Monday, March 26, 2007


Voter’s Policy has a very strong commitment to better living standards and a
natural ‘Way of life” We stand for individual freedom, unhampered
initiative, genuine real democracy, with financial security, and no poverty
traps. Private enterprise is now unnecessarily, unnaturally, stifled and
suppressed by faulty management of our nation’s money supply by bankers and
economists. This is Fact!!!

Our production and distribution system is already naturally in our modern
age of machines and technology and can produce an abundance of consumer
goods and services. Unfortunately the present banking and financial system
is still in the pre-machine age and urgently needs modernising so that the
abundance of goods and services can be distributed equitably.
• We follow the policies from philosophies as expounded by Major
Clifford Hugh Douglas, M.I.Mech.E., M.I.E.E., consulting engineer,
economist, author, and the founder of Social Credit New Economics Movement.
He has 700 pieces of literature in the Edinburgh Library at Edinburgh
• Contrary to a wide spread idea in NZ, - Social Credit is not a
political party.

M P’s must represent and work for policies wanted by their local voters, -
not policies foisted on voters by banker’s economists, state bureaucrats,
big business or the leaders of Political Parties who are naturally
responding to pressure from the above.

• Parliament’s duty is to responds to pressure - when pressure from
voters is greater than pressure from the above groups, - voters will get the
policies they need and want.
• The above groups do not vote for local M P’s only local voters do.
• Local voters must insist local M Ps represent policies voters want.
• Voters Associations must be established in every electorate to
communicate policies local voter’s need and want to their local
representative M P’s to work in Parliament to have enacted and also to
reject policies not wanted
• ADD strength to democracy with Binding Citizens Initiated Referenda.
• The greatest power on earth is the “Will of the People”. Voters must
learn to use democracy. Democracy is a responsibility of voters who must be
• Responding to voters Local M P’s and Parliament, must become the
bosses of specialists, economists, State Bureaucrats and other groups by
enacting policy legislation wanted by their local voters.
• The local MP rarely wants to lose their chosen occupation, the
privileges and good income that go with the job and will therefore work for
voters to keep their votes.
We are not against any section of NZ society we are against the present
SYSTEM of faulty banking & economics that generates total prices faster than
total incomes. It is the faulty way bankers and economists manage the
present creation, - injection and distribution of their compounding debt
money that must be modernised. The system is man made and can be changed.

Henry Ford said: “If the people of the nation understood our banking and
money system, I believe there would be a revolution before tomorrow morning”
end Quote.

Our criticisms should not be taken as directed against bank employees; not
even against bank managers or inspectors. They are but workers like you and
me, from whom is required complex precision, irreproachable integrity,
proper dress, constant courtesy, and perfect obedience….PTO.

What is SOCIAL CREDIT? Lecture 2.

“Social Credit is the belief inherent in society that individual members in
association can get what they want” definition by L.D.Byrne

What is the Philosophy of Social Credit?

The successful teaching of Social Credit as a practical reform must include
more than just a reform of finance and economics:

C. H. Douglas in one of his most important and valuable utterances, has
stated that Social and Economic systems represent “the policy of a
philosophy” and he defines “policy” in this connection as “action
consciously directed towards a given objective”. end quote.

Social Credit believes in decentralised control, with the foundations of
society laid on the complete independence of the individual. It believes
that policy should come from the community through building up from the
individual – not down from the State.

It believes that the future of the world lies in cooperation, but only in
cooperation of reasoned assent – not in forced cooperation of regimentation.

“It believes that economic activity is simply a functional activity of men
and women in the world and that progress is most rapid and effective through
the free expansion of individuality” quote C.H.Douglas.

It believes that science and technology must not be used to enslave men; but
to free them from unnecessary work and so give them leisure and the
opportunity for self-development.

It believes that the system under which people live should represent truth
and reality – not lies and falsity.

We must build up from the individual – not down from the State
The basis of freedom is Economic Security

Quote C.H.Douglas. “Systems were made for men, and not men for systems, and
that the interest of man, which is self-development, is above all
systems…MORE…” end quote C H Douglas in “Economic Democracy”.

Wednesday, March 21, 2007



209 Palm Lake Road, Webster Road Resort, Deception Bay 4508,Queensland.
Telephone (07) 2891104. email:

New Zealand Agent Henry Raynel 120 Litten Road, Howick, Auckland.
Telephone / 09-5370094 / fax 09-5370092 Email:


Apply now for Course starting soon.

Please ask for application form

Reading & 8 Monthly Tutorials.

lecture - one ……… ……Introduction

Lecture - two……… … ..Philosophy

Lecture - three…………..Policy.

Lecture – four ……The Purpose of Production

Lecture - five……… …..The Industrial System.

Lecture - six……… ……Trade.

Lecture - seven……… ….Politics.

Lecture - eight……… ….Review.

School Course fee and books $140.00


Please enrol me for the Elementary Course.

I acknowledge that this Course is accepted by me under the terms and conditions as specified in the Ordinances which have been supplied at my request. I agree to take the Course on the conditions specified and agree to complete the required assignments as set. I understand and accept that the duration of the Course will be approximately one year, and that on completion, subject to my having completed all required assignments, I will be eligible to apply to undertake the Advanced Course. I understand that this Course is not a vocational Course and that any Certificate issued will be recognised by the Social Credit School of Studies Inc. which is the only body authorised to conduct such examinations.

Name (please print-Mr./Mrs./Miss/Ms.)


Date of Birth …………………………………………………………….


I enclose $140 00 for full course fee payment, and this includes the cost of required list of reading study Course books that is attached. I understand that each lecture must be completed before commencing the next lecture. Tutorials are held monthly 10 a.m. on the first Sunday of each month for 8 months, at the above address. Long distance students may apply to do the course by correspondence.

