C.H. Douglas

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Major Clifford Hugh "C. H." Douglas MIMechE, MIEE (20 January 1879 -), is a British engineer and pioneer of the Social Credit economic reform movement.

Education and engineering career

C. H. Douglas was born in either Edgeley or Manchester, the son of Hugh Douglas and Louisa Hordern. Few details are known about his early life and training; he probably served an engineering apprenticeship before building an engineering career that brought him to locations throughout the British Empire in the employ of electric companies, railroads, and other institutions. He taught at Stockport Grammar School. After a period in industry he went to Cambridge University at the age of 31 but stayed only four terms and left without graduating. He worked for the Westinghouse Electric Corporation of America and claimed to have been the Reconstruction Engineer for the British Westinghouse Company in India (the company has no record of him ever working there, deputy Chief Engineer of the Buenos Aires and Pacific Railway Company, Railway Engineer of the London Post Office (Tube) Railway and Assistant Superintendent of the Royal Aircraft Factory Farnborough during World War I, with a temporary commission as captain in the Royal Flying Corps.

Social Credit

It was while he was reorganising the work of the RAE during World War I that Douglas noticed that the weekly total costs of goods produced was greater than the sums paid out to workers for wages, salaries and dividends. This seemed to contradict the theory put forth by classic Ricardian economics, that all costs are distributed simultaneously as purchasing power.

Troubled by the seeming disconnect between the way money flowed and the objectives of industry ("delivery of goods and services", in his view), Douglas set out to apply engineering methods to the economic system.

Douglas collected data from over a hundred large British businesses and found that in every case, except that of companies heading for bankruptcy, the sums paid out in salaries, wages and dividends were always less than the total costs of goods and services produced each week: the workers were not paid enough to buy back what they had made. He published his observations and conclusions in an article in the English Review where he suggested: "That we are living under a system of accountancy which renders the delivery of the nation's goods and services to itself a technical impossibility." Between 1916 and 1920, he developed his economic ideas, publishing two books in 1920, Economic Democracy and Credit-Power and Democracy, followed in 1924 by Social Credit.

Freeing workers from this system by bringing purchasing power in line with production became the basis of Douglas's reform ideas that became known as Social Credit. There were two main elements to Douglas's reform program: a National Dividend to distribute money (debt free credit) equally to all citizens, over and above their earnings, to help bridge the gap between purchasing power and prices; also a price adjustment mechanism, called the Just Price, which would forestall any possibility of inflation. The Just Price would effectively reduce retail prices by a percentage that reflected the physical efficiency of the production system. Douglas observed that the cost of production is consumption; meaning the exact physical cost of production is the total resources consumed in the production process. As the physical efficiency of production increases the Just Price mechanism will reduce the price of products for the consumer. The consumers will be able to purchase as much of what the producers produce that they want and automatically control what continues to be produced by their consumption of it. Individual freedom, primary economic freedom, was the central goal of Douglas's reform.

At the end of the Weltkrieg, Douglas retired from engineering to promote his reform ideas full-time, which he would do for the rest of his life. His ideas inspired the Canadian social credit movement (which obtained control of Alberta's provincial government in 1935), and in the Australasian Federation the Social Credit Political League has been founded. Douglas has also lectured on Social Credit in Canada, Japan, New Zealand and Norway.

In 1923 he appeared as a witness before the Canadian Banking Inquiry, and in 1930 before the Macmillan committee, which was a Canadian committee tasked with considering the reasons for the New York Stock Market Crash of 1929. In 1929 he made a lecture tour of Japan, where his ideas were enthusiastically received by industry and government. His 1933 edition of Social Credit made a reference to the Protocols of the Elders of Zion, which, while noting its dubious authenticity, wrote that what "is interesting about it, is the fidelity with which the methods by which such enslavement might be brought about can be seen reflected in the facts of everyday experience."