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Salient: Victoria University Students' Paper. Vol. 28, No. 11. 1965.

Early Social Credit — from its beginning to its first election

Early Social Credit
from its beginning to its first election

THIS ARTICLE, by Miss M. H. H. King, MA, tells some ol the early history of the Social Credit movement before its emergence as a political party.

Miss King has relied on her personal recollections and those of others associated with the early days of the movement, including Mr. J. N. Blaymires of Te Puke, Mr. Harold Fin/ay of Hawera, Mr. H. J. Angus of Tauranga, Mr. H. W . Chiles of Dunedin, and Mr. W. B. Owen ol Christchurch.

The period of New Zealand political history this article covers is not well known, and Salient leels that it will be of interest to all interested in New Zealand politics.

Dr. Raymor Johnston of the University of Melbourne has written "All human living, whether of the civilised or the primitive pattern, is based on assumptions. They are very powerful and they are seldom examined."

It is to the crisis In human history that we owe that examination of our basic assumptions which is necessary to progress.

With World War I came the first shock to our basic assumptions regarding that supremely important element in the social structure, money.

From August 4, 1914, it was generally supposed and proclaimed by economists and others, that the struggle could last only a few months, because "there would not be enough money."

On the contrary, as Lord Milner afterwards remarked, "As long as the things that were necessary were available, the counters for dealing with them would always be forthcoming."

New Knowledge

From that standpoint, reinforced by the revelations of Reginald McKenna and others, the journey has been slow but steady towards the present knowledge as to the nature and origin of money:

• The bulk of money today has no physical existence whatever, even as paper. (A. de V. Leigh, sometime secretary to London Chamber of Commerce).

• The money supply of the community consists of the notes and coin in actual circulation in the community, together with the total of trading bank deposits, including the deposits of the government and government departments with the Reserve Bank. (Reserve Bank of NZ).

• The total amount of money in the community varies only with the action of the banks, etc. (McKenna).

Financial difficulties were not considered during the war, but what about the aftermath? The nineteenth century had naively attributed the so-called trade-cycle to sunspots. It had meekly though not without protest, accepted the "hungry forties."

The twentieth century made strenuous inquiry, when after the armistice of 1918, prices fell disastrously, cargoes on their way to overseas markets became almost worthless, and to my own knowledge, sturdy NZ farmers wept when bales of wool and other produce of their labour went for a few shillings.

C. H. Douglas raised the voice of protest in Britain as early as 1920. He wrote:

Hardly had the last stretcher case reached a casualty clearing station in a grim and haunted silence, when a bleat of anguish rose from these sheltered shores—not from the battered wrecks in the hospitals, not from the sad-eyed women in black, but from Lord Inchcape and other bankers. We were a poor, poor nation, they said, no homes for heroes for us, At the most we must be contented with a few Nissen huts.

NZ Repercussions

The repercussions were felt in New Zealand as in other countries, but the contraction of credit on which the bankers had decided was not immediately operated in America, and an uneasy recovery was made up to 1928, despite the return of Britain to the gold standard in 1925; but in 1929 came restriction in America also with the Wall Street collapse of that year, and the beginning of the world slump.

R. G. Hawtrey held that the world's economic troubles were due to "mistakes of the banking system in the discharge of the vital function of the creation of credit."

Douglas on the other hand made it clear that there was in the price-cost system an inherent defect, persistently tending toward a failure of effective consumer demand, and that this was merely aggravated in its effects by bank contraction of credit, with the resultant check to that "economic growth" necessary to keep the crazy system afloat.

He declared: "The first step towards the solution of the problem is the recognition of the fact that what is called credit by the banker ... is definitely communal property."

Hence the basis of the Social Credit proposition that credit at its origin belongs to the nation and can be used by governments for the benefit of the nation as a whole.

Interest in NZ

This new economic gospel found ready acceptance in minds not clouded by fixed pre-conceptions and age-old assumptions, not to mention supposed personal interests.