Please provide an indication of education standards achieved, some employment experience, and of any other Social Credit studies or allied subjects that have been completed.


There are a couple of points which require clarification. Douglas suggested in The Monopoly of Credit
"It is neither the correct method of deciding what is to be done, not the question of who is to do"

In this instance he was referring to centralization of administration. The function of producing a correct
set of accounts as envisaged requires an administrative organization with the power to obtain the
information necessary. There are two possibilities, one is the Treasury which is a government
department and although it advises the government on financial matters it is still a government
department subject to control by the government. Apart from some minor policy inputs by a
government it is the treasury which in the main determines financial policy. On this count alone it
should be disqualified from acquiring the function of producing the accounts for the nation.
On the other hand there is the Central Bank. When Douglas was proposing his ideas the banking
system and in particular central banks (even prior to the nationalisation of the Bank of England) were
vastly different to what they are now. The truth is that Central banks whilst ostensibly under the control
of governments are nearly completely independent. In the United States this is even more so under their
Federal Reserve System.
With establishment of the International Monetary Fund the role of Central Banks has changed
considerably and the following quote substantiates the effort to distance Central Banks from
governments which are again ostensibly supposed to be representatives of the people of the nation. The
first President of the IMF was Per Jacobsson on whose death an annual commemorative meeting was
held for the purpose of allowing members of the then central banks to contribute towards the policy of
the IMF. One such meeting (there were others expressing similar sentiments) revealed the thinking at
that time and which is now nearly reaching the objectives stated.
I quote the following from a lecture by Maurice Frere, President of SOFINA; Honorary Governor of
the National Bank of Belgium, 1964. The lecture was given on November 9, 1964 under the
sponsorship of The Per Jacobsson Foundation, published under the title Economic Growth and
Monetary Stability Growth .
"To ensure a better defence against the various possibilities of inflation, it seems essential that the
monetary authority should enjoy a large measure of independence vis-a-vis the political authority in
spite of the wish that some people may have to subordinate the former to the latter.
"The independence of the monetary authority from the political authority is not enough in itself,
however, to ensure a really effective defence against inflation.
:KLOVW LW DSSHDUHG WKDW ³LQIODWLRQ´ ZDs the reason it has since been shown that there was much more at
stake and anyone who wishes to study the developments over the last fifty years particularly in Europe
would find the whole process more than interesting. Central Banks, although responsible for certain
aspects of monetary policy domestically, are closer to other Central Banks and certainly do not operate
in the interests of the individuals comprising a nation. Their function, as they see it, is directed towards
what they regard as more loftier objectives. For example, the Charter of the Reserve Bank of Australia
contains a clause which places responsibility for employment or unemployment on their shoulders.
This has not been recognized for fifty years.
If we eliminate the Treasury and the Central Bank as functionaries in the accounting process, what
organizations exist that are capable of carrying out the operation.
Douglas may not have specifically mentioned a National Credit Authority but his views on
governments, the so-called ballot box democracy farce, nationalisation of the banks, and that policy
recognizing the people as the owners of the money supply, should emanate from the people
(decentralisation) and that a centralized administration to carry out the function was the proper step it is
not difficult to gauge his direction.
The idea of a National Credit Authority may have been stated by John Hargrave but the idea of a
National Credit Office was mentioned by a group in 1931 called The Legion of Unemployed (see The
New Age February 26, 1931. Incidentally, Douglas gave his blessing to efforts by John Hargrave in
early endeavours but this was withdrawn when Hargrave became involved in party politics with the
formation of a Social Credit Party.
What is important is that there is a body with the responsibility for producing a
correct set of accounts whereby the final results (if positive)can be translated into issuing New Credit.
The means whereby this can be done is again immaterial but the most obvious would be to instruct the
Reserve Bank to act on the results provided. Administrative details are not important at this stage of the
discussion. The setting up of National Accounts is.
Finally, a National Credit Account does not contrast with a National Credit Authority. One is a
bookkeeping account and the other is an administrative body. One might as well say that a
bookkeeping account in a company contrasts with the board of directors whose job it is to administer
the Company.
Vic Bridger


