OBSTACLES ARISE

King Country Chronicle, Volume XXX, Issue 4810, 18 February 1936, Page 3

OBSTACLES ARISE

ALBERTA'S SOCIAL CREDIT. MR. ABERHART'S PROBLEMS. (Christian Science Monitor.) Predicted obstacles are beginning to appear in Alberta's Social Credit path. With orthodox financiers and politicians abandoning the whole plan, former Social Creditors cautioning against any departure from original formulas, and a chorus of impatient voters shouting "We—want—dividends," Premier Aberhart is finding his effectiveness as an economic engineer severely tested. This abundance of would-be advisers has placed on Alberta's Social Credit Government an added burden. Not alone is Mr. Aberhart faced with the necessity of reconciling factions within. Thus the question arises whether Social Credit as set forth by its foremost engineer, Major C. H. Douglas, will ever reach the stage in Alberta where it may be said to have a fair and practical test.

Complications are multiplied by the fact that the present severity of Alberta's debt and unemployment problem excludes any present attempt to launch the Social Credit dividend; by the growing opposition, as adverse political and capitalistic interests become'better-organised and increasingly vocal; and by the fact that Mr. Aberhart's plan to bridge the crevasse, dividing the radically different systems represented by a conservative Liberal nation and an experimental Social Credit province, is scrutinised with some misgivings. But in the meantime Mr. Aberhart maintains a confident front and proceeds very much as he promised. First, he proposes to establish Alberta's credit along conventional lines . To this end he attends the inter-provincial conference at Ottawa. There he hopes to obtain a refunding of the 200,000,000 dollars provincial debt together with liabilities of certain Albertan cities, with a reduction of interest which would amount to an annual saving of 3,000,000 dollars. Once the pressing financial question is adjusted, Mr. Aberhart proposes to send for Major Douglas—the same Major Douglas" who came to Alberta at the instance of Aberhart opponents early in the last campaign—and enlist his services in an advisory capacity. Meanwhile, a fast-finding organisation is being set up, probably to be administered by the Department of Trade, and Industry, which will supervise registration and classification of the population, assets, liabilities, prices, and other data to supply facts necessary for a comprehensive engineering of a Social Credit Plan. Unquestionably many Social Credit sympathisers are pinning their hopes for the Alberta experiment on the intervention of Major Douglas. It is no secret that Mr. Aberhart's plan for setting'up the system in a province which has no special constitutional authority for control of currency, trade or commerce, is looked on askance by many of Major Douglas' converts. As set forth in the Social Credit Manual, written by Mr. Aberhart, and further elucidated in speeches and radio talks, the Alberta application of the theory goes something like this:—

The plan consists of three factors: First, basic dividends are to be given to every citizen in the form of credit sufficient to care for the necessities of existence; second, an automatic price control system will be introduced to fix a "just price" at which goods and services will be available; and third, provision will be made for a continuous flow of credit.

Enlarging on these factors, it is explained that so far as the "basic dividends" are concerned, the picture is simplicity itself. View the province as a great stock company in which the citizen holds shares, and with all the resources of the province backing its credit. Now let each and every qualified shareholder be given a dividend in the shape of credit certificates which he must spend within a certain period. To prevent a simultaneous rise in prices which would offset the advantage of the dividend, let "a price control" feature be introduced. Periodically let a commission determine a fair and just price for all goods and services within the province. To see that consumption balances and controls production, it is also proposed to determine a compensating price.

This compensating price would represent the difference between the market price and the just price at which dealers sell their goods, and this compensating price would be returned to dealers in much the same way that basic dividends are issued and recovered. This would give the producer, importer or distributor a fair commission on turnover while preventing exploitation of consumer purchasing power. Finally comes the most controversial phase of the Alberta plan; that is, the provision for continuous circulation of credit. Now credit,

as most businessmen agree, is the fluid of industry. While it remains active industry has few slumps. Therefore nothing must be allowed to interfere with it. To this end all basic dividend credits; salaries, wages, income from whatever source, must be expended within a year of their receipt. However, surplus credit may be used to purchase Government bonds maturing at a later date.

Credit, too, must not be confined to consumers. When producers and distributors need credit to facilitate the production or movement of needed goods within the province, the State proposes to issue credit without interest.

And where is the money to come from? Ah, there's a question that Mr. Aberhart probably never heard before—at least not more than half a million times! The Alberta Socreds reply that dividends will not be paid in money, but in the form of credit, much as the bank issues most of its loans under the present system.

The citizen is to be given a dividend book and a book of blank nonnegotiable certificates. When he wishes to purchase goods he merely makes out a "certificate" and presents it to the party with whom he is dealng. This non-negotiable paper must be deposited in the State Credit House Branch. It is proposed to issue no new money.

But, comes the next question, where is all this credit to come from? Mr. Aberhart answers that it will be charged against the natural resources of the province very much as Government bonds are now secured.

Ah, but will not such an issue rapidly build up a huge debt against Alberta? Not so, replies Mr. Aberhart, because a method of recovery through the cycle of credit will be immediately introduced. This is referred to as the "levy," - another word for taxation. An enormous spread exists between production costs and consumers' • price. It is proposed to reduce this spread while providing for fair turnover. Because of the stimulus to consumption which would follow the issuance of the Social Credit dividend, it is felt that producers and distributors will be able to carry on with a closer margin of profit. This would permit of a levy, somewhat after the nature of a processing tax, which would supply the -basic dividends. The amount required would depend upon the flow of goods and credit.