Individuals here and there, urged by the disastrous conditions of a time when unemployment in New Zealand reached about 70,000, when the average yearly gross income of the Northland dairy-farmer was assessed at £150, when in my own experience girls came to school without breakfast because their fathers were out of work, began to "read, learn and inwardly digest" the new ideas and to communicate them to others.

Thus groups were formed in various centres for the study of Social Credit and its application.


The strongest such effort took place in Northland, where persons influential in the Auckland Farmers' Union brought the matter to the fore, so that monetary reform on Social Credit lines became the declared policy of the Union and of the Country Party which was its off-shoot.

Captain H. M. Rushworth, sometime president of the Union, and A. E. Robinson, its secretary, were foremost advocates,

Rushworth stood for Parliament under the auspices of the Country Party and represented the Bay of Islands electorate in the House for many years.

Mr. A. Sexton, an Auckland lawyer, represented Franklin for one period, and Dr. Smith of Rawene, one of those vigorous eccentrics who inevitably come to the top in new movements, became a sort of unofficial president of the movement throughout New Zealand.

Colonel S. J. E. Closey was appointed assistant secretary to the Auckland Farmers' Union and under its auspices conducted a campaign throughout the country for a "compensated price" for farm produce, a campaign which like the later one for "Real Democracy" sponsored by R. G. Young and others in the Waikato, served to bring home the conviction that only straight-out demand for reform along Social Credit lines and under that name, could ultimately succeed.


Social Credit in Wanganui is today traditionally associated with the name of Mr. R. O. C. Marks, originally a teacher at Wanganui Collegiate School, and still a member of the Dominion Council of the Political League, but its inception in that city is associated with Miss Sylvia Gilford, whom I remember affectionately as a teacher at Waitaki, and with Miss McCarthy, also of Dunedin, who was for years overseas correspondent for the Social Credit Association.

Miss Gifford's brother, Mr. W. Gifford, had much to do with the beginnings of things in Lower Hutt, where he also was a school teacher.


In Christ church, to come further south, we heard early of the activities of Messrs. Allardyce and Davey, apostles of Sociai Credit in the early thirties, and associated with them was Mr. J. E. Colechin, afterwards first dominion secretary tary of the Political League.


In Dunedin, my introduction to the movement came from attending a class formed under the auspices of the Theosophical Society by Mr. W. McEwan, son of the then librarian at the Municipal Library.

This class studied Hattersley's "This Age of Plenty," which led in due course to my reading of all Douglas's books, with the "New Age,' then the organ of the movement in Britain.

On inquiry I made contact with other students of the subject, in particular with a Mr. Habershon, accountant in a large drapery firm in the city, and a gentleman of most acute intellect.

He used to say: "You must never forget your two premises," referring to Douglas's reply to the British Labour Party's criticism of his and Orage's plan for the mining industry in that country.

He set out the parallel assumptions of Social Credit and of the present monetary system pointing out that to criticise the former on the premises of the latter was like blaming a game of football on the ground that it was not played according to the rules of cricket.

Cartoon by Ash Murray

page 9

[unclear: The] Thirties

I soon learned also that Social [unclear: credit] was a live issue in [unclear: Australia] and Canada as well as in [unclear: Britain], and it proved a more [unclear: gorous] organism in the [unclear: domi-ons] and commonwealth than [unclear: in] original home. There was much [unclear: interest] in the matter in [unclear: Dunedin] the early thirties, partly owing its novelty, but more to the [unclear: lamitous] conditions of the time.

There were actually food riots in [unclear: the] streets of the city, and a large [unclear: ocery] establishment had win-[unclear: ws] smashed by the rioters.

Orthodox economists, of course, [unclear: se] to attempt rebuttal of the [unclear: esis]—their fundamental [unclear: assumpsons] were in danger of strict [unclear: amination]. Debates were [unclear: held] Professor Fisher, Mr. Lloyd [unclear: oss], and no less a person than [unclear: local] Communist leader, Mr. [unclear: ark] Silverstone. It was all very [unclear: vigorating].

[unclear: Douglas] Comes

A milestone in the story is the sit of Major C. H. Douglas to [unclear: New] Zealand in 1934.

He came at the invitation of the [unclear: movement], presided over at that me by Dr. Smith, and was [unclear: welcomed] at a camp reunion at Ash-[unclear: urst], near Palmerston North. Sub-[unclear: quently] he lectured in the main [unclear: entres] and in Wellington made [unclear: intact] with the heads of them [unclear: overnment].

This contact led to the setting [unclear: p] of the 1934 Monetary [unclear: Commision] to which Douglas presented [unclear: requested] a plan for New Zealand "within the framework of the [unclear: sent] system"—a plan now forgotten.

[unclear: Taranaki]

A feature of the Ashhurst [unclear: condition] was the visit of Mr. C. S. [unclear: Sarclay] Smith, editor and [unclear: publisher] of "The New Era" in Sydney. [unclear: He] was invited by certain [unclear: enthiiasts] in Hawera—principally Mr. [unclear: Harold] Finlay—to address a [unclear: meet] in that town, a meeting which [unclear: was] attended by about 600 people [unclear: and] led to the formation of a very [unclear: active] and enthusiastic group, [unclear: rm] whose efforts the movement [unclear: spread] throughout Taranaki.

The most important result of [unclear: the] Douglas visit was the incorporation of the Social Credit Association of New Zealand with a [unclear: ermanent] office in Wellington, [unclear: and] a constitution designed mostly [unclear: by] Colonel Closey, which was [unclear: never] very rigidly adhered to.

Geoff Murphy giving it what it takes at the Jazz Workshop held during Arts Festival.—Chris Black photo.

Geoff Murphy giving it what it takes at the Jazz Workshop held during Arts Festival.—Chris Black photo.

The Social Credit ideas were used by the NZ Labour Party to secure their landslide victory in 1935. The movement in Dunedin and elsewhere lent its enthusiastic support, when it heard from Mr. M. J. Savage of the wonderful things that were to follow from "the intelligent use of the public credit" and read Mr. Nash's pamphlet, "Labour has a Plan."

Labour Fails

After the election, however, it became clear that in the sequel nothing would be heard of the public credit or its intelligent use. The association kept on its educational efforts from its office in Wellington and elsewhere.

It held annual conferences, at which evidence soon began to accumulate of a determination to take direct political action. Prominent in this urgency were Miss S. Andrew of Dunedin, Mr. R. G. Young of Hamilton, and Mr. F. C. Jordan of Auckland.

A resolution was at last carried in January, 1953, on a motion moved by Mr. W. B. Owen of Christchurch and seconded by Mr. F. W. Stevens of that city, to form a political wing of the association.

The decision having been taken, Mr. Owen continues:

A committee was formed in Christchurch which met regularly ... early in 1953 certain individuals undertook to contribute from 10/ - to £1 per week to finance the salary and expenses of an organising secretary for Canterbury and Mr. J. E. Cole-chin, who resigned from his job for the purpose, was elected to the position. From this date interest and membership increased steadily. On the Dominion level, the committee met frequently in Wellington in conjunction with the Association under the chairmanship of Mr. R. O. C. Marks. Messrs, Colechin, Mackay and Owen were commissioned to draw up a constitution and policy for presentation to the first annual conference in 1954.

Active on the dominion committee were Mr. R. G. Young and Mr. F. Jordan, who gathered considerable interest in the North Island. At the conference in 1954, the name NZ Social Credit Political League was adopted and it was decided that the League be incorporated. The constitution was adopted with minor changes and also the interim policy. Mr. J. E. Colechin was elected dominion secretary with appropriate salary, the responsibility for which was taken over by the League. Mr. W. B. Owen was elected the first president of the League.

Thus, on the eve of the 1954 election, eighty Social Credit candidates sought the franchise of the country and history began to be made.