We may well ask, “What is the importance of a National Balance Sheet?” and “Why is it considered such a
necessity by Social Credit advocates?” The answer to these and other questions in the following
explanation are considered and we leave the reader to judge for him or herself.
Every business entity is required by legislation to keep a proper set of books of account. That is one reason.
Equally important is the fact that by keeping an accurate record of all the business activities engaged in by
the business the proprietors and or the shareholders can ascertain whether or not the business is viable, i.e.
making a profit or loss and not heading for the Bankruptcy court.
A normal business Balance Sheet is in reality a statement of the Assets and Liabilities, which shows the
financial position of the business at the date, specified. Also a normal Balance sheet contains information
that breaks up the Assets into Current Assets, Fixed Assets and Intangible Assets.
Current Assets usually are those assets that can be realised or turned over quickly or in a short period of
time, in the sense that they are either cash in hand or can be converted into cash in that short period of time.
In the main these may consist of cash in hand, i.e., in the bank, debtors, other types of paper that can be
converted such as financial documents like bills of exchange, short term deposits, stocks on hand of goods
or raw materials, manufactured work in progress.
Fixed Assets consist of property land, buildings, plant and machinery, motor vehicles and can be regarded
as those items that are necessary for the business to produce its trading income.
Intangible Assets are those that have no material existence. They have no real value in themselves and
include such things as goodwill, patents, trademarks, and licence rights. Although they may have no real
value in themselves, they do have a complex value in that they may be worth more or less than the amount
shown on the Balance Sheet depending upon, for example, the profitability of the business. On the other
side of the Balance Sheet are classified what is known as Liabilities. These, like the assets, are classified
according to whether they are, Current, Deferred, or Capital, or Retained Earnings (undistributed profit).
Current Liabilities contain all those items that must be met within a short period of time. These would
normally include payments to creditors for purchases and other expenses incurred in running the business
such as telephone, electricity, and payments for tax, the bank overdraft, and bills payable.
Deferred Liabilities include those liabilities that do not have to be paid in the immediate future. Items
classified under this heading are mortgages, debentures, and long-term loans.
Capital is the money originally contributed by the proprietors or shareholders in establishing the business.
This changes according to whether or not the business is profitable. If profits are made and they are not
distributed to the proprietors (in a private business) or shareholders in a public company they become
retained profits and may be added to the Capital, or just shown as Retained Earnings. If the business is not
profitable the Capital Account can be a negative figure because losses are transferred to the Capital
Account also. Alternatively the Capital Account will remain as per the paid up Capital figure and the
Losses shown separately.
This preliminary and brief introduction to a Balance Sheet is sufficient explanation for our purposes. To
obtain an accurate view of the financial position of the business it is vital that any interested person must be
able to read and understand the time worn areas to investigate. These are (a) Liabilities to creditors that
indicate whether or not the business can meet its obligations and pay its way. (b) Working Capital that is
simply the difference between Current Assets and current Liabilities. This difference indicates whether or
not the business has the available funds to enable it to continue its daily activities.©) Fixed Capital which
as already explained include those factors acquired for the purpose of earning income. By comparing the
Capital and Fixed Assets it is possible to determine if the proprietors or shareholders adequately financed
the business or whether outside creditors have financed the whole of the investment in current assets but
have also provided some funds that are locked up in Fixed and Intangible Assets.
Construction of a Balance Sheet
A Balance Sheet is not an account but a summary of ledger balances at the end of a financial period and is
constructed in such a way that reflects the double entry system of bookkeeping i.e. debits and credit
balances of ledger accounts. For every debit there must be a corresponding credit and the Assets how the
debit balances whilst the Liabilities show the credit balances.
There are two ways by which a balance sheet may be adjusted or compiled. The first is by a direct debit to
an asset item and a corresponding credit to an asset item. For instance a purchase of plant and equipment
would have a debit to plant and equipment and a credit to the bank account item. Other adjustments can be
made at the end of a balance period but these need not concern us here. The other way is by the transferring
the result of the Profit and Loss after all Trading and Overhead Expenses have been completed. All of these
particular accounts are cleared at the end of the financial year period and the result is transferred to the
Balance Sheet to Retained Earnings or Accumulated Losses depending upon the result being a profit or
It is necessary to understand this brief and incomplete explanation only for the purpose of recognizing how
a Balance Sheet may be affected by the accounting system adopted.
There is one item usually appearing on a Balance sheet that has not been mentioned because it does have
special significance for Social Credit accounting. This is Depreciation that is applied to tools, plant and
equipment to reflect a realistic value of those items. On the other hand, as many companies have found to
their regret or at least to the shareholders, appreciation of assets can be also very significant. A company
that has property in the form of land and/or buildings and has not adjusted these values in their accounts
may, and have found that their share value is underestimated and therefore are a target for a takeover. The
result has been that they are taken over and then the company is closed down and the property assets are
sold off for a value much higher than that shown on their balance sheet.
We can summarise at this point and say that a Balance Sheet is a summary of ledger balances at the end of
a financial period and should be a true and accurate position of the worth of the entity at that point. It is
affected by adjustments within the balance sheet items themselves or by the results of the trading within the
specified period.
A Realistic Approach to a Balance Sheet
The first thing requiring understanding is that all recording in accounts and thus reflected on the Balance
Sheet is done by the use of symbols. In Australia it is the $, in the U.S it is the $, even though these $s are
not the same thing. In the U.K. it is the £, in Japan it is the ¥ and for different nations different symbols
with differing values to all others.
The symbol $ is the symbol for signifying an amount in money terms. Thus $2 means two dollars, or more
correctly in Australia $AUS2 or the U.S. $US2 which are not the same thing. It is important to remember
that these are symbols and intangible, and represent a monetary value of something physical and real in the
sense that it is tangible and exists in the real world.
In studying a Balance Sheet from this perspective it can be readily seen that the Balance Sheet is comprised
of intangible and intangible things. Remembering that a Balance Sheet is the result of double entry
bookkeeping system it is necessary that the Assets and Liabilities be in balance. If we apply this principle
to all existing balance sheets throughout the world it is obvious that all debits must equal all credits. Taking
this one step further and which is significant for the purposes of explaining a National Balance Sheet, if all
money balances, i.e. debtors and creditors including loans, mortgages and any other claim to money, such
as Bills of Exchange etc. were settled, the only things that would remain on Balance Sheets would be
tangible items. These would include things such as property, buildings, furniture and fittings, plant and
equipment, motor vehicles, and stock of finished goods or work in progress or raw materials. All of these
items are classified as Assets on the Balance Sheet but there would be no Liabilities. If one wished to show
a Creditor it would have to be God, or Nature, or a Natural Resources Account.
A realistic appraisal of a Balance Sheet must recognise that the Balance Sheet provides information which
is historic in the sense that it records a position at a point in time after events have occurred and that all
activity has been recorded by the use of symbols. These symbols e.g. the $ make the task of recording
much easier than using other methods that would be required under a barter system. However, the problem
that has arisen is that the symbol has come to be regarded as a physical commodity itself, which is
completely false and has allowed the reality to be clouded by a delusion. This does not mean that the
symbol should not be used, just that it should be correctly regarded as a representation of the real thing and
of no value in itself. It is not, and should not be regarded as a commodity with a price value.
Introduction to a National Balance Sheet
Under current government financial accounting there are two aspects. First, all government expenditures
and receipts are subject to appropriation through the Budget, which is set by the government each year.
