Our MONEY REFORM brings
DEMOCRACY and FREEDOM from DEBT SLAVERY
A Speech by Alistair McConnachie
Prosperity, September 2005
The following speech was delivered by Alistair
McConnachie at the American Monetary Institute's 2005
Monetary Reform Conference, at the Essex Inn, 800 South
Michigan Avenue, Chicago, on Thursday 29th September
2005, at 6pm. It was
published in the September 2005 issue of Prosperity and
can be read at
http://www.prosperityuk.com/articles_
* * * * * * *
Thank you. I have been asked to speak about the Bank of
England, and its place within the monetary system of the
UK. After that, I want to tell you about the monetary
reform which we in the United Kingdom are proposing.
Tomorrow we are going to be hearing about the US Federal
Reserve, from Mr William Hixson -- author of the two
wonderful books, Triumph of the Bankers and A Matter of
Interest, and one of the founders of COMER, the
Canadian-based Committee on Monetary and Economic Reform,
from whom we will also be hearing this evening.
Now, the Federal Reserve is differently constituted from
the Bank of England, but given the political will, both
institutions are able to be reformed to deliver the
results which we as Money Reformers are seeking.
"Given the political will" -- creating that
political will, is the real challenge for us.
THE BANK OF ENGLAND
The Bank of England is Britain's Central Bank. Just as
individuals and businesses keep accounts at commercial
banks, so commercial banks and government keep accounts
at the Central Bank -- in our case, the Bank of England.
The Bank of England began in 1694 when King William
needed money to fight a war against France. A company
promoter by the name of William Paterson came up with the
idea of a bank. It would raise £1.2 million and then
lend a million to the Crown, at a high rate of interest.
In return for the loan, it was incorporated by Royal
Charter as the "Bank of England" which became
the government's banker. Thus began the British national
debt.
It wasn't until 1946 -- 252 years after it was first
established -- that the Bank was nationalised and brought
more firmly under the control of the British government.
In practice this didn't change very much although it
meant that the State acquired all the shares, and that
Governors and Directors were to be chosen by the
Sovereign on the advice of the Prime Minister. Further,
the Chancellor of the Exchequer reserved powers to give
the Bank formal directions.
Richard Greaves has written a very good article, which I
commend to you, in the January 2005 issue of Prosperity,
"Shedding some Light on the Bank of England".
Copies are at the back of the hall, and I'm using his
research when I tell you
that:
Today, operating as it does as the bankers' bank, it is
to the commercial banks (ie the High Street banks) what
the commercial banks are to the public. Just as we may
deposit money with commercial banks, so commercial banks
in turn
keep deposits with the Bank of England. The amount of
cash that a commercial bank can buy up from the Bank of
England to meet its customers' cash withdrawals is
limited to the amount of deposits it has in its account
at the Bank of England and/or what it can borrow from the
Bank of England or from other banks. Commercial banks
borrow from the Bank of England in exactly the same way
that individuals and businesses borrow from commercial
banks.
However, it is much more significant to note that whilst
the Bank of England is now state-owned the fact is that
our money supply is once again almost entirely in private
hands, with 97% of it being in the form of interest
bearing loans of
one sort or another, created by private commercial banks.
Indeed this is now where the real power resides -- with
commercial banking.
The Bank of England is now essentially a regulatory body
that supports and oversees the existing system. It is
sometimes referred to as "the lender of last
resort" in so far as one of its functions as the
bankers' bank is to support any bank or financial
institution that gets into difficulties and suffers a run
on its liquid assets. In these circumstances, it is
not obliged to disclose details of any such measures, the
reason being so as to avoid a crisis in confidence --
confidence being something on which the current system is
very dependant.
However beyond that, it is no longer a major player in
the lending/money creation market. Its annual accounts
reveal that its loans and profits are only a fraction of
those of a major commercial bank such as Barclays, and it
only holds a very small amount of government stocks, so
it is no longer really lending to government either --
that function has largely passed to the merchant banks.
Most of its profits come from what is known as the
"issue department" -- the department of the
bank which is responsible for printing and distributing
bank notes and coins. These are purchased by the high
street banks to meet their customers' demands for cash
and the various banks have their accounts at the Bank of
England debited accordingly. Basically, the profits from
this operation belong to the state and are transferred to
the Treasury, thus being added to the public purse.