With a • circulation in Alberta of only once a month, it would be necessary to recover but 10,000,000 dollars to carry on the full issuance of 25 dollar dividends, it is contended. These dividends would constitute another medium of exchange paralleling the Canadian dollar. The question that stands forth with especial insistence in the present crucial period of Alberta's experiment is this: Can Mr. Aberhart legally handle credit in this fashion; can he fix the selling price of goods processed within the province; can he control the price of imported goods? He says he can do so. Since the dividends are to be paid out in credit, transferable by cheque on the State Credit House Bank, the issuance of such credit, he declares, is within the authority of the Provincial Government. As for fixing prices, he declares that the British North American Act gives the provinces such power. But, despite Mr. Aberhart's confidence in the legality of his plan, opponents will undoubtedly see that debatable points shall be Court tested. And suppose the Courts should find this provincial handling of credit and prices illegal? Suppose Mr. Aberhart's following thins out through a process of political and special interest absorption? Suppose any of a host of arguments which are used against a Social Credit should prove insurmountable? Suppose—and the odds are on the side of the supposers—the Aberhart Social Credit Plan should wilt under the heat of organised opposition? Well, Social Creditors have an answer for all that. . As a political organisation Social Credit might fail through provincial restrictions and political and financial manipulation. But as individuals seeking to free themselves from the old economic net, they insist that Social Credit opens more than one gate to security.

A pathway to one such gate has already been blazed in Alberta through the publication of a revised plan for a province-wide corporation to supply Social Credit dividends. This

plan was worked out and recommended by Herbert Bruce Brougham, of New Rork, a journalist, author, authority on the new economics and an accredited representative of Douglas Social Credit groups in the United States.

Indicative of the sort of proposals that may be expected should Aberhart Social Credit hit the rocks, Mr. Brougham's plan, which is assumed to have the .approval of Major Doug- \ las, includes the following features: For purposes of strictly business bookkeeping the transfer-credits machinery of the Godsborough Social Credit Bill, introduced in the United States House of Representatives on the day that Mr. Aberhart and his party were swept into the office in Alberta, would be utilised. < "The plan could be put into effect, Mr. Brougham states, by private enterprise signing up thousands of adult Social Credit consumers to • deal exclusively with producers, manufacturers, wholesalers and retailers who will 'contract to supply them with dividends derived from the creation of new trading credits based on the margin of unused capacity, and at" a discount on retail price. The plan is actually designed to act as a club on the Government. It would entail a house-to-house canvass for the signing of consumer contracts, contingent on 100,000 Social Credit signers being secured, together with purveying corporations sufficient to supply their normal wants. This would be sufficient to start the plan in Alberta under private auspices. There would be no compulsion or intimidation. Those who chose to stay outside' would merely forfeit possible benefits. Furthermore—and this feature seems of especial significance to nonAlbertans—the plan could be applied to any population area in America without political action or new laws. Hence Douglassans are declaring that upward of 150,000 adult Social Credit customers and their families in Alberta have no grounds for despair about implementing Social • Credit should the Government delay unduly or deliver itself of a plan doctored by financial interests to make it abortive.

This latter apprehension needs placating, for formal Social Creditors have voiced it ever since Mr. Aberhart called in R. J. Magor, of Montreal, a financial adviser of the conservative type, to assist in stabilising Alberta finances. They -question whether the new Premier is the sort of Daniel who can emerge from the lions' den unscathed. Not only in Alberta, but in groups of this continent and abroad, there is a general feeling that Mr. Aberhart, unquestionably sincere as he is, needs competent advisers.

Typical of the general feeling is the warning sounded in London by Maurice Colborne, one of the leaders of the movement in Great Britain, that immediately Social Credit showed signs of success the banking monopoly might be expected to intervene to suppress it. Mr. Colborne was no lone voice in the wilderness when he expressed concern lest Mr. Aberhart encounter legal obstacles to Social Credit similar to those raised against President Roosevelt's New Deal.

As for Mr. Aberhart, his confident and objective attitude is expressed in a recent utterance: "What we ask of you," he told a convention of Albertans, "is patience and co-opera-tion in helping us to establish that which we hope to establish. If we fail, we fail. If we win, the rewards will be everyone's." And thus Social Credit in Alberta to-day marks time, while forces representative of special interests on the one side and of engineered social security on the other, assemble the materials for another engagement on the modern economic battlefield.. Premature indeed were the assertions that Social Credit had won a marked victory when Alberta voted for a Social Credit Government. The victory remains to be won—or lost.

But the intervening period, while the Premier seeks to untangle the financial snare left by his predecessors, is serving the purpose of clarifying the issue of Social Credit and of bringing into the volunteer reserve ranks some competent lieutenants. Many believers believe, moreover, that even though Social Credit should fail,- the experiment will have been a success. For, they say, it is operating to warn vested interests that capitalism is threatened because of abuses in the old order that have brought suspicion on the whole system. Whether reform shall be voluntary or enforced remains largely within the power of individual thinkers to determine.