Chapter XII
Creditalism Vs. Capitalism

The world has been cursed over 250 years by Creditalism parading under the banner of Capitalism.  The people of every nation who toil and produce every human want, the masses, have come to hate the term Capitalism, and justly so because credit has been parading as Capital.  And the users of the people's own credit have not only robbed them of the use of it in their own defence, but have created against the people a $250 billion debt during World War II.

Creditalism parading as Capitalism has won the hatred of the masses of the entire world because wherever it goes it robs the masses of the products of their toil, takes from them title to their lands, either ruthlessly kills them or forces them to toil for them as peons for peons' wages and builds palaces and skyscrapers — and call it the "great works of Capitalism."

The peoples of Europe take America's food and turn from us to Russia not because they love or want Communism, but because they hate our brand of Capitalism more and want it less.  The people, the producing masses of the United States, even the whole world are turning against Creditalism as we know it and feel it today.

There are two sources of Capital — that is, of money:

1.  The production of goods, which is itself an act of creation.  The amount saved becomes true capital which is stored or investment capital.  That is true private capital, and the: person who created it has a perfect social right to use it as he pleases.  It is honest capital.  It represents wealth which he has created.  It will always be limited to that portion man saves out of his production of goods for all of us; therefore it could never become dangerous.  A nation financed on earned capital would be a democratic nation because no individual or group could become strong enough to dominate or destroy individuals or other groups.  A person or group needing more capital than he or they had, would borrow earned (existing) money from others, and no new money would be created and added to existing volume to inflate and cheapen it.  This sort of economy truly would be sound, beneficent Capitalism.

2.  The creation of bank deposits by simply crediting the bank customer's account when "the bank buys from him any security" — his own note and mortgage, deed of trust, or government or corporation bonds, stocks or shares, or any other commercial paper.  The bank gives nothing of value.  The act is called a loan, but you can't lend nothing.  But the act creates by a "flick of a pen, out of thin air," bank deposits which are transferable from buyer to seller, hence it performs the primary and chief function of money, a medium of exchange.  Bankers call it bank credit, but that is untrue.  It's the people's credit, made attractive on the faith of the people's own Government.  It is Creditalism and not Capitalism.  It gives bankers absolute control over all production, all transportation, all communication, all education — all industry, all trade and commerce; and, in effect, title not only to the real wealth of the Nation, but title to its earning power.

Well, fellow citizen, you have read that frank sketch of the most sordid set of human creatures ever spawned by selfish greed.  You will find my simple, constitutional remedy equitable and sound.

There was just one zeal dominating me as I sketched the "Crime of Banking", and outlined the "Remedy", and that was America's greatest contribution to the tenets of organized government — "Equal Rights for All; Special Privileges for None."

I believe that the Declaration of Independence of 1776, and that the Constitution of the United States of 1787, are the greatest economic documents ever penned by men that they, sketched the "Crime of Special Privileges," and charted the course of "Equal Rights to All," so clearly, so succinctly, that no one can fail to understand them.  Smart men, among them were smart lawyers - men who knew the exact meaning of every word they used-wrote those immortal documents and their desire, which they consummated, was to write so simply that all minds could understand them.  They knew that any document which required a lawyer's interpretation was dangerous.

I believe that in spite of the fact that Congress has failed to obey all of the simple injunctions of the Constitution, and permitted selfish men of greed to wangle unconstitutional laws out of them, there is no other nation's government so worthy of its citizen's love and devotion.  With all of our official shortcomings and corporation abuses, none of it is due to our form of government, nor to its foundation, nor to its objectives.  We Americans love our form of government so much that we will suffer grave injustices in our laws, hoping that Congress will right them in the American orderly way.  I believe Congress will set the House of Money in order soon.

I believe that Congress will redress the grave wrong the Supreme Court committed when it declared corporations to be persons, and set the House of Corporation in order.

They are now awaiting a mandate from the people.  Let's briefly look at What Might Have Been, if Congress had obeyed the Constitution and coined or provided the money of the nation.

First.  There would be no huge corporations dominating industry, but there would be thousands of small industries scattered through out the nation giving the people a finer and a more personal service.

Second.  There would be few monster cities, if any; but there would be thousands of small cities hovering around widely dispersed small prosperous industries.

Third.  There would be fewer "fine" residences and country "estates", but there would be millions more pretty little cottages with children romping on ample lawns.

Fourth.  There would be fewer country clubs, big cars yachts and seaside resorts, but there would have been thousands more small cars and small family cabins down by lake and stream, where millions of families of workers could spend restful weekends.

Fifth.  The skyline would not soar in isolated blobs, but millions more one-two-and three-story buildings would fresco the horizons of millions of contented people who owned not only their homes and business houses, but their souls, too.

Finally there would not be a $250,000,000,000 national war debt hanging over us.

Now, let's see what would have happened if our plan had been in operation:

1. Congress would have frozen all prices, all wages, all salaries, all invoices, all deposits, and every human being, physically and mentally able to render any form of service, would have been automatically conscripted into service, each left at his task, or sent where he could best serve.  Each would be paid a living wage with food, lodging, other expenses, if sent from home, plus care of dependents.  All materials and supplies, would be requisitioned, and all sites for camps.

