production is the total resources consumed in the production process. As the physical efficiency of production increases the Just Price mechanism will reduce the price of products for the consumer. The consumers will be able to purchase as much of what the producers produce that they want and automatically control what continues to be produced by their consumption of it. Individual freedom, primary economic freedom, was the central goal of Douglas's reform.
At the end of World War I
, Douglas retired from engineering to promote his reform ideas full-time, which he would do for the rest of his life. His ideas inspired the Canadian social credit movement
(which obtained control of Alberta's provincial government in 1935), the short-lived Douglas Credit Party
in Australia
and New Zealand's
rather longer-lasting Social Credit Political League. Douglas also lectured on Social Credit in Canada, Japan
, New Zealand
and Norway
.
In 1923 he appeared as a witness before the Canadian Banking Inquiry, and in 1930 before the Macmillan Committee
. In 1929 he made a lecture tour of Japan, where his ideas were enthusiastically received by industry and government. His 1933 edition of Social Credit made a reference to the Protocols of the Elders of Zion, which, while noting its dubious authenticity, wrote that what "is interesting about it, is the fidelity with which the methods by which such enslavement might be brought about can be seen reflected in the facts of everyday experience."
Douglas died in his home in Fearnan
, Scotland. Douglas and his theories are referred to several times (unsympathetically) in Lewis Grassic Gibbon
's trilogy A Scots Quair
. He is also mentioned, together with Karl Marx
and Silvio Gesell
, by John Maynard Keynes
in The General Theory of Employment, Interest, and Money (1936, p. 32). Douglas's theories permeate the poetry and economic writings of Ezra Pound
. Robert Heinlein's first novel For Us, The Living: A Comedy of Customs
describes a near future United States operating according to the principles of Social Credit. While Heinlein's talent was still developing, and the story's rough edges reflect that, Heinlein saw Social Credit as the path to a utopia where poverty is eliminated and those who have mental aberrations that interfere with their societal interactions (persons who we would call criminals) are treated as invalids needing the best help society can provide to heal their mental wounds.
Engineer
An engineer is a professional practitioner of engineering, concerned with applying scientific knowledge, mathematics and ingenuity to develop solutions for technical problems. Engineers design materials, structures, machines and systems while considering the limitations imposed by practicality,...
and pioneer of the Social Credit
Social Credit
Social Credit is an economic philosophy developed by C. H. Douglas , a British engineer, who wrote a book by that name in 1924. Social Credit is described by Douglas as "the policy of a philosophy"; he called his philosophy "practical Christianity"...
economic reform movement.
Education and engineering career
C. H. Douglas was born in either EdgeleyEdgeley
Edgeley is a residential area within the town of Stockport, Greater Manchester, England. The suburb is characterised largely by Victorian close-packed terraced housing and council estates with some larger properties around Alexandra Park. Edgeley includes Edgeley Park, home of Stockport County F.C...
or Manchester
Manchester
Manchester is a city and metropolitan borough in Greater Manchester, England. According to the Office for National Statistics, the 2010 mid-year population estimate for Manchester was 498,800. Manchester lies within one of the UK's largest metropolitan areas, the metropolitan county of Greater...
, the son of Hugh Douglas and Louisa Hordern. Few details are known about his early life and training; he probably served an engineering apprentice
Engineering apprentice
An engineering apprenticeship is an apprenticeship in mechanical engineering or electrical engineering. A typical example is the apprenticeships formerly available at the BTH and EEC at Rugby in England...
ship before building an engineering career that brought him to locations throughout the British Empire
British Empire
The British Empire comprised the dominions, colonies, protectorates, mandates and other territories ruled or administered by the United Kingdom. It originated with the overseas colonies and trading posts established by England in the late 16th and early 17th centuries. At its height, it was the...
in the employ of electric companies, railroads, and other institutions. He taught at Stockport Grammar School
Stockport Grammar School
Stockport Grammar School is a co-educational independent school in Stockport, England, founded in 1487 by the 1482 Lord Mayor of London Sir Edmund Shaa.The school motto is "Vincit qui patitur" – He who endures, conquers....
. After a period in industry he went to Cambridge University
University of Cambridge
The University of Cambridge is a public research university located in Cambridge, United Kingdom. It is the second-oldest university in both the United Kingdom and the English-speaking world , and the seventh-oldest globally...
at the age of 31 but stayed only four terms and left without graduating. He worked for the Westinghouse Electric Corporation of America and claimed to have been the Reconstruction Engineer for the British Westinghouse Company in India (the company has no record of him ever working there ), deputy Chief Engineer of the Buenos Aires and Pacific Railway Company, Railway Engineer of the London Post Office (Tube) Railway
London Post Office Railway
The Post Office Railway, also known as Mail Rail, was a narrow-gauge driverless private underground railway in London built by the Post Office with assistance from the Underground Electric Railways Company of London to move mail between sorting offices...
and Assistant Superintendent of the Royal Aircraft Factory Farnborough
Farnborough Airfield
Farnborough Airport or TAG London Farnborough Airport is an airport situated in Farnborough, Rushmoor, Hampshire, England...
during World War I
World War I
World War I , which was predominantly called the World War or the Great War from its occurrence until 1939, and the First World War or World War I thereafter, was a major war centred in Europe that began on 28 July 1914 and lasted until 11 November 1918...
