A.N. FIELD
The Truth About the Slump
The land is the basis of all wealth, and if the farmer lives in a state of insecurity it is impossible for the rest of the community to be secure. With the farmer up in the air financially, everybody else is up in the air, and particularly so in a country like New Zealand. This fact was very clearly recognised by the ingenious concocter of the "Protocols of the Learned Elders of Zion," whoever he may have been. It was obvious to him that to make the money power supreme over the community the landed interest must be kept at its "lowest possible ebb."
If the people live in freedom on the land they will still be secure even though the moneychangers have turned the temple into a den of thieves. It is thus of vital importance to the money power to entrap the tiller of the soil and the hushandman in the toils of debt.
This has been very completely achieved in New Zealand. Half a century ago a Conservative Minister of Lands told Parliament that the only alternative he could see before the farmers of New Zealand was to be either the tenants of the moneylenders or the tenants of Crown.
Crown tenancy is of no use at all to the money power as it cannot take away the land by enticing the farmer into debt—not that he needs much enticement, for going into debt has become as natural to a New Zealander as sucking in his mother’s milk. For some years we did have Crown leaseholds that were inalienable, but the moneylending interest soon saw to it that these leases were done away with.
One current proposal is to alleviate the farmers’ distress by de-rating rural lands. It may be well-intentioned, but what is its effect ? It means that in order to enable the farmer to go on paying his interest bill he is to be relieved of payment of local rates. The money for these rates is to come from some other source, this source being the towns. The proposition is thus that the townspeople shall be roped in to pay the farmers’ rates. Boiled down it means that the townspeople as well as the farmers are to be forced to work for the farmers’ mortgagees, and are to be robbed of their earnings in order to keep up the value of the mortgagees’ security. With no rates the land will be worth more to the mortgagees than before, but the let-off in rates will not suffice to save the farmers. They need a lot more help than that.
What the farm mortgage total is is not very clearly revealed in New Zealand statistics as no complete figures are collected. Figures published in the Government year book for 1930 deal with the mortgages as shown in 40,494 rural land tax returns. These holdings total 23,418,000 acres of an unimproved value of £148,130,000, and the mortgages on them amount to £109, 789,000. The capital value is not given, but the total unimproved value of all rural land is £221,000,000 and the total capital value is £351,000,000, or roughly half as much again as the unimproved value.
So far as they go the figures indicate that the whole of the rural lands of the Dominion are mortgaged to about half their capital value as shown on the Govern ment valuation roll, all except a small fraction of such valuations having been made prior to 1926. If these capital values are written down by half we have the position that the mortgages equal the whole capital value of the rural land in the country and that the farming population has just about no equity at all in the land it occupies.
Of course not all the farmers are in the same boat. The little men are in up to their necks, about 20,000 of them having mortgages of £1,000 and more per £1,000 of unimproved value, Government valuation. One whole group of these small farmers, for instance, is shown with £1,412 per £1,000 unimproved value round their necks.
The greater part of the land in the country is still occupied in very large holdings, and many of these large holdings are clear of mortgage. A regrettable feature of the official figures is that no clue is given to the number of holdings that are unencumbered. Anyway, pretty well right through the piece the rule is that the more valuable the holding the smaller the average mortgage per £1,000 of unimproved value, the biggest class of land holders coming down to £30 per £1,000.
The figures indicate quite clearly that if anything at all is to he done to help the farmer it will only be done by getting him out of this bog of debt. In cold, hard fact there is nothing to stop us from doing this. Nor can we get our country into any sound state of prosperity until we do it. What we lack is the will to act.
The steps that require to be taken to put our farmers in a position of security are really quite simple in principle. One perfectly workable plan is set out in the "Rural Report of the Liberal Land Committee, 1923-25," issued by the British Liberal Party, and published by Messrs. Hodder & Stoughton, Ltd., at the modest price of one shilling net.