Second, the activity within the economy is recorded, not in accordance with current accounting principles
but based on economic principles that do not reflect the correct financial situation. The figures that are
compiled are recorded in a National Income and Expenditure Statement that by definition as set down by
economists must be in balance. Briefly this is based on an assumption that in any given financial period the
money paid out in disbursements to people i.e. the national income is equal to the national expenditure in
the same period and therefore is equal to and provides a figure valued at factor cost that is referred to as the
national output. This national output is regarded as the creation of wealth by the nation’s industry.
We need not concern ourselves with the fallacies contained in the simplistic approach in the above except
to point out that if there is any use at all for the compilation of such figures it would be for the purpose of
obtaining information on trends that may occur. These trends may offer assistance in obtaining statistical
information on changes that may be occurring within the economy. However the information does not
reflect the true state of the economy.
The contention that is being presented here is that the nation should be regarded as being similar to a large
company and the accounting conducted on similar lines but not the same principles. A starting point would
be to regard the nation, e.g. Australia as Australia Ltd. or Great Britain as Great Britain Ltd. A number of
fundamental basics for the compilation of a National Balance Sheet would include:
1. An inventory of all national resources including people.
2. A change in the method of the original creation and distribution of money (credit which when
used becomes money).
3. The establishment of a Statutory Financial Authority with specific functions.
4. The setting up of special national accounts.
5. An alteration in the government budget process.
6. A realistic assessment of the real situation in the economic process with regard to Production,
7. Consumption, including Exports and Imports, and Appreciation and Depreciation.
8. A recognition and acceptance of the principle that all citizens are shareholders in the Nation and
should receive the benefits of their association, and their cultural inheritance.
In detailing the particular aspects of the above grouping it will be seen that a change in certain philosophies
will be necessary. It is no small assertion to state that it is precisely certain philosophies that have been and
are a hindrance to the attainment of a change in national financial accounting principles for the betterment
of the people in the world.
Balance Sheet
If all financial recorded figures were removed or cancelled out on Balance sheets, under the double entry
bookkeeping system, the only remaining items would be physical tangible assets. These items would be
classified as Land, Buildings, Machinery and Tools, i.e. Plant and Equipment including all vehicles and
earthmoving equipment and even things such as oilrigs. Other items would include stock on hand or an
inventory of all finished goods, work in progress, i.e. , semi-manufactures and produce and raw materials.
It should be understood that all production is the result of conversion of natural resources into another form
and this conversion of matter from its natural state into another is attained by the use of energy. Energy can
be from a natural source such as solar energy in the form of coal,
use of natural resources converted by the use of human energy. There are then two sources of energy,
natural resources and human energy and even human energy can only exist supplied by natural resources.
This brings us to the point in normal double entry bookkeeping as to the other side of the Balance Sheet
where the Assets are recorded, i.e. Liabilities. If Assets are recorded what is the counter entry in Liabilities?
Who or what is the Creditor or from whence came the assets. God - Natural Resources? It seems clear that
there should be a Capital and Equity Account that is credited with the estimated value of the resources of
the nation including human capital. This would reflect the equity of all individuals as shareholders in the
nation. It would show the ability of the nation as a going concern as in any business to produce both Capital
and Consumer goods as and when required.
On the Assets side there would be a corresponding entry by a debit to a National Credit Account. This
action is no different to the situation when a new business is commenced. The Bank Account is debited
with a deposit of money received from shareholders and is shown as an Asset, whilst the corresponding
entry has been credited to the Capital Account recognising the shareholders as the holders of the equity as a
Liability by providing the business with the necessary funds.
From a Social Credit perspective the Law of Cost means that the Cost of Production is Consumption. The
real physical cost in a nation, of all its production is the total consumption that occurs in the nation for a
given period. With the reality that the physical Cost of Production is Consumption, this fundamental Law
of cost means that all production is paid for in full on consumption. This Law of Cost is consistent with the
fact that there is no debt in nature. Either the resource exists or it does not. The farmer cannot water his
crops on next month’s or next year’s rain. A motor vehicle cannot run on petrol from oil that has not been
This physical fact should be reflected in the accounts in a National Credit Account, which would be in two
segments, a Consumption Goods and Services Account and a Capital goods Account. From a National
Accounting system that produces a National Balance Sheet and has a National Credit Account and a
National Resources Account that these are not Accounts in the same manner as accounts in a business.
They would the result of a compilation of figures, which purport to reflect “flows” or changes in the
economy. For purposes of illustration we may start with a very simple example of what has been stated to
this point:
Australian Commonwealth
Balance Sheet
As At 30 June 200..
National Resources and Capital
Natural Resources
Physical Resources
Capital -- Shareholders Equity
National Credit Account
Consumption Goods
Dr. Cr.
Exports Production Consumption Imports
Capital Goods
Dr. Cr.
Exports Imports
Deaths Public Property
Emigration Immigration
The above illustration is a simple attempt to highlight the differences between a business Balance Sheet and
one compiled for a nation. A few explanations on items included will be clarified but it is necessary to
indicate that this idea is not new. The use of National Credit for the benefit of the nation was recognised in
the South Australian Parliament August 23, 1939 when a motion was carried by 17 votes to 13 in the
“That, in the opinion of this House, the National Credit of the Commonwealth should be used in the interest
of defense, the primary industries and the general welfare of the people of Australia”.
On September 19th, 1939, the Governor informed the House that the Resolution as stated above was
transmitted as Message No 9 to His Excellency the Governor-General. Quite obviously this would have no
effect on the Commonwealth as having originated in a States House but it does show that the idea of
utilising the National Credit for the benefit of all its citizens is not new. There have been other attempts to
design a National Balance Sheet both in Australia and the United Kingdom but these have been based upon
establishing criterion for explaining economic decisions by government and the results that have occurred
from those decisions. Since 1989 the Australian Bureau of Statistics has been experimenting with
developing a National Balance Sheet which contained statistics recommended in the 1968 version of the
United Nations System of National Accounts. In 1977, the United Nations published a proposal for
countries to prepare national and sector balance sheets.
The suggestions offered here differ markedly from those other proposals because it is based on a
philosophical base that encompasses the belief that “The essential mechanism of genuine democracy is
decentralised control of the real credit of the community”.1
National Balance Sheet
Natural Resources
What should be recorded on a National Balance Sheet are the real physical non-financial assets that
represent the real credit of the nation. Some of the items that would appear under this heading would
Fixed Assets:
These would be of two types, those that occur naturally and can be referred to as non-produced and those
that are the result human energy production.
Non-Produced Assets
Crown land including national parks and reserves, forests both natural and government re-forestation
plantations for commercial use, water resources and sub-soil assets such as mineral, oil and gas deposits
that can be exploited commercially for the benefit of society.
Physical Assets
An understanding of what should be included under this heading is that the ability to produce is obtained
from the use of labour or human energy plus the use of inventions down through generations. Thus there
should be recorded a Valuation of Australian Citizens.
Valuation of Australian Citizens
Whilst this may create some criticism it must be recognised that the individual is the most important part of
society. As such there should be a valuation for the purpose of recording on a National Balance Sheet total
productivity taken over the total population on a per head basis.
Produced Assets
Include Government buildings both residential and non-residential, all machinery plant and equipment.
National Credit Account
Consumption Goods
All exports of consumer goods in a given period represent a physical loss to the nation in that a
