Henry Ford and Social Credit

Christopher M. Quigley

B.Sc., .M.I.I., M.A.

The Gap is Growing “As we have seen, the more automatic machinery replaces men, the wider becomes the gap between buying power and prices because salaries and wages are thus reduced, leaving other cost items proportionately increased. When we stop to realize that the gap is constantly widening as efficient machine-power rapidly replaces inefficient man-labor in doing the work of the world, it becomes evident that we are reaching the senseless absurdity of a maximum production and a minimum of consumption. Yet we wonder at the paradox of poverty in the midst of plenty !” “From Debt To Prosperity” Crate Larkin.

Ireland and the world lurches from financial crisis to financial crisis yet very few academics, reporters or commentators point out the fatal flaw in current orthodox economic theory which is the central force behind these crises. The flaw relates to the general LACK OF PURCHASING POWER in contemporary society. As was explained by Major Clifford Douglas in his theory of Social Credit this weakness in classical economic theory is not new and many scholars have explained the problem however, increasingly the solution is being conditioned out of people’s consciousness. The collapse of the international banking system, as a result of the banking crisis has brought this Achilles heel of Keynesian economics into sharp focus. The elite fear that the prospect of a “greater depression” will force change that will eliminate their position of control and privilege. Hence the current “spin” emanating from controlled media outlets. What is the main objective of Social Credit? In essence it seeks to fairly compensate citizens with real purchasing power and thus end the current "trans-national/robot out-sourcing" industrial policy of American and European business leaders. It seeks to replace capital investment (i.e. investment in robots et al) with human investment. Why? Because robots though they do the work have no money. They do not buy cars, raise families, and care for the well being of elderly parents. Robots do not use shampoo, eat food or watch football. They do not babysit grand-children or change diapers. They do not munch a candy bar or scoff a pizza. Therefore if robots end up doing all the work who has the money to consume the products they produce? Europeans must stop looking on their nations simply as mechanical economies and start to see them in simple human terms. Irish citizens must wake up and smell the conceptual corruption in contemporary European Union economic policy. Why is purchasing power so important? It is fundamental because without money no exchange can take place. In order to understand what I am talking about let us look at the historical example set by Henry Ford in 1920. He completely redefined "classical" economics through the policies undertaken by the Ford Motor Company.

Under "normal" economic theory it was assumed that a corporation could only maximise profits by ideally becoming a monopoly which meant increasing price and limiting supply. Ford did the exact opposite. He had a more holistic view of the role of the corporation in society. He understood the synergetic relationship between money and goods. He DOUBLED the wages of his workers, DECREASED the price of the Model T and in the process remade the Ford Motor Corporation and remade America. (This policy was not inflationary because he knew he could at least double production through increased efficiencies when he doubled wages. This is the essence of the enlightened policy of Social Credit for communities rather than of monopoly credit for social elites alone). The Ford Company boomed. How did this happen? It was axiomatic. He understood the importance of money and purchasing power in society. With "high" wages Ford's workers were able to make a good living and have excess funds to save or spend. Accordingly their financial anxiety ceased and staff turnover dropped by a multiple of five in one year. This dramatically decreased management expense and increased productivity. Workers finally had peace of mind. With the increased disposable income in the Detroit area the general economy boomed. All classes of economic sectors expanded. As a result more workers, new business owners, company managers, insurance brokers, real estate brokers, bankers, salesmen, craftsmen, delivery men, builders, farmers and retailers all could afford Ford cars. Demand for the model T exploded through the increased buying power WHICH HE HAD CREATED THROUGH MONEY DISTRIBUTION. Like Major Clifford Douglas Ford understood economics and he understood the issue of PURCHASING POWER. FOR HIM PURCHASING POWER WAS NOT CREDIT BUT CASH. HE REASLIZED THAT WITHOUT THE MONEY TO PURCHASE HIS CARS POTENTIAL DEMAND WAS IRRELEVANT. THEREFORE HE INITIALLY REDISTRIBUTED DIVIDENDS FROM THE OWNERS TO THE WORKERS. THIS INCREASED GENERAL BUSINESS ACTIVITY AND TURNOVER EXPONENTIALLY. THESE INCREASED SALE BOOSTED PROFITS TO SUCH A DEGREE THAT THE SAME OWNERS EVENTUALLY RECEIVED INCREASED SUSTAINABLE DIVIDENDS. EVERYBODY WON. THIS BRILLIANT POLICY MADE THE COMPANY. It built up the economy of Detroit and it helped define America as a country where a factory worker was respected and well paid, not exploited, as had been the case throughout the English industrial revolution. The "American Dream" was Ford’s vision made manifest. It was a dream brought to fruition not through political fantasy but through the hard laws of economics, accounting, finance, production, distribution and marketing. As Ford said: “Power and machinery, money and goods, are useful only as they set us free to live. They are but means to an end. For instance, I do not consider the machines which bear my name simply as machines. If that was all there was to it I would do something else. I take them as concrete evidence of the working out of a theory of business, which I hope is something more than a theory of business—a theory that looks toward making this world a better place in which to live. The fact that the commercial success of the Ford Motor Company has been most unusual is important only because it serves to demonstrate, in a way which no one can fail to understand, that the theory to date is right. Considered solely in this light I can criticize the prevailing system of industry and the organization of money and society from the standpoint of one who has not been beaten by them. As things are now organized, I could, were I thinking only selfishly, ask for no change. If I merely want money the

present system is all right; it gives money in plenty to me. But I am thinking of service. The present system does not permit of the best service because it encourages every kind of waste—it keeps many men from getting the full return from service. And it is going nowhere. It is all a matter of better planning and adjustment.”