In the 584 pages of that report is embodied a mass of invaluable information on the land question, and an exposition of the grounds on which the policy adopted is founded. That policy was designed to give the tenant farmers of Britain security in the possession of their holdings and an equitable return for their labours.
Our problem can be solved by exactly the same means. The needs of our farmers are the same. The English problem is private landlordism. Our problem is mortgaged freeholds, which is merely disguised land-lordism. Where they have rack-renting in Britain we have overmortgaged freeholds.
Our system is more vicious than the British system, for whereas a tenant-farmer there who is turned off through failure to meet his rent loses all the labour he has put into the farm, with us the farmer turned out by his mortgagee loses all the capital he put into buying the farm, as well as his labour in improving it. When land values slump there is no share and share alike under the moneylenders’ system. The farmer is stripped of everything he owns on the farm or off it before the mortgagee loses so much as a brass farthing. The man who has not lifted a hand in labour gets all, the toiler and producer loses all.
The British Liberal Party land programme is based on the fact that in English law no subject can acquire an absolute title to land. The greatest interest in land which a subject can have is a tenancy in fee simple. In former days that tenancy carried duties and obligations. These were gradually whittled down to nothing. The Liberal policy proposes that upon an appointed day the Crown shall resume its rights.
Upon this taking place the State will have the right to transfer any farming land to any person competent to use it to the advantage of the community as a whole.
Every tenant holding will be forthwith transferred to its then tenant (if a competent person), who will hold it in Cultivating Tenure. The land will be valued at its true farming value, a rental upon this value assessed, and the Crown will pay to the former private landlord an annuity corresponding to the rental fixed, less administrative charges.
This means that the private tenants of Britain would automatically become Crown tenants. The rentals fixed would remain unaltered so long as there was no break in the tenancy, and the tenants would have the right to transmit to heirs within specified degrees of relationship, such heirs to be competent to farm the land. The tenant would also be permitted during his lifetime to transfer the holding to a person within the same degree of relationship, but no payment by way of rent or its equivalent to the transferrer would be allowed.
A Cultivating Tenant would also be permitted to surrender a holding at any time, and upon such surrender would have a right to full compensation for the fair value of improvements made by him. On the death of a tenant without heirs competent to farm the land the value of the late holder’s improvements would be paid to his estate.
All farming land occupied as freehold by a bona fide farmer on the coming into force of Cultivating Tenure would be left in the hands of its occupier, subject to the State having the right to secure the proper use of the land for productive purposes. An occupying owner would have the same rights of bequest as a Cultivating Tenant. If he wishes to give up his holding at any time, or if he dies without an heir competent to farm it, the State has the right of pre-emption.
The part of the policy of especial interest to us in New Zealand is the provision that the State shall be under an obligation to take over the holding of an occupying owner who requests its transfer to Cultivating Tenure. In this case the occupier after being approved as competent to farm the land, is offered it at a rental assessed as in the case of Cultivating Tenants above, and an annuity is paid for the land to him as owner, the annuity being the amount of the rental less administrative charges.
Obviously an occupying owner would have nothing to gain by such a transfer to Cultivating Tenancy provided he had an unencumbered holding. If this land was mortgaged to an amount in excess of its net rental value he would, of course, have everything to gain by transferring to Cultivating Tenancy. Such a provision in our New Zealand law for the conversion of freeholds to State tenancy would offer a door of salvation to innumerable farmers, and save this country from its present drift into the same private landlordism that destroyed the yeomen of England, and reduced agriculture in that country to its present pitiable condition.
The objective of the whole policy is to bring the financial demands upon the farmer within his capacity to pay. The report says:
"Depression can be relieved only by relieving agriculture from the weight of false values. False values can be eliminated only by refusing to recognise them and making their reappearance impossible."
That is precisely the problem we have to face in New Zealand. The British Liberal Party land policy of 1925 offers a perfectly just and feasible way of stripping off fictitious values without dispossessing competent farmers. Our present system offers no way but to break the backs of the farmers for the benefit of moneylenders.