THE PROFITS FROM THE NOTE ISSUE GO TO THE PUBLIC PURSE
The Bank of England Annual Report 2005 states that for
the year 2004/2005, "the profits of the note issue
were £1,618 million (2003/2004 £1,234 million). The
change was the net effect of more notes in circulation on
average during the year and higher interest rates. These
profits are all payable to HM Treasury."
(p.34) www.bankofengland.co.uk/publications/
annualreport/2005report.pdf
So we see here that the Bank of England is quite open
about the fact that the profit from its note issue --
that is, the difference between what it earns by selling
the notes at face value to the commercial banks, minus
its cost of printing, minting and distributing them --
goes to the Treasury. That is, the profit goes right into
the public purse as an effective debt-free input -- this
benefit is traditionally termed "seigniorage".
Now imagine if everyone was using notes and coins instead
of electronic forms of money. The debt-free benefit to
the public purse would be immense! It would be in the
billions and billions of pounds, and taxes would fall
massively.
Indeed, in 1948, around half of all money in circulation
(46%) was notes and coins which were created debt-free by
the government, with the profits going directly to the
public purse.
However, as the demand for electronic, cheque book and
credit card money has risen, the demand for notes and
coins has fallen. This means that most money
circulating in society is now private bank debt-based
money in electronic and cheque book form -- around 97% of
money circulating.
As a result, the private banks are making vast profits
from this situation. And because the government has
an ever-declining source of seigniorage revenue, our
taxes go up to repay the money which the government has
to borrow from this private banking system! At the same
time, more and more people are swallowed up in
ever-rising levels of private debt.
Over the years, the Government has simply ignored what
has been happening to the money supply. It has ignored
the fall in the demand for notes and coins and its
subsequent loss of seigniorage. In other words, it has
shamefully abdicated its traditional responsibility to
create a supply of money, publicly, and debt-free, for
the people.
As Money Reformers, we are saying that in addition to
regulating the banking system, it is the responsibility
of government to maintain a basic stock of money in
circulation which is free from debt at its point of
creation. If society enjoyed the benefit of a 46%
debt-free money stock in 1948, then there is no reason
why we shouldn't continue to enjoy such a benefit today
-- although this doesn't necessarily have to be in the
form of notes and coins. It can be in the form of
electronic money, created debt-free for public purposes.
Otherwise, we will continue with the situation today
where the private banking system is acting as the
national money supply mechanism and levels of debt will
continue to go through the roof, along with bank profits,
and our taxes!
FOCUSING OUR MESSAGE
So what do we propose to do about all this?
If we want to take an idea into the mainstream, we need
to concentrate on one of the core issues, and we need to
come up with a practical policy to apply it, which is
politically workable . in the circumstances of the
moment. Focusing in this way is a core strategy of the
American Monetary Institute. If we don't have focus, then
the message won't take off and fly. So, while I am not
going to speak about the specific reforms suggested by
the American Monetary Institute, I want to tell you about
what we in the UK are proposing.
THE POLICY WHICH WE PROMOTE IS .
what we call The Prosperity Proposal: Publicly-created
Debt-free Money. Slogan: "Money for the People, and
by the People: The Democratic Imperative".
SO, WHAT IS PUBLICLY-CREATED DEBT-FREE MONEY?
It is money created by the government of the day,
debt-free. That is, debt-free! Not
"interest-free". Not "low-interest".
But debt-free -- money which does not have to be paid
back.
Money Reformers say the government has the power, indeed
the duty and the responsibility, to create money
debt-free, instead of running to the private banking
system for it. We have seen that it already does this via
the note issue.
It needs to extend that principle to other forms of
money, such as electronic-based money.
We call this money, "publicly-created money"
since it is created on behalf of the people of the nation
by their elected government. It belongs to the people of
the nation, and it works for the benefit of the people of
the nation. It is not intended to benefit the banking
system or any private interests -- as so much government
borrowing does today.
INSTITUTE A PUBLIC MONEY DEPARTMENT AT THE B of E
Practically speaking, our innovation proposes an
extension to the Bank of England -- which we could call
the Public Money Department -- which would be chartered
to create debt-free money for the exclusive purpose of
financing investment in Public Fixed Assets -- that is,
in things like maintaining the
schools and hospitals. This "publicly-created
money" would be a debt-free input of money to the
Treasury, just like the production and sale of the notes
and coins represents a debt-free input to the Treasury --
of, as we have seen, somewhere around £1.6 billion last
year.
