Preface to the second edition (of Monarchy or Money Power)
EVENTS have moved very quickly since the first edition of this book was published last year. I have accordingly added to the present edition, in the form of “Book I,” an account of these events and a discussion of their bearing on the views which I hold. I make no apology for setting in the forefront of that outline the religious aspect of the great struggle which is now proceeding in every corner of the world; for I believe that that struggle is essentially of a religious character. Elsewhere I have attempted to show that the worship of Mammon partakes also of the nature of religion.
The literature of this subject is, of course, the most extensive in the world, ranging as it does from the Bible to the latest monograph on economic science. A life-long study of the French Revolution and of Napoleon’s reign is the basis of the chapters dealing with these events, but I wish to make special mention of A King’s Lessons in Statecraft , by Louis XIV, edited by Jean Longnon and translated by Herbert Wilson (Unwin); of The Life and Writings of Turgot , by Walker Stephens (Longmans); of The Assignats , by S.E. Harris (Harvard Economic Studies Cambridge University Press); and Currency and Credit , by R.G. Hawtrey. These four books, though I disagree cordially with many of the opinions expressed in them, seem to me to be essential to a proper understanding of the nature and finances of the French Monarchy and of the French Revolution.
The state of Great Britain after the close of the Napoleonic Wars is best understood by reference to the files of The Times and to contemporary speeches, but I wish to acknowledge indebtedness to The Life of Robert Owen , by G.D.H. Cole (Macmillan). I owe a debt also to A.E. Feavearvear for his excellent work The Pound Sterling (Oxford University Press). The Reports of the Inspectors of Factories should be consulted for an account of industrial conditions, and a study ought to be made of Marx’s Das Kapital . The speeches of Peel, Disraeli, and Chamberlain have been freely drawn upon, and also the writings of Disraeli and the Biography of Disraeli , by Buckle and Monypenny. Keynes’ and Hawtrey’s works afford great help in studying the more recent developments of currency and credit. The Stabilization of the Mark , by Dr. Schacht, even if the views expressed are not accepted, is a valuable book. It need scarcely be added that the “ Macmillan Report ” (and its addenda) is indispensable to a proper understanding of the existing situation. I wish in conclusion to acknowledge my debt to the late Lord Milner for his expression, “ The Money Power,” and for his book, Questions of the Hour , and to Major C.H. Douglas for his writings upon the monopoly of credit. My sincere thanks are due to my friend Douglas Woodruff for his most valuable help, to my friend W.F. Casey for his kindness in reading the proofs, to my friend Douglas Jerrold for his sympathy and understanding, and to my friend the Rev. Samuel Ford, Vicar of All Souls’, Loudoun Road, London, for the inspiration of his preaching.
R. MCNAIR WILSON.
LONDON,
March, 1934
INTRODUCTION TO THE SECOND EDITION
IT is, naturally, a joy to me that the first edition of this book has been sold out within a period of months, for I believe that the opinions expressed in the book are of importance to my own and other countries at the present time.
I can hold this view without vanity or self-congratulation because these opinions, far from being new, are as old as European history. At no time in that history have they lacked some advocate. It is with the most profound happiness that I see, across the Atlantic, a new champion of these opinions rising who is worthy to be their exponent alike by reason of his Christianity, his statesmanship, his knowledge, his political sagacity and his courage. I mean President Roosevelt.
Public comment upon President Roosevelt’s administration has already made it plain that in the minds of the majority of men and women it represents what may be called a halfway house between democracy and dictatorship, and there is further implied in these comments the idea that democracy and dictatorship are the only methods of government available to men, and that all forms of government, however apparently varied, can be placed in one or other of these great classes.