real physical item leaves the nation and should be recorded as a loss by a debit to the National
Credit Account as Consumption Goods.
Under the Law of Cost, consumption is the cost of production. As production encompasses both Consumer
Goods and Capital Goods part of Consumption relates to Consumer Goods and the other part relates to
Capital Goods. For the purpose of simplicity at this stage the value of consumption should be debited to
this particular account.
Production (Consumer Goods)
As natural resources are utilised in the production of Consumer Goods this should be reflected by a credit
to the National Credit Account to record the increase in Consumer Goods. The amount by which the entry
would be affected would be the total of wages, salaries and dividends paid out in the given period of
production. Writing down the national assets would offset this credit grant by an equivalent amount. The
consumption incurred in production is a cost; it is a diminution of real credit, and should be so accounted.
As all consumer goods imports are an addition to goods produced in the nation they should be
accounted for as a gain and credited to the National Credit Account.
National Credit Account
Capital Goods
All exports of capital goods represent a physical loss to the nation and should be recorded as a Debit to the
National Credit Account and credited to the relevant asset account to reflect the loss.
All capital goods imported are an addition to those produced domestically and are an addition to the
physical resources and should be credited to the National Credit Account.
Births and Deaths
An adjustment should be made to the Valuation of Citizens according to the addition and loss
under this heading.
Emigration and Immigration
The same principle applies here with respect to the loss and addition to the available physical
Financial considerations
It will be observed that there is no provision for financial assets or liabilities such as Loans, Borrowings,
Shares, Treasury Certificates, Investments either domestic or overseas or any other type of financial paper.
Also there is no provision for foreign exchange holdings or liabilities.
The National Balance Sheet is a statement or a summary of balances of accounts at the end of a particular
period and reflects the position within the domestic economy. The only financial record that should appear
is the financial figure that represents the value of legal tender to balance the net values of assets and
liabilities on the balance sheet. Obviously the values of the assets and liabilities would be expressed in
terms of Australian currency.
The question of financial arrangements with nations outside Australia that represent any transactions that
have occurred and require a recording of the trading in real physical goods is a separate matter and is dealt
with elsewhere. Under the operation of a correct set of National Accounts there would be no need for such
things as Capital Inflow, attracting overseas investment, or borrowing from other countries. Gold would be
treated as a commodity only and its value would be determined by commercial market operations on its
commercial properties usefulness.
The National Debt as it applies to the Commonwealth Government would not appear on the National
Balance Sheet. This matter is beyond the scope of this proposal and will be dealt with in association with
the question of imports, exports and foreign exchange. Many other proposals for the construction of a
National Balance Sheet include items that relate to the private sector. Some of these include things such as
Trade Debtors, insurance policies, pension funds, bank deposits, Treasury bills, commercial bills, hire
purchase figures, instalment credit, house mortgages and many other types of financial assets and liabilities.
These have no place in a Balance Sheet based upon real physical entities.
In constructing a National Balance Sheet as proposed here it is recognised that many questions will arise as
to what should or should not be included. Whether it is on possible mineral or oil reserves, or land that may
be regarded as wasteland it is of no importance at this stage as this proposal is in the early stages of
development. The important principle to keep in mind is that it is based upon real physical matter,
developed, underdeveloped, or potential as being available for the benefit and well-being of the citizens of
the nation, and upon which its reflection is mirrored in the available legal currency to utilise it. This
principle can be substantiated by a study of a Profit and Loss account of any business, which reveals that a
portion of the profit is always at any moment represented by what are in fact physical assets. The remainder
is represented by purchasing power.
A National Credit Authority would not determine policy but be responsible for producing a proper and
correct set of accounts on which policy could be based. A Balance Sheet produced by the Authority would
be the absolute determinant of financial policy rather than allow politicians to determine policy on their
own, quite often, mistaken judgements. The Commonwealth of Australia Constitution Act (Chapter 1. Part
V. Section 51) gives full power to the Federal and States Government to control the source and creation of
currency, coinage and the issue of paper money as legal tender. A vital constitutional aspect to be observed
is that in respect of the whole question of money, the Commonwealth has no exclusive power, but power in
conjunction with the states. It has powers with respect to all banks except State Banks.
Two major accounts that could be kept by the Authority would be a National Resources, Capital and
Wealth Account. This would show the resources and ability of Australia as a going concern to produce
wealth and capital when, as, and where desired. The second account should be a National Credit Account
indicating the extent to which those resources were being drawn upon, and the extent of the liabilities and
debts outstanding against the assets of the community.
The Resources Account would be credited initially with the estimated value of the resources of the nation,
and periodically, with the value of all current production, appreciation and imports, and debited with all
consumption, depreciation, obsolescence and exports during the same period of time. The Credit Account
would show the extent to which the banks had issued liabilities against the resources and the value of all
credit instruments and Government Bonds, etc.
A National Balance Sheet would differ from an ordinary balance sheet in two ways. Firstly, apart from
foreign moneys held overseas, no money would appear as an asset except as a monetized figure
representing the difference between the real assets and liabilities representing the difference in balances.
The resources, accumulated capital and wealth of the community would far exceed the total of all
liabilities. This difference is the accumulated resources of society, and the embodiment of the Cultural
Inheritance, which give value to all credit by whomsoever created and issued.
At present, this Cultural Inheritance cannot be used by the Community who are its rightful beneficiaries
because it is not monetised. As soon as we have a balance sheet however, it will be seen that this surplus of
assets over liabilities can be monetised and distributed to the community in whatever way deemed desirable
so that consumption may keep pace with production, and so enable a continuous expansion of production.
This surplus is the physical source from which the community pays necessary expenditures. With a national
accounting it would be evident that such services need no longer be paid for by taxation, which would only
exist for purposes of economic control e.g. to control inflation.
For the first time Australia would become a Co-operative Commonwealth which would distribute a
dividend to all its citizens instead of resembling a tin mine which, instead of distributing dividends,
continually makes calls on its shareholders.
The purpose of the following illustrations of the ways in which the Reserve Bank may finance the nation is
to make explicit the principles of action, not to design a programme. Information from the Accounts
provided by the Credit Authority will indicate the necessary new credit that can be issued The ways in
which loans may be made to Government Instrumentalities simply suggest the application of the principles
of true costing and pricing and the rate at which credit should be recalled. That is to say that loans could be
provided to Local Authorities interest free but with a nominal service charge over, for instance, a ten year
period. This would allow Local Authorities to either repay existing debt and thus reduce their interest
costs, or to finance new capital works. The loan would not be able to be used for maintenance or current
It is assumed that the Reserve Bank will finance the works programmes of the governments in a similar
manner. It should be emphasised that the Community and their Political Representatives must have a much
greater control over the Governments, the Civil Services, and the Financial Authorities. To give the
Governments absolute control over credit policy instead of making a Balance Sheet the determinant of
financial and national policy, is to head straight for an Authoritarian State.
To commence, it may be wise to make works programmes to some degree, dependent upon public
subscriptions to government loans.
Assuming that a Government project such as the Snowy River Scheme has been financed by a loan from
the Commonwealth Reserve Bank, what sort of book-keeping system will be necessary? As a loan by the
Reserve Bank is simply a loan by the people to themselves we may safely assume that the loan will be
interest-free and no costs other than service charges would occur.
But what about depreciation charges? Shall or shall not these be included in costs and prices? This is best
