ESSAY
4
Beclouded
Revolution
PEOPLE everywhere associate revolution in the twentieth century with the dramatic events that occurred in Russia during [sic] World War I. But there occurred a still greater revolution of which most people are unaware. This was a revolution more gradual, more subtle, and more far-reaching in its consequences. It was a revolution in government fiscal policy, which not only has underwritten the socialist developments in this century by the revenues it has provided the state, but has further promoted these developments through the debilitation and demoralization of personal enterprise that has followed.
The
power of any government to make paternalism seem practical, and thus
insidiously to socialize the economy, lies entirely in the belief
that it can and does issue money. This is the foundation error from
which all socialistic projects receive their unsuspected sustenance.
To attribute to government the power to issue money, makes of it an
apparent fountain of wealth that strikes the ground from under all
opposition to the welfare state. If government has the power to issue
real money, what can possibly be wrong with paternalism and the
socialistic ideology?
The
practice of deficit financing seductively turns the minds of the
people from the economic means of attainment to the political. For,
obviously, when government can continuously take out without putting
in, it strengthens itself and commensurately weakens personal
enterprise, with the result that the people develop a growing respect
for and dependence upon government and a contempt for enervated
personal enterprise. This conditions them for progressive
socialization and dictatorship. The secret of this process lies
overwhelmingly in the Government's power to dilute the money stream.
Ideologies have little to do with it; they are an accompaniment more
than a cause.
This
revolutionary shift in government finance has come about, in the
United States, since 1931. Here is the historic record of war deficit
financing and of subsequent debt reduction:
Total
Deficit Reduced to By
REVOLUTIONARY
WAR $ 75 millions $45 millions 1812
War
of 1812 $127 millions 0 1836
CIVIL
WAR $ 2.8 billions $961 millions 1893
FIRST WORLD WAR $25.5 billions $ 16 billions 1930
FIRST WORLD WAR $25.5 billions $ 16 billions 1930
It
is evident that the Government's traditional practice was to run
deficits under the stress of war and to reduce them during the
succeeding peace. Government money issue power was therefore curbed
by fiscal policy. The creation of money was normally the function of
private businessmen, and the banking system remained largely the
servant of personal enterprise. In the depression year of 1931,
however, peacetime deficits were instituted for the first time. Soon
thereafter, the policy was adopted of treating the depression as a
war and ameliorating it by public borrowing and lending and spending.
These deficits, greatly expanded during World War II, have become an
established habit that constitutes a veritable politico-economic
revolution. Credit is now controlled by the Government, the banks are
but branches of the Treasury, and deficit financing is established
policy.
Such
a policy by a government is, in all innocence, the beginning of a
process which culminates in communism, which is but the receiver for
bankrupted personal enterprise. By issuing monetary units, government
acquires the people's labor and substance, and gives them nothing in
return. Simultaneously, exchange, upon which personal enterprise
depends, is destabilized, and by this sabotaging process the people,
in desperation, are finally compelled to petition the government to
go into the production and distribution of the necessities of life.
In other words, the process of issuing monetary units, without giving
anything in exchange for them, ultimately brings a public demand that
the government return something for its issue. With this, the people
petition themselves into communism. For when government enters
production and distribution, free exchange and, therewith, all
freedom, ends.
Lenin
reputedly said, "the surest way to overturn the social order is
to debauch the currency." Certainly a major instrument of the
Bolshevik revolution was the extensive counterfeiting of the Czar's
currency with this objective in mind. This deliberate policy is
memorialized in the following curious passage translated from the
Russian:
“I
would like to dedicate this imperfect work of mine to the one who, by
the perfection of his own work and its unbounded abundance gave me
the impulse to write these pages. I refer to the printing press of
the People's Commissariat of Finance. The revolutionary government of
France managed to exist and to wage war thanks to paper issues; the
'assignats' saved the Great French Revolution. The paper money of the
Soviet Republic supported the Soviet Government in its most difficult
moments, when there was no possibility of paying for the civil war
out of direct tax receipts. Glory to the printing press! To be sure,
its days are numbered now but it has accomplished three quarters of
the task. In the archives of the great proletarian revolution,
alongside the modern guns, rifles, and machine guns which mowed down
the enemies of the proletariat, an honorary place will be occupied by
that machine gun of the People's Commisariat of Finance which
attacked the bourgeois regime in its rear—its monetary system—by
converting the bourgeois economic law of money circulation into a
means of destruction of that same regime and into a source of
financing the revolution.”*
*
Preobrazhensky, Eugeny A., Bumazhnyeden'gi v epokhu Proletarskoi
dictatury [English translation: Paper Money During the Proletarian
Dictatorship.] Moscow, State Publishing House, 1920, page 4.