All deposit credits would become a revolving fund, subject to Government check for expenses.  The $100 billion plus on deposit would have been ample funds because it would have poured out in a steady stream as the Government wrote cheques for materials, supplies, labour and services, and rushed right back when the person took it to bank for cash or deposit.

All materials and supplies bought would be at the pre-war fixed prices.  All service charges, all wages, all salaries-all price structures would remain on pre-war bases.  All non-essential businesses and activities would be suspended. All private money lending would be suspended.  Every person would be employed and directed by the Government.  No profit.  No new private business.  No loafing.  No shirking.  No strikes.  No get-rich fellows.  Just one big family working and fighting, with but a single thought — to win the war, and — WIN IT FOR KEEPS — and win it quickly!

Remember: under my plan there would be no BANKERS, so the money situation would be simple.  Depositories would be kept busy shifting accounts back and forth between the people and the Government.  It would be just like a $10 cheque Brown writes White for corn.  White endorses cheque and hands it to Black for oats.  Black endorses it and hands it to Green for a shoat, Green endorses it and hands it to Redd for hens.  Redd endorses it and hands it to Smith in payment of debt he owes Smith.  Smith buys a Stetson from Goldstein, and he rushes down to the depository and deposits the cheque. The depository debits Brown's account $10 and credits Goldstein's account $10. Probably neither White, Black, Green nor Smith had a deposit account. Certainly it was Brown's deposit account giving value to the cheque, and there was only one $10 involved, but it paid for $50 worth of stuff and settled a $10 debt between Brown's writing the cheque and Goldstein's depositing it, it had done $60 worth of business — ends up $10 on deposits.  No one was injured least of all Brown, owner of the $10 deposits.  His cheque transferred the $10 deposits to White, and each re-transferred the deposits until Goldstein asked for final transfer from Brown to him.  Time element meant nothing.  A day or 365 days would have resulted in same endorsements, same stuff bought with final transfer of deposits.

That is exactly what the Government should have done, used the existing deposits over and over until the war ended.  Each would have been paid for his time and his goods.  There would have been a continuous flow of deposits from depository to person, from person to person, and from, person to depository, the Government acting exactly as the pump that sucks up the water out of the pool, forcing it through nozzles.  The water falls right back to be sucked up again, over and over.  The Brown $10 did as much business as, six cheques if each cheque had been redeposited by first recipients.

The Government having the control and the use of its own credit, there would have been no bonds engraved, and no new deposits created under total manpower conscription.  The Government would have operated all businesses — farms, factories, mines, forests, retailing, wholesaling, communication and transportation, so all cheques issued would ultimately return to the Government for redeposit.  There would not have been any bond sales, and stars would have had better jobs than osculating pot-bellied bankers at bonds sales.  Not only all able-bodied men and women, but property, all money and every business would have gone to war — sure, it would have been a total war, and we would not have had the rank abuse of rank that some would get more pay — private to general, janitor to superintendent would have been well fed and clothed, and paid a small stipend for fun and recreation.

Oh!  You wouldn't like that?  I didn't think you would.  Neither did those privates who slithered on bellies in mud to reach the foxhole only to be mangled by a bomb.  If a boy 18 may be compelled to face that, why should you escape?

Yep; that's right. There'd be no war, if every person had to serve without profit or hope of reward other than victory.  Cut out blatant flag-waving, battle-dodging, profit-stealing patriots, and you'll cut out war?

2. At the close of the war, the re-adjustment would have been an easy, a painless, and an inexpensive task.  All persons would have returned to their pre-war stations.  Everyone's business would have been restored to him as it was before the war — same invoice, same location, farm, forest or whatever the business was before the war: same stock, implements, tools or equivalent values of each.  Every pre-war employed person would return to his pre-war job and pre-war pay, picking up threads of life where he left them when the war took over.  No one would be any richer or poorer, unless he had saved some of his war pay.

Every depositor would have his pere-war account unfrozen and added to such deposits as he saved from his war pay.

A short while ago the vice-president of a Dallas bank said, "Another depression is ahead, and when it comes it will be a honey."  He must have felt that his dumb slaves would do nothing about it.  Remember what the President of the American Bankers Association said to his fellows assembled in Baltimore, in 1931:

"We the men assembled in this hall, we men who control the economic destiny of this nation, knew in 1927 this terrible depression was coming, and we did nothing about it."

And he could have quoted the American Bankers as having said, in a circular to all bankers, in 1891: "We authorize our loan agents in the Western States to loan funds on good real estate to fall due on September 1, 1894, and at no time thereafter.  And on and after that date we will not renew our loans under any consideration, but on September 1, 1894, We Will Demand Our Money.  We will foreclose and become Mortgagees in possession.  We can in this way take two-thirds of the farms west of the Mississippi, and thousands of them east of the great Mississippi as well, at our own price. . . . We may as well own three-fourths of the farms of the West and the East and the money of the Nation.  Then farmers will become Tenants as in England!"