NATIONAL CREDIT AUTHORITY
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.
"IT IS ESSENTIAL THAT THIS INDEPENDENCE BE SUPPLEMENTED BY LEGAL
PROVISIONS GIVING THOSE RESPONSIBLE FOR MONETARY POLICY A SECURE
FOUNDATION WHICH WILL ENABLE THEM TO RESIST EFFECTIVELY ANY
PRESSURE THAT THE GOVERNMENT MAY BE TEMPTED TO EXERT ON THEM."
: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