An Alberta-based political movement inspired my interest in money, its purpose, how it works, and the economy
Called Social Credit, the movement’s party governed Alberta from 1935 to 1971.
Social Credit was elected in the midst of the Great Depression with promises of providing residents with a dividend called social credit from government.
The Social Credit victory got some help from the incumbent United Farmers of Alberta government, whose premier Brownlee was involved in a lengthy sensational trial for having coitus with a government secretary over three years. The trial was widely covered across Canada with full pages of testimony.
The idea behind Social Credit came from a British Army Major C.H. Douglas. Douglas believed in reviving the economy by giving money to people. He realized without money circulating people were unable to buy anything and business would stagnate.
A few European regions tried to print their own money and were able to better withstand the Depression.
Social Credit critics labelled the policy “funny money” — a term that grabbed my attention.
The argument against “funny money” was based on the limited supply of goods and services that an economy can produce. Just putting unearned money into the hands of people would create inflation as all that money chased a limited supply of goods and services in the economy.
The people of Alberta never bought the argument against “funny money” for two reasons. Both the first two Social Credit Party leaders were radio evangelists who equated opposition with the devil. And from 1949 on, the oil gusher in Leduc gave the province all the money it needed to spend.
Social Credit tried the dividend thing twice with issuance in the 1930s of property certificates and a $25 dividend to residents in the 1950s. Neither was well accepted.
While attending rural grade school, I borrowed Maj. Douglas’ book from the Medicine Hat Public Library, using my grandfather’s city address to get a library card.
The theories didn’t make sense to me. The book offered a primitive form of guaranteed income.
Years later, when our neighbour Bud Olson ran successfully for federal Social Credit and I had one university economics course under my belt, I argued with him.
Olson insisted that the Pearson Liberal government of the day was effectively using “Social Credit” policy by running big annual deficits. He was also concerned that interest payments on the debt had reached nine per cent of the federal budget.
This is the same Bud Olson who crossed the floor in 1967, won re-election in 1968 as a Liberal, became Liberal minister of agriculture and a senator.
Bud and Maj. Douglas must be laughing in their graves now.
Under the fear of the pandemic, governments around the world are finding money — via the printing press — to stave off economic collapse caused by quarantining and business shutdown.
In Canada, the announced spending and tax deferrals must be nearing $200 billion. By contrast the national debt was $645 billion at the end of 2019.
While it’s easier to owe yourself the money via the central Bank of Canada, the interest burden will starve needed future government expenditures.
The future tax burden will probably become heavier as we pay for the cure of our virus-infected economy.
The one-time money-to-the-people practice could become more regular with guaranteed incomes for all.
Boy, we do live in interesting times, “funny money” or not.
Ron Walter can be reached at ronjoy@sasktel.net
The views and opinions expressed in this article are those of the author, and do not necessarily reflect the position of this publication.