The British Liberal policy means that where land has been over-mortgaged those who advanced excessive amounts on it, or sold it for a fictitious value, will have to bear the loss. This is no more than justice. As the Liberal reports says:
"No wise advisor of investors would encourage a mortgagee to risk an amount greater than two-thirds of the present real value. Mortgages beyond this amount must be regarded as highly speculative. The ever-present possibility of recent years that the State might raise additional revenue by specialised land taxation has been an additional reason for caution on the part of mortgagees. When the system of cultivating tenure is instituted it will be possible to ascertain the extent of mortgages on agricultural land, and it would, in out opinion be reasonable to indemnify first mortgagees up to a reasonable limit. ...
"This problem had, of course, to be faced under the Irish Land Purchase Acts. Under those Acts owners are entitled to sell their lands without obtaining the consent of their mortgagees, but except where the sale prices are fixed by the Acts, the mortgagees get notice of the purchase prices and can object to them if they are shown to be inequitable. Mortgagees receive notice of the proceedings for sale, and, when the purchase money has been advanced and lodged in Court for distribution to the parties who may be found legally entitled thereto, the mortgagees attend and prove their claims before the Examiner, who investigates the title. The claims are paid out of the purchase money in so far as the money is available to meet them. ...
"We do not believe that many cases of hardship would arise. In any case such hardships cannot be weighed in the balance against the present accumulated hardships of rural life, and the present danger to national stability, and great nations cannot be deflected from pursuing great policies by the possible grievances of problematical minorities. Whatever, for instance, may be the case for or against Prohibition in the United States, no one would argue that the interest of persons who had mortgages on drink-trade premises should have been allowed to tie the hands of the American nation. ..."
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A most important point in the British Liberal Party policy is the method of payment for the land. This is set out in clause 245 of the policy, as follows:
"The landlord’s annuity shall be, in principle, perpetual. But the State may make such arrangements as are equitable, by sinking fund, drawings or other means, to redeem the annuities at any time in any way equitable to all parties. The annuity shall be paid in income bonds or in such other way as is necessary to enable the recipient to realise its value at any time in the open market."
The essential thing is that the State can conduct the scheme without recourse to borrowed money. But it may, at its convenience from surplus revenue, or by any other means, buy in the annuity bonds on equitable terms. There is, however, no obligation on the State to redeem the annuities. Under the Irish Land Purchase Acts passed by the British Parliament the mortgagees were paid in cash. Since the Irish Free State took over the payments have been made in 4½ per cent. Land Bonds.
It will be contended by many that unless the mortgagees are paid in cash or in bonds which the State undertakes to redeem at a given date, a great injustice will be done them, and that an irredeemable bond, or a bond redeemable at the option of the State, is a very inferior substitute for cash and its offer to the mortgagees a gross breach of faith. A little reflection, however, will show this not to be the case.
Every person who invests money on mortgage lays cut a given sum of cash in return for a fixed annuity. That annuity is derived from the annual produce of the land. The sole value of rural farming land lies in the periodic yield of material wealth by the application of labour. The cash laid out by the mortgagee gives him a claim to an annual cash payment, derivable from the produce of the land.
What happens when the mortgagee wants to recover his principal sum advanced? His sole expectation of recovery lies in the belief that either his mortgagor or some other person will be willing or able to pay down a lump sum of cash in order to secure the annual cash payment to which the mortgagee is entitled. The mortgagee has no absolute guarantee from any source that such a payment will be forthcoming. He takes his chance of being able to discover some other person who will give him a sum of money equal to that invested by him in return for the annual payment due to him. It is true that in addition to land itself the mortgagee has a claim over such other assets as his mortgagor may possess.
Under the proposed scheme what would be the position of the mortgagee ? The State-issued annuity bonds given him would be a vastly better security than he now has. They would be secured over all the lands of the Dominion instead of only over one farm. Their income would be infinitely more certain.