answered by remembering that financial technique should be a reflection of physical reality, and that the
true law of price is a reflection of physical fact. The first fact to be considered is that irrespective of how
the scheme is financed, and irrespective of the bookkeeping system employed, from a physical viewpoint
the scheme was paid for day by day and week by week as it was being constructed.
The second important fact is that the construction of such a scheme involves a great consumption
of material, energy and man power, and the proportion of consumption to production is, for the
time being, greater than had the scheme not been undertaken.
The National Credit Account would therefore have been debited with the extent of this consumption, and if
prices were based on the natural law of costs, prices would rise during construction.
On completion, however, the Resources, Capital and Wealth Account would be credited with the cost of the
scheme as an asset plus the appreciation of wealth resulting therefrom, and as the scheme had been paid for
both physically and financially, the debt owing by the Authority would be wiped out.
As the scheme was financed by the Reserve Bank, the depreciation problem would be treated in a similar
way. The national Credit Account would be debited with the depreciation charges, and prices would rise
accordingly, but if the depreciation were immediately made good, and the scheme brought up to its original
worth, that account would be credited with the same amount and no charges need be made.
If the scheme were financed by public loans, charges would have to be made for interest and repayment of
capital. But as the Resources Capital and Wealth Account would be credited with the cost of the scheme no
matter how its construction be financed, such charges could be met by the Reserve Bank rebating the
investors for interest and capital direct, instead of including these costs in prices. If the scheme were
financed by bank loans, which were recalled before the scheme, were completed, the accounting would be
similar to that as follows.
A somewhat similar procedure would be applied in regard to the trading banks. The Reserve Bank would
open Loan Accounts for each bank, and these accounts would be in debit to the extent of the banks' loans to
their clients. As loans were repaid, the accounts would be credited with the amount paid by the banks to the
Reserve Banks.
As the banks pursue a short loan policy, and loans are repaid before the capital and wealth they have helped
to produce appears on the market, it will be necessary to record these in the National Credit Account,
which will indicate the rate at which credit is issued and recalled. This rate will not agree with that at
which physical wealth and capital are produced and consumed, as revealed in the National Resources,
Capital and Wealth Account.
In conjunction, these accounts would indicate the ratio at which credit must be recreated in order to
make good the deficiency of money caused by the premature recall of money. This premature recall of
credit occurs in many ways, of which only one has been mentioned.
There is no reason why the banks should alter their short term policy provided the National Resources,
Capital and Wealth Account is credited with the value of the capital and wealth when it is completed,
and thus has an asset against which he can issue credit to producers or consumers to make up the shortage
caused by the premature recall of credit.
When the factory begins production, its depreciation charges can be recouped by the manufacturer from the
National Credit Authority, which would draw on the National Credit Account, provided the manufacturer
eliminated the depreciation charges from his prices.
Unless these depreciation charges are recouped to the producer in either the above, or a combination of the
above ways, there will be difficulty in selling production, and the total production could never be sold
because some of the credit has been prematurely withdrawn from circulation.
A system of national accounting is necessary if the community is to have available sufficient money to buy
all the goods and services which farms and factories can produce, at prices which will allow producers to
function profitably.
Other advantages would follow. Our present system of taxation would eventually give way to a National
Dividend by which the profits of Australia as a going concern would be distributed. The greatest blessing,
however, would be that the present Debt System, in which the community can develop industrially, socially
and culturally, only by getting deeper and deeper into debt, would be transformed into a Credit System in
which the resources of Australia could be monetised and used for the benefit of all citizens. Under such a
Credit System, the individual would be established in his personal sovereignty and freedom, and cooperation
would replace compulsion as a means of securing participation in enterprises and projects. This
does not mean that debt will not exist. It is simply stating that the issue of new credit (money) will not
come into existence as a debt as occurs under our current system. Several aspects of national accounting
have not been treated because of lack of space, but anyone who has grasped the principles enunciated
above, will be able to apply them to any aspect of the subject.
Correction of Accounting System
There would be few informed people who would seriously question the fact that there is and has been for
some considerable time, serious defects in the financial system. This fact can be evidenced through the
unpurchaseable surplus production (quite separate from the notion of built in obsolescence), poverty
expressed in lack of purchasing power accompanied by economic need, the “problem” of unemployment
with its corollary of unempayment, the number of people in receipt of government benefits, the growing
disparity between the haves and the have-nots, cut-throat competition, increasing personal, government and
national debt, mounting pressures for countries to open their markets to increased competitive exports, and
the immoral utilisation of cheap labour to support these endeavours.
The increasing speculative ventures in the financial markets around the world in buying and selling
currencies none of which add to the productive process for the benefit of the people in general. Whilst all
economic production is measured in terms of finance, science is reducing the human energy requirement in
the productive process. This is accompanied by a system that continues to maintain the importance of a
scarcity of finance, which is or should be simply a claim upon the articles that are produced and potentially
could be produced in abundance.
Economic democracy as a reflection of economic security can never be achieved until the defect in the
financial system, which virtually controls the economic system, is rectified. The observation of the facts
when presented in terms that can be readily tested can elicit only one answer to the question--who is
benefitting? Take one example of the way in which unemployment is regarded. Now, we are talking about
unemployment and not money or anything else. In a physical sense, whether it is human, mechanical,
electrical, solar energy, the word “employ” means, “to use something, or a person, to be occupied, or to use
one’s power”. In other words it requires the use of energy, in some form. Economic production is simply
the application of energy to available raw materials. If a means is attained whereby energy can be saved
there is a physical saving and that in turn should be regarded as an asset, yet in conventional terms to be
unemployed is regarded as a liability.
“...Economic production is simply a conversion of one thing into another, and is primarily a matter of
energy. It seems highly probably that both energy and production are only limited by our knowledge of
how to apply them.”2
If a housewife obtains a washing machine, a vacuum cleaner, a dishwasher or some other appliance that can
relieve her of the necessity to expend energy on a particular chore, it allows her more time to do those
things that she would prefer to do rather than things she is obliged to do. The same analogy can be applied
to industry in the use of increased technology and the use of human energy in the form of labour or
“Employment”. Why then is this not regarded as an asset?
This could be expanded to an article in itself, but any accountant would recognise that an industry that
saved energy, no matter what form, would save money because money is the measure used to calculate the
cost of the use of energy. The reduction of human energy employed in an undertaken must be translated
into increased profits (all other things being equal) and this is reflected in an increase in the financial
position on the Balance Sheet. The Balance Sheet would then reflect this as an increase in Assets or a
reduction in Liabilities depending upon whether the undertaking operated on a credit bank balance or an
The answer to the question of why people do not have economic democracy lies in the acceptance or
rejection of an outdated philosophy, against the physical facts contained in a pursued policy. On the one
hand we are offered an increase in an asset for the benefit of people in society, and on the other a denial of
the benefits that should ensue to the people in their association. The very policy that results from the defect
in the financial system that affects the distribution of the results of observable phenomena in the form of
associations, by denying those benefits, is a matter of control.
1. An Introduction to Social Credit, Dr. Bryan W. Monahan, p. 86.
2. Social Credit Principles, C.H. Douglas, An address delivered at Swanwick, November, 1924.
This document was prepared by:
Victor Bridger
Social Credit School of Studies