The means is innovative, but the principle of debt-free
seigniorage enjoyed by the public purse, is long
established.
As we have seen, it has simply been eroded by the
evolution of the private banking system whose
bank-created money has come to exist primarily in
non-cash form. That is, in electronic form, transmitted
by information technology. Similarly, our innovative
"publicly-created money" can be created as
non-cash money. It does not have to be in the form of
notes and coins.
People should not have to suffer in an increasingly
usurious and debt-soaked society just because the demand
for notes and coins has fallen. It is the responsibility
of the government to maintain the debt-free money stock
for the benefit of the people.
No other innovation could benefit so many and harm none.
The basic research is done and recorded. What remains is
to generate credibility and overcome the inertia within
government and the civil service establishment.
WHY WE CALL IT "PUBLICLY-CREATED MONEY"
We don't call it "government-created" or
"state-created money" because some people have
an aversion to the words "government" and
"state". Such aversions can lead to bogus
objections on the basis of a misunderstanding of words
alone.
"Oh, you can't let the government create
money", such people will say in a knee-jerk manner.
SOME OBJECTIONS WE HAVE FACED
Indeed, one of the main objections which we have
encountered and which is found across the political
spectrum is that we should not be giving this power to
the government because the government, it is claimed,
"cannot be trusted".
We would answer this in several ways. We answer it
Technically, and we answer it Philosophically.
A technical answer would be that we could ensure that the
amount of publicly-created money was limited to a certain
amount or percentage each year, which would be
objectively measured in some way. For example, it could
be the amount necessary to pay off the interest on the
national debt, or it could be an amount equivalent to the
difference between the rise in the overall money supply
from one year to the next -- as was suggested by Michael
Rowbotham in his book, The Grip of Death.
The point here being that there would be an objective
measure. With this specific amount there could be strict
limitations imposed upon its allocation. Perhaps only to
be spent on Fixed Public Assets such as schools,
hospitals, and roads, or public sector projects decided
by the elected Parliament or Congress.
Of course, these spending choices will create
controversy, but such political debate is at the heart of
our democratic system.
A MODEST PROPOSAL -- DEMOCRATIC CONTROL
Philosophically though, we would answer the question by
saying that at the heart of our Reform is a modest
proposal -- democratic control! Money for the People and
by the People! Money Reformers, highlight the fundamental
monopoly power of money creation enjoyed by the few to
the detriment
of the many. We highlight the fundamental question of who
has the power to create the money in the first place. We
say, our money supply is a public resource, which should
not be exploited for private profit. The creation of
money should be a public service, under public control
for the public good.
We point to the fact that many of the economic and social
ills which beset society and the world today are due to
the power to create money being concentrated in the hands
of a tiny minority, rather than democratically
distributed in the hands of the People. So,
"If", as James Gibb Stuart has written,
"we can break the Monopoly of Credit -- the control
over the 97%, and rising, of our money supply, presently
created by the banking system -- then we have established
the right of government to create more, on behalf of the
people." (Prosperity, June 04 -- also May 02, June
03 and Jan 04)
MONEY REFORMERS ARE QUESTING FOR REAL DEMOCRACY
Now some others will say, "Well, that is all very
well and good but best not talk about that until we have
the democratic changes in place which will allow us to
implement these reforms safely."
However, life doesn't work that way. You don't start
doing something until every other little thing around you
is perfect. That would be neurotic. Rather, you begin as
soon as you can and you engage with the reality that is
around you, which will always be less than perfect! So,
let us seek Money Reform at the same time as we seek
Democratic Reform.
Let us not wait for one before we promote the other.
Let us be clear to locate our programme for reform -- and
to locate our opposition to the present monopoly of the
banking system -- within a wider struggle for democracy
and for social justice, for Americans, for Canadians, for
Australians, for British people, and for all the people
of the world.
In closing, let me wish the greatest success to the
American Monetary Institute and to the valuable and
inspirational work which Stephen Zarlenga and his
colleagues are doing here. We have such a powerful truth
on our side. Let us tell it widely. We have such a
powerful light on our side. Let us shine it brightly upon
the darkness of the debt-ridden international financial
system which enslaves so many.