If at the same time the State undertook to redeem the bonds for a given cash sum the State would be putting the mortgagee in a much superior position to that which he occupies today. The whole resources of the State would be put behind both his annual income from his mortgage and behind the repayment of the capital sum.
There is no warrant whatsoever for giving the mortgagee more than he is entitled to at present. The position is amply met if the State pays out income bonds backed with the State guarantee of a perpetual annuity and leaves the mortgagee to dispose of these in the open market whenever he wishes to recover his principal.
To say that the annuity bonds, although backed by the credit of the community as a whole, are not going to be saleable, is to say that the surplus wealth seeking investment is going to dry up or decline. So long as there is surplus wealth in the community its owners must lend it. They have no option in the matter. If it remains idle on their hands it either deteriorates and perishes or at best produces nothing. In either event it ceases temporarily or permanently to have value. To maintain its value its holder must invest it. No investment for that surplus wealth can offer better security than one that is backed by the credit of the State. So long as there is surplus wealth seeking investment the present cash value attaching to all forms of security depends on the degree of certainty attaching to the income to be yielded. If that income is uncertain the security declines in value, no matter what its face value or however assured the ultimate repayment of the principal sum.
People do not buy Government stock maturing in fifty years time because they expect precisely at the moment of maturity to have a use for the principal sum they have invested. They buy Government stock because its absolutely assured income makes it at all times the most saleable of securities. Its present value depends on the demand for such assured income.
Here, for instance, is what a formerly well-known financial writer has to say about irredeemable stocks. The extract is from Mr. Charles Duguid’s little book, How to Read the Money Article (Effingham Wilson, 1901), pages 55-56:
"A redeemable stock, of course, is one which will be paid off: in which our investment must sooner or later cease. We shall go on drawing our interest until the date of redemption, but when that date arrives our capital will be paid back. However much we may desire to continue, however convenient it is to receive the nice steady income from the interest payable on a certain day, we shall be obliged to take our money back and look out for a fresh investment. Nearly all corporation stocks are in this redeemable category; the Government now makes our municipal authorities pay back their loans within a certain time.
"Irredeemable stocks are, of course, exactly the opposite. Upon these the borrower goes on paying interest for ever. Or at all events interest is paid until the stock can be bought back in the market, or until terms can be arranged with the holder. Corporations which long ago issued irredeemable stocks have sometimes regretted their policy. Finding they can borrow money more cheaply than at the rate they have to go on paying, they endeavour to rid themselves of the burden. But for the very reason of their improved credit, or even because of the high rate of interest they undertook to pay for ever, the stocks are tightly held. ..."
The above extract is interesting in that it shows an experienced financial writer dwelling not at all on the disadvantages to the holder of irredeemable stocks, but on possible disadvantages to the issuer.
The objections likely to be raised to the payment of mortgagees’ claims by annuity bonds have been dealt with at some length as they will probably be the principal objection put forward against the plan proposed. The objection is not one that can be sustained against the very positive advantages to be gained by the community as a whole.
In the plan outlined in this chapter we have a simple and entirely practicable means of placing the farmers of New Zealand in a position of security. It is not a plan emanating from any wild party of revolutionaries, but is the sober, considered policy put forward five years ago by the British Liberal Party. Our depression can only be relieved and production cheapened—an essential preliminary to any return to prosperity—by stripping fictitious values from the land. To let things take their course means that with a continuance at the present price level we shall simply sit back and see the greater portion of the active producers of this country ruined and stripped of all they possess. If so monstrous a wrong can be averted we are less than men if we refuse to save these people.
The remedies proposed in the two preceding chapters go hand in hand. The second would be dangerous without the first, and the first would be incomplete without the second. Taken together they offer an immediately practicable means of relieving the acuteness of the present depression and of placing our country in a position of relative security. Both these steps are of the utmost importance to the entire population of the Dominion for they go directly to the root of our troubles.