Henry Ford "My Life and Work"

Compare for one moment the circumstances in Detroit in the 1920s and mainstream Ireland and Europe today. The exact opposite is occurring. Meaningful wage levels are being destroyed. Real buying power is contracting due to systematic out-sourcing of real jobs and the misguided use of capital investment to destroy human potential. No jobs or low jobs means there is no money circulating to consume what is produced. The system contracts and cannot hold. The cycle, once started, feeds in on itself resulting in deeper and deeper deflation. Society slowly but surely hollows out from the inside. All the while, as is so apparent in Ireland, folk do not fully understand the total implications of what is happening due to "dumbed down" educational policies. To replace falling wage (money) levels the banking elites have tried to substitute credit. This credit switch from previously hard earned cash is an unstable arrangement because debt is very expensive and is non-liquidating other than through savings, bankruptcy, lotto wins or death. This is no way to run nations as it is totally unsustainable and unstable. It creates constant anxiety and eventual destitution and depression among citizens. It is particularly ineffective now that most banks are actually insolvent and are no longer in the position even to provide credit in the form of business loans, credit card facilities, car loans, overdrafts or home equity draw-downs. Thus in essence the “solution” to "the problem" in Ireland and Europe as a whole for that matter, is enlightened redistribution of purchasing power. Currently too much power over such redistribution is controlled by banks and associate entities. This money centralization is stagnating the system and the fact that this arrangement failed to regulate itself, and caused a credit collapse, has accentuated the speed of failure by multiples. It is time to change. Society must move on. The intellectual framework to effect this change as demonstrated by Ford, and Douglas has been known for over 80 years. Its successful implementation today would bring a renaissance to general commercial and societal development. There is no more important function for academia today than to disseminate this vital economic truth. To the elites, who must know the truth, this monopoly credit based boom-bust phenomenon is obviously allowed to continue because they have control. Their ownership motivates them to disregard consequences provided they are protected through privilege. However, I believe that the truth is too odious to ignore anymore. The end result of the current

regressive financial policies is the on-going development of a modality which I call: “Techno-

Feudalism”. This “Techno-Feudalism” is bringing with it vast disparities in wealth, ownership and

opportunity. It is leading to the eventual obliteration of the middle classes in developed nations. It is

allowing global corporations engineer the slow Fabian demise of effective democratic institutions as

increasingly corporate boardrooms rather than governments are defining people’s destinies.

Untamed it will break traditional social cohesion and lead to mass unrest, depression and despair. Is

this not exactly what we are witnessing in Portugal, Spain, Ireland and Greece as we speak? But the

future does not have to be so bleak. The monetary solution of increasing actual purchasing power for

average Americans and Europeans is so obvious it is “madness” not to sort it out. The truth must be

allowed to break free.

“The organism has a right in natural law to draw sustenance from its environment. We cannot with impunity abstract humanity from the natural world. …. Unfortunately, the present financial system creates an ever greater deficiency of effective and unattached purchasing power giving the illusion, through a distorted financial lens, of actual or physical scarcity in the midst of actual and potential abundance…..

Wallace Klinck, Social Credit Author

In the 1930s the engineer and self-taught economist Major Clifford Douglas claimed that society was intellectually hypnotized and that only a drastic de-hypnotization and re-education could save it. Douglas believed in people. He felt that individuals had far more goodness and potential than society was allowing them for. He reckoned that if common folk were given enough freedom and leadership they could move society and civilization into a new age. An age of extended liberty, discovery, art and culture. The alternative he felt would be booms, busts, over-consumption, under-consumption, excesses, depressions and wars. Eighty years later this is exactly what the world has experienced and is continuing to experience. However, the period between each stage is narrowing and the level of debt, instability and inequality are exploding beyond comprehension. To Social Credit followers of Douglas this situation is not happening by accident; it is happening inevitably because the conceptual flaws of the monopoly of credit and the fabricated scarcity of money was allowed to be perpetuated by a privileged banking class. The enlightened monetary and economic policies of Henry Ford and Clifford Douglas are heartfelt attempts to bring about conceptual revolution to historical economic orthodoxy. It is incumbent on all interested parties who desire to solve this problem of problems to become educated and aware of the available solutions and to actively participate. Not to do so will allow the current “greater depression” to expand and gain a greater grip on economic activity. History shows that such a development will eventually lead to escalating strife as sure as night follows day. For those of us who wish to reject regression in favour of progression we must strive to free contemporary economic policy from its death waltz with outmoded Keynesian monetarism. We must help economic orthodoxy move on, sanity demands it. The knowledge is there in Social Credit policy let us utilise it. Note: Fabianism: the slow persistent application of socialist policy which achieves its objective so

gradually that most people do not realise the radical change in motion. The word is named after the

Roman general Quintus Fabius Maximus Verrucosus Cunctator (ca. 280 BC – 203 BC) a Roman

politician and general, who wore down Hannibal by many years of attrition rather that through

immediate direct open combat.

References: "Social Credit"

Major Clifford Hugh Douglas Mondo Politico.Com "My Life and Work" Henry Ford In Collaboration with Samuel Crowther “From Debt to Prosperity” Crate Larkin. (C) 8th. November 2012 Christopher M. Quigley