And by so doing let us, and the American Monetary
Institute, bring freedom from debt slavery to America.and
to the world.
--- This email has been sent to you by Alistair
McConnachie, Editor and Publisher of 4-page monthly
journal PROSPERITY: Freedom from Debt Slavery, which
is dedicated to promoting the policy of publicly-created,
debt-free money. A
PROSPERITY at 268 Bath Street, Glasgow, G2 4JR;
Tel: 0141 332 2214; Fax: 0141 353 6900.
admcc@admcc.freeserve.co.uk
http://www.ProsperityUK.com
from P.Myers
NEWS March 11th
2004
The Corporation as Psychopath
A new film and book, currently only available in Canada,
are taking the country by storm.
The book is titled: The Corporation: The Pathological
Pursuit of Profit and Power. It is by Joel Bakan (Free
Press, 2004). The movie is called: The Corporation. It is
by Mark Achbar, Jennifer Abbott, and Joel Bakan.
Experienced US corporate reporters Russell Mokhiber and
Robert Weissman have this to say about them:
"We've seen an advance copy of the movie. We're read
an advance copy of the book. And here's our review: Scrap
the civics curricula in your schools, if they exist.
Cancel your cable TV subscriptions. Call your friends,
your enemies and your family. Get your hands on a copy of
this movie and a copy of this book.
Read the book. Discuss it. Dissect it. Rip it apart.
Watch the movie. Show it to your children. Show it to
your right-wing relatives. Show it to everyone. Organize
a party around it. Then organize another.
The filmmakers juxtapose well-shot interviews of
defenders and critics with the reality on the ground --
Charles Kernaghan in Central America showing how, for
example, big apparel manufacturers pay workers pennies
for products that sell for hundreds of dollars in the
United States - with defenders of the regime - Milton
Friedman looking frumpy as he says with as straight a
face as he can -- the only moral imperative for a
corporate executive is to make as much money for the
corporate owners as he or she can.
Others agree with Friedman. Management guru Peter Drucker
tells Bakan:
"If you find an executive who wants to take on
social responsibilities, fire him. Fast." And
William Niskanen, chair of the libertarian Cato
Institute, says that he would not invest in a company
that pioneered in corporate responsibility.
Of course, state corporation laws actually impose a legal
duty on corporate executives to make money for
shareholders. Engage in social responsibility -- pay more
money to workers, stop legal pollution, lower the price
to customers -- and you'll likely be sued by your
shareholders. Robert Monks, the investment manager, puts
it this way:
"The corporation is an externalizing machine, in the
same way that a shark is a killing machine (shark seeking
young woman swimming on the screen). There isn't any
question of malevolence or of will. The enterprise has
within it, and the shark has within it, those
characteristics that enable it to do that for which it
was designed."
Business insiders like Monks and Ray Anderson, CEO of
Interface Corporation, the world's largest commercial
carpet manufacturer, lend needed balance to a movie that
otherwise would have been dominated by outside critics
like Chomsky, Moore, Grossman and Rifkin. Anderson calls
the corporation a "present day instrument of
destruction" because of its compulsion to
"externalize any cost that an unwary or uncaring
public will allow it externalize."
"The notion that we can take and take and take and
take, waste and waste, without consequences, is driving
the biosphere to destruction,"
Anderson says, as pictures of biological and chemical
wastes pouring into the atmosphere roll across the
screen.
Like Republican Kevin Phillips is doing as he
criss-crosses the nation, pummeling Bush from the right,
Anderson and Monks are opening a new front against
corporate power from inside the belly of the beast. They
are stars of this movie and book.
The movie and the book drive home one fundamental point
-- the corporation is a psychopath.
Psychologist Dr. Robert Hare runs down a checklist of
psychopathic traits and there is a close match.
The corporation is irresponsible because in an attempt to
satisfy the corporate goal, everybody else is put at
risk.
Corporations try to manipulate everything, including
public opinion.
Corporations are grandiose, always insisting that
"we're number one, we're the best."
Corporations refuse to accept responsibility for their
own actions and are unable to feel remorse.
And the key to reversing the control of this psychopathic
institution is to understand the nature of the beast.
No better place to start than right here.
Read the book.
Watch the movie (www.thecorporation.tv).
Organize for resistance."
Corporate Watch can only agree...
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