Instead of a multitude of re-adjustments, the whole of which will be again dislocated immediately another variation in the purchasing power of gold occurs—and such variation is highly probable—all that we require is the passing of two laws, both quite simple in principle.
The first will enact that the gold content of our pound is to vary according to the movement of the export index number, the average figure for, say, the year 1925, or some other suitable point, being taken as par. The intervals at which the adjustments are to be made will be prescribed, the exact manner in which the index number is to be calculated will be laid down, and a small board will be set up to certify to the accuracy of the index figure. The board’s task will be important, and it would be well to have represented on it the various interests affected as far as practicable, say, one representative each of the banks, the Chambers of Commerce, the Farmers’ Union, and the Trades and Labour Councils.
The second law will enact that any farmer on making application, and on being certified by the Land Board as competent, will be given the option of having his freehold converted into a Crown lease. The land will be valued at its true productive capacity, and the basis on which the valuation is to be made will require to be very carefully set out. The farmer will be offered the holding at a rental based on this valuation. The land will be paid for in Government land bonds yielding an income equal to this rent, less administrative charges. Mortgagees will receive notice of the proceedings and their claims will be met by the allotment of the land bonds to them in so far as the bonds are available to meet the claims.
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Neither of these simple proposals can be dismissed as impracticable. The first is the embodiment of a plan advanced by a man who has a world-wide reputation as a first-class authority on monetary matters. As has been stated, the author holds a letter from this gentleman, Professor Irving Fisher, expressing the opinion that it would be quite practicable for New Zealand to adopt the plan independently of other countries.
A prominent director of the Bank of England in a private letter to the author has stated:
"You have asked me specifically whether I think there would be likely to be any support from the London end for an experiment in New Zealand something on the lines of the Fisher plan. The whole outlook has been so uncertain during the past two or three months that it has been difficult to make up one’s mind with any definiteness on this question. At the moment, however, my feeling is that the experiment would not be supported. Of course, often there is theoretical objection to a cause which, the moment it becomes urgent from a practical point of view, is waived, and I have been unable to make up my mind how far people in authority would, if pushed by emergency, agree to internal stability with high fluctuation in exchange rates. There is no question, however, as to the general view in London against this course, and they are still fumbling after obtaining stability in the value of gold and are not prepared to consider the remedies that may have to be looked at if such instability is chronic."
The author desires to direct attention to the portion of the above letter which he has put in heavy type. If ever a country was pushed by emergency New Zealand is today, with the Hawkes Bay disaster coming on top of the worst slump in its history. Coming from such a quarter, the letter cannot be regarded as other than most encouraging.
It has to be remembered that the Fisher plan will not in any way affect our external liabilities. It is simply an internal redistribution of the national income. As our external creditors will not be thereby affected they would thus have to show themselves of a malevolent disposition if they sought to punish us for making this experiment. Opposition from the London end would simply be an indication that the Money Interest there is determined to prevent the people of any part of the British Empire freeing themselves from their present slavery to gold. If such is the fact, which the author would be sorry to believe, the sooner it is disclosed the better for the whole Empire.
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The second of the two enactments which we will require to frame can no more be dismissed as based on the theories of wild revolutionaries than the first. It is the considered policy of the British Liberal Party adopted after years of investigation of the land problem. Before the war the Land Committee of the Liberal Party put forward a land policy consisting merely of a wide variety of palliatives—the sort of thing with which we are so familiar in this country and which gets us nowhere. After the war it took a more courageous line, and the policy of 1925 was the result. The handbook in which the whole question is examined and the policy set out is one of the finest expositions of the land problem in existence. The fact that a most determined, and successful, effort was made to defeat the British Liberal Party at the elections next following its adoption of this policy in no wise detracts from its value. Any proposal which prefers the interests of the people to the vested interests of a powerful minority must expect such resistance. And the greater the measure of justice it gives to the people the more violently will it be resisted, and the more contumely will be heaped upon it through the innumerable agencies and channels that Wealth commands.