(1) Obtain from existing sources, such as company balance-sheets, land registration offices, and insurance companies, such information necessary to place a money valuation upon the whole of the capital assets of Scotland, such as land, roads, bridges, railways, canals, buildings, drainage and water schemes, minerals, semi-manufactured materials. No distinction between public and private property. Replacement values to be used where the property is in use.

Add to this the sum representing the present commercial capitalised value of the population. Such a figure exists and varies with the actuarial expectation of life and the plant capacity of the country, and is something like £10,000 for a citizen of the United States at the age of twenty-five. From the grand total thus obtained a figure representing the price value of the Scottish capital account could be obtained. Financial credit to any equivalent can be created by any agency such as a Scottish Treasury empowered by the Scottish people.

(2) As from the initiation of this scheme, the holding of any stock, share, or bond by a holding company or trustee will not be recognised. It is the intention that no shareholding in any industrial undertaking shall be other than in the form of equity shares of no par value, i.e. preference or common shares or stock. Bonded indebtedness will be recognised for purposes of compensation where held by individuals, upon a proper investigation, but where held by corporations will be subject to such terms of redemption as may seem desirable.

No transfer of real estate directly between either persons or business undertakings will be recognised. Persons or business undertakings desiring to relinquish the control of real immovable estate will do so to the Government, which will take any necessary steps to re-allot it to suitable applicants. No Government Department shall administer either directly or indirectly any business, whether agricultural, productive, or distributive, other than the administration of the financial and credit schemes, or receive payment for any services rendered to the public, other than in bulk.