.
Social Credit
It was while he was reorganising the work of the RAERoyal Aircraft Establishment
The Royal Aircraft Establishment , was a British research establishment, known by several different names during its history, that eventually came under the aegis of the UK Ministry of Defence , before finally losing its identity in mergers with other institutions.The first site was at Farnborough...
during World War I that Douglas noticed that the weekly total costs of goods produced was greater than the sums paid out to workers for wages, salaries and dividends. This seemed to contradict the theory put forth by classic Ricardian economics
Ricardian economics
David Ricardo was born in 1772 and made a fortune as a stockbroker and loan broker. At the age of 27, he read An Inquiry into the Nature and Causes of Wealth of Nations by Adam Smith and was energized by the theories of economics. His main economic ideas are contained in Principles of Political...
, that all costs are distributed simultaneously as purchasing power.
Troubled by the seeming disconnect between the way money flowed and the objectives of industry ("delivery of goods and services", in his view), Douglas set out to apply engineering methods to the economic system.
Douglas collected data from over a hundred large British businesses and found that in every case, except that of companies heading for bankruptcy
Bankruptcy
Bankruptcy is a legal status of an insolvent person or an organisation, that is, one that cannot repay the debts owed to creditors. In most jurisdictions bankruptcy is imposed by a court order, often initiated by the debtor....
, the sums paid out in salaries, wages and dividends were always less than the total costs of goods and services produced each week: the workers were not paid enough to buy back what they had made. He published his observations and conclusions in an article in the English Review where he suggested: "That we are living under a system of accountancy which renders the delivery of the nation's goods and services to itself a technical impossibility." The reason, Douglas concluded, was that the economic system was organized to maximize profits for those with economic power by creating unnecessary scarcity. Between 1916 and 1920, he developed his economic ideas, publishing two books in 1920, Economic Democracy and Credit-Power and Democracy, followed in 1924 by Social Credit.
Freeing workers from this system by bringing purchasing power in line with production became the basis of Douglas's reform ideas that became known as Social Credit
Social Credit
Social Credit is an economic philosophy developed by C. H. Douglas , a British engineer, who wrote a book by that name in 1924. Social Credit is described by Douglas as "the policy of a philosophy"; he called his philosophy "practical Christianity"...
. There were two main elements to Douglas's reform program: a National Dividend to distribute money (debt free credit) equally to all citizens, over and above their earnings, to help bridge the gap between purchasing power and prices; also a price adjustment mechanism, called the Just Price, which would forestall any possibility of inflation. The Just Price would effectively reduce retail prices by a percentage that reflected the physical efficiency of the production system.
Douglas observed that the cost of production is consumption; meaning the exact physical cost of production is the total resources consumed in the production process. As the physical efficiency of production increases the Just Price mechanism will reduce the price of products for the consumer. The consumers will be able to purchase as much of what the producers produce that they want and automatically control what continues to be produced by their consumption of it. Individual freedom, primary economic freedom, was the central goal of Douglas's reform.
At the end of World War I
World War I
World War I , which was predominantly called the World War or the Great War from its occurrence until 1939, and the First World War or World War I thereafter, was a major war centred in Europe that began on 28 July 1914 and lasted until 11 November 1918...
, Douglas retired from engineering to promote his reform ideas full-time, which he would do for the rest of his life. His ideas inspired the Canadian social credit movement
Canadian social credit movement
The Canadian social credit movement was a Canadian political movement originally based on the Social Credit theory of Major C. H. Douglas. Its supporters were colloquially known as Socreds...
(which obtained control of Alberta's provincial government in 1935), the short-lived Douglas Credit Party
Douglas Credit Party
The Douglas Credit Party was an Australian political party based around the social credit theory of monetary reform, first set out by C. H. Douglas. It gained its strongest result in Queensland in 1935, when it gained 7.02% of first preferences. The party's strongest federal result was at the 1934...
in Australia
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
and New Zealand's
New Zealand
New Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses and numerous smaller islands. The country is situated some east of Australia across the Tasman Sea, and roughly south of the Pacific island nations of New Caledonia, Fiji, and Tonga...
rather longer-lasting Social Credit Political League. Douglas also lectured on Social Credit in Canada, Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...
, New Zealand
New Zealand
New Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses and numerous smaller islands. The country is situated some east of Australia across the Tasman Sea, and roughly south of the Pacific island nations of New Caledonia, Fiji, and Tonga...
and Norway
Norway
Norway , officially the Kingdom of Norway, is a Nordic unitary constitutional monarchy whose territory comprises the western portion of the Scandinavian Peninsula, Jan Mayen, and the Arctic archipelago of Svalbard and Bouvet Island. Norway has a total area of and a population of about 4.9 million...