No greater boon could be conferred on the people of New Zealand than the enactment in its entirety of a land policy on similar lines to that embodied in the British Liberal Party programme of 1925. The writer proposes nothing so revolutionary at the moment. He directs attention solely to one portion of that policy as a means of securing immediate relief in the emergency which now confronts us.
We have already given Crown tenants the right to convert their formerly inconvertible tenancies into free-holds. About a third of the holders of leases in perpetuity have converted their holdings to freehold, in many cases with disastrous results to themselves. It is time we worked the machine in the opposite direction. The proposal outlined is the only equitable and practicable means the present writer has been able to discover which will accomplish the most urgent thing required today for the liberation of the people of New Zealand, namely, the stripping of fictitious values from the land without the complete ruin of the people on the land. Those who oppose it must either put forward a better way of achiev-ing this end, or else reveal themselves as indifferent to the ruin of the farming population of the country, as not a few have done in published statements in the press. A monopoly value has been put upon the land, and those who would gain access to the land have been forced to pay that price. Now they are told they must pay the penalty of their folly. That is a typical line of thought finding daily expression in the newspapers. Those who advance it apparently affect to believe that the farmers of New Zealand have gone about insisting on the sellers of land accepting more than the land was worth. How much truer are the words of the British Liberal Land Committee, already quoted:
"Depression can be relieved only by relieving agriculture from the weight of false values. False values can be eliminated only by refusing to recognise them and making their re-appearance impossible."
Finally, it cannot be too strongly emphasised that the scheme outlined would be dangerous in the extreme if embarked upon without stabilising our currency in relation to the export produce price level. Under the unstable gold standard it is impossible to value land in terms of money. Only the other day the writer saw valuations made for mortgage purposes in which the value of sheepfarming country was worked out on the basis of wool fetching a shilling a pound. For all the parties concerned the valuation, though made by a fully competent man, was the rankest of gambles on what the purchasing power of money is going to be. For the State to give freeholders the option of converting to Crown tenancies without first stabilising the currency would be to plunge from one disaster into another. The two proposals are inseparable.
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To many persons the proposals set out in this book are likely to prove highly unpalatable. It is an old saying that you cannot make an omelette without breaking eggs. Every reform, every change means upsetting something that is customary and accepted. Before people will accept a reform it must be shown either that it means a real gain or that there is peril in continuance of existing practices. Do not the facts in the present case reveal both that gain and that peril ?
The international financiers who control the world today rely for their supremacy on the continuous co-operation of the moneylenders and interest-drawers of all nations. They have calculated that the innate selfishness of human nature will cause the wealthy classes in all countries to resist to the last extremity any step which would free the people from servitude to the money power. They have calculated that the people, inflamed by such resistance, will plunge into socialism, and that with a nationalisation of industries by means of borrowed money, international finance will be placed in full possession of the entire assets of the community.
How faithful in every country has been the co-operation of the local moneylenders in weaving this web of world control ! Plunged into difficulty by the gold manipulators what is the course everywhere pursued? Every agreement, every contract, may he varied save the contract; with the moneylender. His contracts stand in a different class from all others. The religion we profess may declare the labourer worthy of his hire and may condemn the taking of usury; but, in practice, Christian statesmanship as a matter of course passes legal enactment in time of crisis to deprive the labourer of his wage in order that the full tribute to the usurer may he forthcoming. If the moneylender forgoes—or even post-pones—taking his due sum it will be purely as an act of grace on his part. The special sanctity attached to a payment calling for no exertion whatever on the part of those who receive it might puzzle a visitor from another planet able to consider our institutions detachedly.