(3) For the purpose of the initial stages an arbitrary figure, such as 1per cent of the capital sum ascertained by the methods outlined in clause (1), shall be taken, and a notice published that every man, woman, and child of Scottish birth and approved length of residence, with the exception mentioned in the paragraph that follows, is to be entitled to share equally in the dividend thus obtained, which might be expected to exceed three hundred pounds per annum per family. It will be clearly understood that no interference with existing ownerships, so called, is involved in such a proceeding. The dividend to be paid monthly by a draft on the Scottish Government credit, through the Post Office and not through the banks.

Any administrative change in the organisation of the Post Office should specifically exclude transfer of the money and postal order department and the savings bank. No payments of the national dividend will be made except to individuals, and such payments will not be made where the net income of the individual for personal use, from other sources, is more than four times that receivable in respect of the national dividend. The national dividend will be tax-free in perpetuity, and will not be taken into consideration in making any returns for taxation purposes, should such be required. Except as herein specified this dividend will be inalienable.


(4) Simultaneously with the publication of the foregoing notice a figure to be published known as the discount rate, to replace the existing bank discount rate, a suitable value of this for initial purposes being 25 per cent. It is important that the figure should not be less than 25 per cent, and it might reasonably be higher.

(5) Simultaneously, an announcement to be published that any or all business undertakings will be accepted for registration under an assisted price scheme. The conditions of such registration will be that their accounts, as at present required under the Companies Acts, should contain an additional item showing the average profit on turnover, and that their prices shall, as far as practicable, be maintained at a figure to include such average profit, where this is agreed as equitable for the type of business concerned (the suitable profit being, of course, largely dependent on the velocity of turnover). Undertakings unable to show a profit after five years' operation to be struck off the register.


(6) In consideration of the foregoing, all registered businesses will be authorised to issue with sales to ultimate consumers an account on suitable paper for use as explained in the following clause.

(7) Payment for goods will be made in the ordinary way, either by cheque or currency. The purchaser will lodge his receipted account for goods bought with his bank in the same way that he now pays in cheques, and the discount percentage of the amount of such account will be recredited to the consumer's banking account. Unregistered firms will not be supplied with the necessary bill forms for treatment in this manner, with the result that their prices will be 25 per cent, at least, higher than those of registered firms. (It is obvious that the larger the discount rate can be made, the greater will be the handicap of the non-registered firms.)

The total of the sums credited by the banks to private depositors in respect of these discounts will be reimbursed to them by a Scottish Treasury credit. The capital account will be "depreciated" by such sums, and "appreciated" by all capital development. The existing banks will be empowered to charge an equitable sum for the services thus rendered.


(8) The hours of Government offices will be reduced to four hours per day. To meet the temporary congestion of work, additional staff will be employed, such staff, however, doing identical work with the existing staff in the form of a second shift, and sharing with the existing staff the chances of promotion irrespective of seniority. (The object of this is to discourage the well-known bureaucratic tendency to enhance the importance of existing staffs by employing additional numbers of persons ranking by virtue of seniority below the original officials, and, at the same time, to afford an opportunity of appointing a duplicate set of officials to check reaction without dislocation of existing routine.)

(9) Wage rates in all organised industries will be reduced by 25 per cent where such reduction does not involve a loss to the wage-earner exceeding 20 per cent of the sums received in the form of national dividend. The wage rates ruling in 1928 to be taken as the basis against which the reduction would be made.

Any trade union violating a wage agreement to render its membership liable to suspension of national dividend, and any employers' organisation committing a similar offence, to be liable to suspension of price assistance or wage reduction.


For a period of five years after the initiation of this scheme, failure on the part of any individual to accept employment in whatever trade, business, or vocation he was classified in the last census, under conditions recognised as suitable to that employment (unless exempted on a medical certificate), will render such individual liable to suspension of benefit in respect of the national dividend.

(10) Taxation of specific articles or specific forms of property to be abolished. Any taxation found to be necessary to take the form either of a flat non-graduated taxation of net income or a percentage ad valorem tax upon sales, or both forms of taxation together.


The price level of 1928 has been taken for the rough estimate of the items which, when added together, make up the Real Assets or Real Capital account of Scotland. The Financial Credit, which is equivalent to this, appears in a National Account as a contra-item. Money and Real assets are on opposite sides of the account (and should balance) not, as in a commercial account, on the same side of the account.