It is the purpose of this book to combat that idea and to urge that a third choice exists—namely, Christian Monarchy. Emphasis has been laid upon the word “Christian” because Christian Monarchy possesses qualities peculiar to itself which derive directly from the Christian faith. In my submission all forms of human society are based on religious ideas and express relationships of one kind or another to the supernatural. I take the view, for example, that the dictatorships now in being in many European countries are based upon the same religious ideas as underlie the so-called democracies which these dictatorships have replaced. It is outside the scope of this work to trace the origins and history of the religion whose modern expression is financial democracy, but I wish to emphasise my belief that it is a real religion, of respectable antiquity. I am disposed to think that Buddhism is one of its earliest manifestations, and I feel convinced that Platonism and Neo-Platonism, Stoicism and Cynicism, have all made contribution to its growth. Spinoza certainly deserves mention if only as the precursor of Rousseau, and so also do Voltaire, Montesquieu and many other philosophers of the Eighteenth Century. The French Revolutionaries were all imbued with this faith, as they showed in various more or less crude ways; for instance, the worship of Reason as god or goddess, the insistence, upon Rights as opposed to duties, and the praise offered to Beauty both as abstraction and as woman. Robespierre’s “acknowledgment of the Supreme Being” was a belated attempt to reconcile this pagan faith with what remained to the French people of Christian thought. In the Nineteenth Century that reconciliation was effected so that millions who called themselves Christians lived, on the contrary, in accordance with ideas which are opposed to Christianity, without finding out that a deception had been practised upon them. The decline of Christianity in the Nineteenth Century is due, in my opinion, chiefly to this cause.
I wish my reader to form some idea of the “pagan faith” about which I am speaking, because, if he fails to do this, he will fail to understand the strength and the tenacity of the Money Power which constitutes, to-day, a kind of priesthood of the pagan god. The essence of the pagan faith was its rational character. It separated the intellect of men from all other faculties and exalted it above all other faculties. The appeal was ever to Reason against superstition, to Right against privilege, and to Beauty against ugliness. The conclusion was inevitable that the most intellectual ought to rule and direct. That, however, was a conclusion at variance with the idea of universal human right—namely, that every man ought to govern himself. Reconciliation was effected by allowing “the people” to choose “enlightened” representatives who, having been chosen, would become leaders. The party system secured that choice at elections should lie between persons of substantial wisdom. This was the avowed basis of parliamentary democracy. The real, unavowed basis was money, because parties had to meet heavy expenses and could only do so if rich men were prepared to finance them. It was easy, as it happened, to fit the rich man into the political structure of this paganism, for none but men of intelligence could acquire great wealth, and in fact most of the great bankers were men of high intellectual attainment. Soon, therefore, the attributes of the pagan god were enlarged to include wealth. When this had been accomplished it was an irresistible conclusion that he had made bankers in his own image.
Consequently the business of usury, which in the Age of Faith had been viewed with horror and loathing, came to be honoured above all other businesses and to acquire a peculiar, almost sacred, character. Bankers were called pillars of the state and even of the Churches, and none hesitated for a moment to bestow the name of Christian upon their activities. God, it was felt, had given largely to recipients so worthy of his bounty. Thus governments or politicians who opposed the bankers or called down their wrath were held to be immoral, dishonest, and even unpatriotic or irreligious. The power which Parliaments had taken from Kings was handed over to bankers, and the representatives of the people were warned that in no circumstances must they dare to interfere with Money. This was another wav of saving that popular representatives were necessarily less honest than usurers.
Thus the pagan faith found expression in a dictatorship which required no bayonets, apparently, to maintain it. Men could have votes; they could have free speech and free writing. Their rights were secure and their destiny belonged to their own intelligence. What they did not see was that one thing was lacking to this freedom—namely, food. The power to give or to withhold the means of livelihood had passed wholly into the bankers’ hands because, as the sole fountain of money, the banker was able to give or to take away the means of exchanging the products of labour.
We see to-day that, if the banker’s power is seriously challenged in any country, so-called democracy is transformed overnight into crude dictatorship. What we are apt not to see is that such dictatorship differs very little from the democracy which preceded it. Still the foundation is the “pagan faith,” and the source of power, starvation. Financial democracy and dictatorship are always, and necessarily, interchangeable, because they are based on the same philosophical and religious ideas.