Nor can we escape the fact that a State in preferring the interests of the money power to those of the people comes dangerously near to an abnegation of sovereignity. Government accepting a position in which a body of its private citizens announce terms on which they are "willing to co-operate" with it—as financiers have done in some countries—has virtually ceased to be a Government. Accepting such a position, it becomes a mere front, a facade behind which these private persons rule the country. So far as it serves the people at all it fill; the office, not of governing, but of mediating. The seat of sovereignty must he sought elsewhere. This state ment may he thought extreme, but it is in accord with every recognised principle of sound government.
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That our institutions should he falling into such anarchical chaos is due to the monopoly given to gold a, the sole legal tender. These legal tender enactments had their origin when the State in olden times sought to rob the people by debasing the coinage. To make bad money pass current the compulsion of law was required. To this root can our present troubles be traced.
Nothing is more pernicious and misleading than the idea that the measure of value must in itself have value. Nobody exposed this fallacy more clearly than old Bishop Berkeley when he asked in his celebrated Querist, published over two centuries ago:
"Whether money be not only useful in so far as it stirreth to industry, enabling men to mutually participate in each other’s industry and the fruits of each other’s labour ? ...
"Whether the terms, crown—livre—pounds sterling, etc., are not to be considered as exponents of denominations ? And whether gold, silver and paper are not tickets or counters for reckoning, recording, or transferring such denominations ?
"Whether the denominations being retained, although the bullion were gone, things might not nevertheless be rated, bought and sold—industry promoted, and a circulation of commerce maintained ?"
What we all need to realise is precisely that money is merely a ticket to goods and services. This ticket no more needs to have an intrinsic value in itself than a theatre ticket needs to be made of gold or silver to be worth having. Our commerce is in the same sort of a mess that travel would be in if it were decreed that no rail or steamer ticket could be issued unless made of platinum. The amount of travelling that could he done would thus be entirely regulated by the amount of platinum in existence. The cost of travel would depend on what price the holders of platinum wanted for their metal. If somebody cornered platinum at Christmas people would have to give up the idea of going away for the holidays. The thing sounds insane, and we would have to be insane to consider it. Nevertheless, it is exactly what we are doing when we make the volume of credit and trade depend upon possession of another scarce metal of less practical use.
Unless our civilisation is to collapse through lack of intelligence we will eventually have to divorce our currency entirely from gold. Every period of prosperity under the gold standard is checked and killed in collapse because of the scarcity of the exchange medium. One ardent reformer, Mr. Henry Meulen, in his "Industrial justice through Banking Reform" (R.T. James, London, 1917) expresses the opinion that, but for the legal restrictions placed upon banking, a system would long ago have been evolved by which under free competition we would have had a creation of exchange medium — "the creation of paper credit titles to the wealth which now stagnates in the hands of producers—and the distribution of these paper titles to those who are considered by the professional judges of commercial ability, the private bankers, to be capable of producing fresh wealth." With the removal of artificial restrictions due to unwise laws made by persons who did not understand what they were doing, or were prompted by selfish motives, the present divorce of the producer from the means of production would, he contends, be ended. That, of course, would mean an end of the spectacle of one set of persons starving and another set loaded up with foodstuffs which they are unable to exchange for things the starving people could produce.
The author’s purpose in this book is not, however, to advocate any abandonment of gold, but he makes the above digression as many people do not recognise the source from which so many of the present difficulties of commerce flow. It is sufficient here to urge that we take without delay the necessary steps to protect ourselves from complete disaster by vagaries in the value of gold in the hands of the forces that today control and manipulate it.
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If the Money Power that rules the world today is centred in the hands of individuals of a particular race and creed, this fact should not inspire us with feelings of ill-will towards persons of that race. It is given to no man to control the accident of his birth. Each individual must be judged by his own actions and associations. In writing this book the author would gladly have omitted from his pages all reference to race and creed had it been in any wise possible for him to have done so. Nothing is further from the author’s desire than to inspire his readers with feelings of hatred or aversion towards Jews because they are Jews. Christian history has been stained by horrible persecutions of the Jews and the most shocking outrage and brutality have been practised upon these unfortunate people. Hatred begets only hatred and makes bad go to worse. It is in no such spirit that we shall work out our salvation. Even a little reflection will suffice to show that the international money power, though markedly Jewish in its personnel, has vet sacrificed the bulk of the Jews as ruthlessly to its ambitions as it has sacrificed persons of other race and creed. Nor is that power exclusively Jewish by any means.
