"Once a nation parts with the control of its credit, it matters not who makes the laws"
About this Quote
William Lyon Mackenzie King warned that when control of credit slips from democratic hands, the real engine of power leaves Parliament. Credit, for him, meant the creation and allocation of money, the setting of interest rates, and the flow of loans that determine whether farms plant, factories hire, and governments can finance their programs. Laws can proclaim grand aims, but if private or foreign financiers decide the price and availability of money, they can quietly veto those aims by tightening credit or demanding terms that reorder priorities.
The line grew out of the turbulence of the 1930s. Canada was gripped by the Great Depression, unemployment soared, and anger mounted over the perceived dominance of private banks. A central bank was created in 1934 under R. B. Bennett; King’s Liberals later nationalized the Bank of Canada in 1938 to place monetary policy under public ownership. King argued that sovereignty was hollow if monetary sovereignty belonged elsewhere. It was an answer to populist demands, Social Credit agitation in the West, and the urgent need for coordinated recovery and, soon after, wartime finance.
The point is both practical and constitutional. Without control of credit, a government cannot mobilize resources at scale, stabilize downturns, or protect citizens from deflationary spirals. Credit decisions shape investment and employment more directly than statutes, because they govern what actually gets funded. A legislature may authorize housing or infrastructure; an unsympathetic credit regime can make those laws inert.
There is a counterpoint. Granting politicians unchecked sway over money risks short-termism and inflation, which is why modern democracies often make central banks operationally independent. Yet even independence relies on a framework set by elected authorities. King’s warning endures as a benchmark: democracy requires that the broad aims of money and credit serve public purposes, not the narrow interests of those who issue and price it. Political sovereignty rests on monetary sovereignty.
The line grew out of the turbulence of the 1930s. Canada was gripped by the Great Depression, unemployment soared, and anger mounted over the perceived dominance of private banks. A central bank was created in 1934 under R. B. Bennett; King’s Liberals later nationalized the Bank of Canada in 1938 to place monetary policy under public ownership. King argued that sovereignty was hollow if monetary sovereignty belonged elsewhere. It was an answer to populist demands, Social Credit agitation in the West, and the urgent need for coordinated recovery and, soon after, wartime finance.
The point is both practical and constitutional. Without control of credit, a government cannot mobilize resources at scale, stabilize downturns, or protect citizens from deflationary spirals. Credit decisions shape investment and employment more directly than statutes, because they govern what actually gets funded. A legislature may authorize housing or infrastructure; an unsympathetic credit regime can make those laws inert.
There is a counterpoint. Granting politicians unchecked sway over money risks short-termism and inflation, which is why modern democracies often make central banks operationally independent. Yet even independence relies on a framework set by elected authorities. King’s warning endures as a benchmark: democracy requires that the broad aims of money and credit serve public purposes, not the narrow interests of those who issue and price it. Political sovereignty rests on monetary sovereignty.
Quote Details
| Topic | Money |
|---|
More Quotes by William
Add to List