.
In 1923 he appeared as a witness before the Canadian Banking Inquiry, and in 1930 before the Macmillan Committee
Macmillan Committee
The Macmillan Committee, officially known as the Committee on Finance and Industry, was a committee, composed mostly of economists, formed by the British government after the 1929 stock market crash to determine the root causes of the depressed economy of the United Kingdom...
. In 1929 he made a lecture tour of Japan, where his ideas were enthusiastically received by industry and government. His 1933 edition of Social Credit made a reference to the Protocols of the Elders of Zion, which, while noting its dubious authenticity, wrote that what "is interesting about it, is the fidelity with which the methods by which such enslavement might be brought about can be seen reflected in the facts of everyday experience."
Douglas died in his home in Fearnan
Fearnan
Fearnan is a small crofting village on the north shore of Loch Tay in Perthshire, Scotland....
, Scotland. Douglas and his theories are referred to several times (unsympathetically) in Lewis Grassic Gibbon
Lewis Grassic Gibbon
Lewis Grassic Gibbon was the pseudonym of James Leslie Mitchell , a Scottish writer.-Biography:...
's trilogy A Scots Quair
A Scots Quair
A Scots Quair is a trilogy by the Scottish writer Lewis Grassic Gibbon, describing the life of Chris Guthrie, a woman from the north east of Scotland during the early 20th century....
. He is also mentioned, together with Karl Marx
Karl Marx
Karl Heinrich Marx was a German philosopher, economist, sociologist, historian, journalist, and revolutionary socialist. His ideas played a significant role in the development of social science and the socialist political movement...
and Silvio Gesell
Silvio Gesell
Silvio Gesell was a German merchant, theoretical economist, social activist, anarchist and founder of Freiwirtschaft.-Life:...
, by John Maynard Keynes
John Maynard Keynes
John Maynard Keynes, Baron Keynes of Tilton, CB FBA , was a British economist whose ideas have profoundly affected the theory and practice of modern macroeconomics, as well as the economic policies of governments...
in The General Theory of Employment, Interest, and Money (1936, p. 32). Douglas's theories permeate the poetry and economic writings of Ezra Pound
Ezra Pound
Ezra Weston Loomis Pound was an American expatriate poet and critic and a major figure in the early modernist movement in poetry...
. Robert Heinlein's first novel For Us, The Living: A Comedy of Customs
For Us, The Living: A Comedy of Customs
For Us, The Living: A Comedy of Customs is a science fiction novel by Robert A. Heinlein, written in 1938 but published for the first time in 2003...
describes a near future United States operating according to the principles of Social Credit. While Heinlein's talent was still developing, and the story's rough edges reflect that, Heinlein saw Social Credit as the path to a utopia where poverty is eliminated and those who have mental aberrations that interfere with their societal interactions (persons who we would call criminals) are treated as invalids needing the best help society can provide to heal their mental wounds.
Publications
- Economic DemocracyEconomic democracyEconomic democracy is a socioeconomic philosophy that suggests a shift in decision-making power from a small minority of corporate shareholders to a larger majority of public stakeholders...
(1920) new edition: December 1974; Bloomfield Books; ISBN 0-904656-06-3 - Social CreditSocial CreditSocial Credit is an economic philosophy developed by C. H. Douglas , a British engineer, who wrote a book by that name in 1924. Social Credit is described by Douglas as "the policy of a philosophy"; he called his philosophy "practical Christianity"...
(1924, Revised 1933) new edition: December 1979; Institute of Economic Democracy, Canada; ISBN 0-920392-26-1 - The Monopoly of Credit (1931) new edition: 1979; Bloomfield Books; ISBN 0-904656-02-0
- The Use of Money (1935)
- The Alberta Experiment: An Interim Survey (1937)
- The Brief for the Prosecution, Legion for the Survival of Freedom, Incorporated; (December 1986) ISBN 0-949667-80-3
- Whose Service is Perfect Freedom?, Canada; Veritas Publishing Company; (June 1986) ISBN 0-949667-64-1
- The Big IdeaThe Big IdeaThe Big Idea was a millennium-funded, interactive museum in Irvine in Ayrshire, Scotland.The museum, built on the site of Alfred Nobel's dynamite factory, is devoted to invention and inventors...
, Veritas Publishing Company, Canada; (June 1986) ISBN 0-88636-000-5 - The Grip of Death, Jon Carpenter, UK; (May 1998) ISBN 1-89776-640-8
Further reading
- Major Douglas and Alberta Social Credit by Bob Hesketh ISBN 0-8020-4148-5
- Clifford Hugh Douglas by Anthony Cooney ISBN 0-9535077-4-2