Money,
the hated device of capitalism, was found, however, to be
indispensable to progress, and since the revolution, the dictators of
Russia have been trying to restore this instrument of the social
order. Thus they have been forced into the position of trying to
regain the principal instrument of capitalism—without too obviously
retreating from their ideology. In frustration they have turned to
robbing their neighbors under the pretense of “liberation” and
“democracy.”
The
non-communist governments, while innocent of any intent to destroy
their monetary systems, are nonetheless proceeding by gradual steps
to attain the same ends that the communists did by plan—and the
means of accomplishment is the same, namely, counterfeiting, albeit
of the legalized variety. Thus are the non-communist governments
proceeding blindly toward collapse. The communist governments, for
their part, are striving to avert collapse by desperate attempts to
steal that which the former in their ignorance are sabotaging. Hence
the capitalism vs. communism confrontation is false. It is a fog
obscuring the real issue, which is fiscal policy. The real issue is
between counterfeit and genuine money.
Socialization,
which now threatens every nation in the world and is really unwanted
in every nation, is being forced upon every people and every
government as the result of deficit financing, which is the Lorelei
of the do-gooder politician. She promises relief to the distressed
without cost to anyone. This illusion, once accepted, requires more
courage to renounce than the politician can muster, and thus the ship
of state is led to the rocks. I see no escape but for the people to
declare the separation of money and state, and thus forever end
unbalanced budgets with their impulsion to socialization and
interference with personal rights.
ESSAY
5
Warfare
IT
SHOULD be obvious to even a superficial observer that it is
politicians that create wars, and from this observation the logic
should be developed that politics has an affinity for war. War is the
escape for political frustration and the steppingstone for ambition.
It deflects responsibility for the evil consequences of
mal-administration and averts the eyes of the people from
embarrassing facts.
While
war serves the purposes of politicians, it never serves any purpose
of peoples except defensively. Therefore, the war-making power must
be taken out of the hands of government and reside with the people.
To do this, we must deny to government control over the essential
implement of war, which is the money power. If the money power is
reserved to the people, they hold the veto power over war, for no war
expenditures can be made without their consent. With no money power
under his control, the politician has no assurance that the money
will be forthcoming and no means of propagating the war spirit.
It
is not a matter of much import to examine the various reasons that
politicians have had for plunging nations into war, and to attempt to
limit this or that cause. It is, however, essential that we detect
and remove the means by which it is accomplished. John T. Flynn
points out in his As We Go Marching that Mussolini and Hitler
controlled their nations and ultimately involved the whole world in
war through the money power that automatically fell into their hands
with the capture of government.
This
money power is invariably the power to conduct deficit financing. No
war has ever been fought on a cash basis. And when we examine the
deficit power, we find it is simply the power to issue counterfeit
money. Thus the people are made to pay for the war under the delusion
that they are being paid for conducting it. After the war, they fall
into accusative factions, blaming each other for inflation with such
epithets as gougers, labor racketeers, profiteers, chislers, robbers,
black-marketeers, etc. The only complaint against the politician is
for his failure to crack down on this or that group at the behest of
its accusers. The politician, who is the author of the whole misery,
escapes blame and is beseeched to be the deliverer.
The
politician who would wage war successfully must first make war
successfully on his own people, and to accomplish this, he deludes
them through deficit financing. Having, under this delusion, made war
appear profitable, he is able to marshal his people into military
action. Every soldier and every soldier's wife and mother, every war
worker, every war industrialist, every war banker, every bureaucrat,
is "paid" for his services to the god of war. Yet, how can
any of these be actually paid when they produce nothing and, on the
contrary, only destroy? Destroy this delusion, and you destroy the
politician's power to marshal the people for war.
Monetary
nationalism is the only nationalism that is inimical to society. Once
the power to alienate other nationals monetarily and to corrupt the
money supply of a people by false money issues is abolished, lesser
economic interferences will dissolve or cease to irritate. But as
long as our governments are vast counterfeiting machines, Mars can
laugh at peace projects.
ESSAY
6
The
Naturalness of Competition
COMPLETE
FREEDOM OF CHIOCE is brought about in exchange by what is known as
competition, which is the process whereby selectivity operates and
economic affinity is assured. This great and indispensable principle
of life is often stigmatized as an evil, and is the victim if not the
conscious object of all attacks by planned economy against the
natural order. If we cannot hold the principle of free competition
inviolate, there is no need to pursue the subject of free money, for
money is but the handmaid of competition. Money facilitates
competition, and if competition is to be restrained, pursuit of a
true monetary system is a contrary aim.
Competition
is inherent in exchange. Impediment to one is impediment to the
other. Competition is the guarantor of our basic liberty, since
without freedom to trade where one's need and preference are best
served, all other liberties become atrophied. Competition is the
scale that weighs the worth of the service of each man to his fellow
man. If there is nothing to impede it, the greatest equity is
attained, because each trader has received the acme of satisfaction.
This
does not imply that all are assured equal rewards, but rather that
all receive their just deserts. Nor does it exclude the action of
good or ill fortune. One may, by good fortune, discover a natural
value or improved method or possess a special talent that is of
limited supply and hence priceable at a higher level. One may,
through ill fortune or bad judgment or false effort, lose trading
power and even suffer total loss. Competition inspires enterprise,
rewards the good servant and punishes the poor one. It is the
universal police system through which we all police one another's
economic behavior. Through its operation, society ostracizes the bad
and honors the good. It never errs; it is never unjust. It is
infallible. Though we are dealing here only with man's business
conduct, it is well to comprehend that so universal is competition
that it is the natural governor of all human behavior.
There
must not be read into this tribute to the rule of competition an
assertion that competitors do not suffer handicaps that make the
competitive system seem harsh. It does imply, however, that such
harshness is the result of distortion in the economic system—mainly
through the monetary branch—whereby some traders have escaped the
salutary influence of competition and thus gained unnatural trading
power, adverse to their competitors. The remedy for evil effects in
competition is more competition, since it is but the lack of it that
produces bias.
Nor
must any implication be drawn that competition does not permit
society to starve and kill that which is unwanted. How else could it
permit progress; how else could it provide the means of punishment
for the slothful, the vicious, and the unsocial? How else could it be
democratic? The obsolete, the unfit, the unwanted must be eliminated.
In life there is death; in death there is life. This is the law of
progress. Competition is merely its channel.
Lastly,
let it be clear that competition does not lessen the opportunity of
any man to grow relatively rich, if such rewards come for services
rendered and voluntarily paid. It merely permits society to defeat
the extortioner. Nor does it save any man from being relatively poor.
It merely secures him against poverty if he can and will render
service to his fellow man.
ESSAY
7
The
Essential Capitalism
IN
COMMON UNDERSTANDING, the capitalist system means the profit system.
To bring sense into the discussion, we must clarify the concept of
profit by distinguishing between profit and paper profit. A paper
profit is a dream or forecast of power to enjoy wealth. Actual
enjoyment or use of wealth is the only realized profit.
"Production
for use" is but another way of saying production for profit. The
profit system is therefore the use system, with which no one can
quarrel. Capitalism is the system of guaranteeing use or profit by
private ownership, and since there is no other way of gaining such
security, there is no fault to be found with the capitalist system
when clearly understood. The desire for use or profit is natural,
ownership as a means of assuring it is natural, and free money as a
means of conveying and acquiring ownership makes the third of a
natural and wholesome trinity.
The
effect of the valun upon the capitalist system will be to permit
capitalism to be its natural self and to become known for what it
really is, namely, the cultural developer of man through its
facilitating the first and grandest law of nature, the law of
selfishness. The most cooperative, the most social and the most
elevating principle of life is selfishness, and capitalism is its
handmaid. The impulse of acquisition, which is the driving force in
enrichment, brings discontent through disappointment, but never
through realization. Capitalism is never criticized when it works.
Only its miscarriages bring grief and bitterness.
These
disappointments have developed the queer logic of collectivism, which
argues that since capitalism has not worked fairly for all, it should
not work for any. The collectivists also overlook the fact that
capitalism has not worked fairly because of the interference of
collectivism. The sufferer from the biased operation of capitalism is
the victim of collectivism without knowing it. The political money
pretense and all political intervention in personal enterprise are
collectivist schemes. True capitalism seeks and permits no political
interference; its task is the organization of society on a purely
economic basis with complete liberty of action therein assured to
every individual.
Capitalism
is life itself. There is no starting point in evolution beyond the
impulse to live—the law of self preservation—and right there
capitalism starts. Self preservation implies self advancement, and
thus all life follows a consistent capitalistic line that is
unalterable. Despite the handicaps of collectivism, therefore,
capitalism functions because there is no other system that will
function at all.
The
capitalist system has been pushing the world along for several
billions of years. He who would abolish it must start a new universe
on a new principle.
ESSAY
8
Democracy
Realized
We
must have a new pursuit of Democracy in the market places instead of
the capitols of the world.