It is of importance that the difference between this pagan religion and Christianity should be understood. Christianity is a revelation of God proceeding from God Himself. It is also the means of Salvation by which men may achieve the object of their existence—namely, eternal life : “And this is life eternal, that ye may know the Lord your God, and, Jesus Christ Whom He has sent.” Christian policy was, and is, based upon the belief that the kingdoms of this world are part of, and preliminary to, the Kingdom of Heaven. The commands of Our Lord that the Christian must love God and his neighbour were interpreted as establishing, in the sphere of temporal government, what the Pope has called his “ dignity as a man and a Christian.” There was no question of any intellectual merit or monetary power; on the contrary, the Lord Jesus Christ expressly thanked God that He had chosen to hide His Truth from the wise and prudent and to reveal It to babes. The poor, the humble, the weak and the afflicted were declared to be nearer to the Kingdom of Heaven than men and women more happily situated, whether by reason of intellectual gifts or of worldly possessions.
In accordance with this teaching Christian policy was based upon the individual. Its object was to secure to the individual the opportunity of worship and the means of service, which necessarily included the means of living. Thus, human right was identified with, and was derived from, duty. Duty itself expressed man’s relationship to God; its mainspring, therefore, was love or loyalty, a willing and reasonable service. This loyalty was the cement of the social order, which, in consequence, stood in need neither of inducement nor of fear to maintain it. Leadership was, thus, conditioned by objects which were apprehended and understood of all; it was guaranteed by a supreme sovereignty, the Christian Monarchy, through which the people made its will effective. King and People were one. Because of the religious faith which united them they were irresistible, so that no private claim to right or privilege could be sustained against them. Christianity, in other words, was the legitimacy of kingship; Christianity, at the same time, was the charter of democracy. It sustained the throne; it upheld the poor man’s roof; it made the weak strong and the strong weak. Even money was held in subjection as a means to an end. God’s image was not the powerful sovereign, nor the baron, nor the merchant prince, nor the moneylender, but “one of the least of these my little ones.” “He that is greatest among you, let him be your servant.” All were servants, ministers, vehicles of love; and rank itself was measured in degrees of service, not of man only or chiefly, but of God. The Christian state was not a commonwealth in the sense that all its citizens were shareholders for their worldly benefit. The idea of worldly gain was wholly foreign to its conception. The object of Christian government was not to exploit natural resources for the advantage of men and women, but to secure to men and women the means of eternal life, their highest advantage. Every other consideration yielded place to this supreme necessity. While, therefore, Christian Monarchy can properly be described as government by the people for the people, such a description is wholly inadequate. In its pure form it was government of Christians according to the will of Christ which each one of the governed acknowledged to be binding upon him. Such questions as private ownership of property, investment and financial policy were decided in the light of the Christian revelation, and every decision had reference to the poor, the needy, and the afflicted.
R. McNAIR WILSON.
BOOK I
Re-Dedication
“God is marching on” — President Roosevelt
I beg my readers’ indulgence for an attempt to bring into focus the events described in the Conclusion of the book, which was written in December 1932. At that time the history of England at the beginning of the Nineteenth Century was being repeated in America at the beginning of the Twentieth. The Napoleonic Wars left England the creditor of Europe, and placed in the possession of London and firms connected with her most of the gold in the world. This wealth was concentrated in a relatively small number of hands. In Book II my reader may see for himself how, in spite of attempts to maintain freedom, first the nobility and the squires and then the industrialists were brought into subjection. This process of subjugation was attended by grievous affliction of the English people, whose sufferings are on record in a series of Blue books, to which later generations cannot turn without dismay. Briefly stated, the avowed object of the financial authorities was a stable price-level, a benefit easily understood by everyone. In fact, however, it was not the stability of the price-level but the control of it which really interested the financiers. