“Once a nation parts with the control of its currency and credit, it matters not who makes the nation’s laws. Usury, once in control, will wreck any nation. Until the control of the issue of currency and credit is restored to government and recognized as its most conspicuous and sacred responsibility, all talk of the sovereignty of Parliament and of democracy is idle and futile.”
-Prime Minister William Lyon Mackenzie King, upon nationalizing the Bank of Canada in 1937
The Committee for the Republic of Canada’s mobilization to activate the Bank of Canada after a Glass-Steagall re-organization of the economy, must be informed by the American Hamiltonian banking experience, as our system has never fully functioned as a sovereign credit system. While still being used to provide federal and provincial loans for industrial and infrastructural development from its nationalization in 1937 until 1974, the Bank largely operated under an accounting system without being tied to a national mission. Canada’s two closest experiences with a Credit system were to be found from 1939-1945 via the system of Victory Bonds issued for the winning of World War 2, and again as the 1958 attempt by Conservative Prime Minister John Diefenbaker to create a conversion loan in order to re-tie maturing Victory bonds into newly issued “development bonds” tied to his “Northern Vision” policy.
While the Victory bond system was discontinued in favour of a monetarist/Keynesian system after the war, the bank was still instrumental in providing loans to the government which were used to construct such nation building programs which blossomed until the 1960s. The Diefenbaker “conversion loan” program was sabotaged by the British-run operation that led to Diefenbaker’s firing of the Bank of Canada’s Governor, James Coyne in 1960 under a national scandal that laid the seeds of Diefenbaker’s later downfall. By 1974, the Bank’s role in providing loans was given to the Big 6 Canadian Banks which has resulted in a debt bubble explosion from $28 billion to over $600 billion today.
In order for Canada to proceed into the 21st century, renewal of the Bank must necessarily occur under a new Hamiltonian charter such that large emissions of project-specific productive credit may occur. These emissions would necessarily far outpace article 18 of the Bank of Canada’s charter* which stipulate that Bank of Canada loans be contained to within 1/3 the fiscal year revenue for the Federal Government (or 1/4 for the provincial governments), and that repayments to the bank occur within six months. The physical economic demands faced by Canada and the world now far outpace the limits which those accounting rules impose upon our bank.
We present here a February 2013 document by American author Michael Kirsch entitled Draft Legislation to Restore the Original Bank of the United States. We reprint the full document to inspire nations around the world to commit themselves to the principles underlie a policy of productive public credit [see the Canadian Patriot #6 for the full dossier].
*Article 18 (j) make loans to the Government of Canada or the government of any province, but such loans outstanding at any one time shall not, in the case of the Government of Canada, exceed one third of the estimated revenue of the Government of Canada for its fiscal year, and shall not, in the case of a provincial government, exceed one-fourth of that government’s estimated revenue for its fiscal year, and such loans shall be repaid before the end of the first quarter after the end of the fiscal year of the government that has contracted the loan;