DEEP
IN THE MORES of man has ever been the ideal of liberty and, linked
with it, the social consciousness of equality of opportunity, or
democracy. Democracy, the agent, would secure liberty, the ideal. How
to implement democracy has been the problem of the centuries.
The
implementation thus far has been political, and the method has been
the consent of the governed. Obviously, unanimous consent cannot be
hoped for, so recourse is had to the will of the majority. The rule
of the majority is therefore the highest ideal conceivable in the
political sphere. This leaves, at best, a tyranny over the minority.
Is such an ideal worth striving for?
There
is no choice on the political plane. We must either accept this ideal
or turn from the political implementation of democracy to another.
Fortunately, there is now the hope of economic democracy through a
true monetary system that will realize the dream of democracy.
Money
can be the perfect register of desire and appraiser of satisfactions.
It is the means of keeping man ever attuned to his fellow man. It is
a court of arbitration whereunder differences may be easily adjusted.
It can be the steady uplifter of the social order. It can be the
minimizer of taxation and political intrusions. It can be the
preserver of peace. It can dissolve the bounds of social strata. It
can make competition perfected cooperation. It can provide security.
It can make every voter win the election. It can govern by the
unanimous consent of the governed.
There
are no majorities or minorities in a money election. The vote is
unanimous, and it is all cast for the individual. He shoves his
ballot across the counter and takes the winnings. Other individuals
are doing the same; nobody is the loser. Everybody has his choice.
The
election is constant. The campaign of advertising and sales appeal to
the voter is incessant. The voting goes on every minute of the day.
The
candidates are innumerable commodities and services, none of which
can command the voters' continued support without continued
satisfaction. There are no terms of election. There are no age,
residence, or citizenship qualifications for the electors. There are
no guarantees of permanence to the elected. All is in constant flux,
responsive to the wish and whim of the elector. This is democracy
idealized and realized.
But
are not the ballots unfairly distributed? We are coming to that. The
point is that money offers possibilities that can never even be
dreamed of in the political realm. We must pursue this promise and
turn from political action if we would realize democracy.
Granted
a fair distribution of the money ballots, the monetary election
system of exchange can realize the ideal democracy. Such fair
distribution has never been accomplished. But it can be. If the
smallest fraction of effort had been devoted to the pursuit of
democracy in money that has been devoted to chasing the comparatively
low ideal of democracy in the political realm, we would now be
enjoying, through the monetary system, the ultimate democracy.
Even
the low ideal of the rule of the majority has never been attained in
political democracy. It is doubtful whether the majority has ever
prevailed at the ballot box, when we count those qualified voters
whose interest could not be sparked sufficiently to visit the polls.
In the United States, where the voting ratio is probably the highest,
one quarter of the qualified electors has been sufficient to carry an
election. But even this segment does not govern; it merely decides
who shall govern, and the governors thus chosen govern the
non-electing majority as well as the electing minority.
Representative
government is but limited dictatorship, inasmuch as political
democracy gives the representative no formal or official cue to the
action desired by his constituency. Granted that he is honest and
conscientious, he still must fall back upon his own judgment of what
is right or guess what his constituents might prefer. By this process
our millions of statutes have been molded. On top of these statutes
have been proclaimed millions of court decisions, also based upon
guesses as to what the law makers intended and colored by that
nebulous substance, public opinion.
Even
if it were possible for the citizen to register his will upon all
questions that are involved in political government, he could not
spare the time from his task of making a living. But in the very
course of making a living, he is automatically registering his
preference on Main Street several times a day through his money
ballots. Compare the facility of this with political elections once a
year or two or four years.
Our
markets are our true polling places, where farmer, manufacturer,
wholesaler, retailer and consumer are constantly accepting or
rejecting proposals. Why do we beguile ourselves with a sham
democracy when we have the machinery for a perfect one? But there is
sham also in our potentially ideal democracy, the monetary system.
This sham is the creature of the mother sham, political democracy.
Our monetary system is a political creation, and thus the number of
money ballots and their power that each of us can cast in the market
places is influenced by political action. Thus we not only pursue the
folly of political democracy, but through its inevitable miscarriage
we defeat also the operation of a true democracy in our daily
exchanges. To attain democracy, we must not only renounce the false
premise of political realization, but we must rescue money, the true
provider of democracy, from the destructive influence of the state.
Once
we have separated money from state, we shall find that the activities
and interventions of government may be greatly curbed. Through a
monetary democracy, human aspirations will be attainable, and the
functions of the state will be very much confined. Money joined to
state will inevitably trend toward socialization. Separated, it can
be our liberator.
THE
END
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