If by past persecutions, particularly on the Continent of Europe, persons of Jewish race have been driven into underground activity and combination, and have aspired to bring about a state of things whereunder they may dominate not only their former oppressors but the people of all nations, we would 1>e foolish in the extreme to close our eyes to the evidence of such conspiracy. Out desire, and our right, is for freedom to live our lives in our own way, and not in subjection to an alien force subduing our institutions to its will.
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We must face the fact that monopoly and freedom are ill-matched bedfellows. The legalised monopoly given to gold is a canker which has eaten at the heart of free institutions. It has become the parent of innumerable lesser monopolies in subjection to it It is the mainspring of the force driving men on to socialism. And socialism under present conditions is likely to mean little more than the total subjection of the people to the money power. Controlling the executive of a socialised state that power will then control everything. The collabora-tion of international finance and international revolu-tionaries in the production in Russia of the phenomena known under the name of Bolshevism has provided a very real and present instance of what this means.
Many sincere and self-sacrificing people have pinned their faith to Socialism as the hope of humanity. It is an idle hope so long as the commerce of the world is directed by centralised gold control, and so long as Socialism is pursued by paths meaning the piling of illimitable and completely unpayable debt upon the backs of the people. And that is the direction in which each instalment of Socialism has so far taken us.
Many equally sincere persons are of opinion that freedom and progress will best he found under private enterprise and free competition. Private enterprise and free competition can only exist among a people that is free. The gold monopoly has prevented the monetisation of wealth and has caused a purely artificial scarcity of the means of payment. Competitive effort is strangled tinder it, and all over the world, in every country, the small capitalist is being slowly but surely pushed to the wall and crushed out of existence. Soon all that will remain will be great non-competitive trusts and rings, all in total subjection to the money power. No sincere believer in private enterprise can be a supporter of monopoly. Yet what do we find in this country ? It is forbidden by law to start a bank without great expense and a special act of Parliament, the money monopoly is buttressed by law in every way. At the same time in almost every trade and profession, are rings, combinations and close corporations, all set up and designed expressly to check competition and strangle enterprise. The predatory nature of these institutions and their failure to render adequate service for the reward they demand is more than anything else driving the people to seek relief in socialism. It is because advocates of private enterprise and free competition have been faithless to what they preach that this system is now detested by thousands upon thousands of the people.
The money monopoly is the parent of all other monopolies, and it cannot be too earnestly attacked by all who desire to see the survival of free institutions. The Fisher stabilisation plan is no more than an immediate practicable means of escape from an intolerable position. It is but a first step towards better things, and to no question can the student turn his attention with more profit to his fellows than to mastery of the problem of providing a medium of exchange adequate to the needs of our present civilisation. We have everything in the world needed to make us happy and prosperous, but misery and wretchedness stalk abroad because we lack the means of getting this wealth round where it is needed.
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At the moment our immediate problem is to cope with a situation full of menace to the future of our country, to our race, and to the free institutions that are our heritage. The very freedom of those institutions lays them widely open to attack by the underground conspiracy of a handful of persons operating in collusion in different countries. Their defence is the defence of a11 that every right-thinking man holds dear in this world. It Is a cause in which we can gladly enlist the utmost that is in us, and in the service of which the fate of the individual shrinks to nothingness. The first step is to seek out and know the truth, and thereafter with all our wit and skill to discern the path to security and unflinchingly to pursue it.
It is in the hope that what he has written may be of some slight service to his countrymen that the author now lays down his pen.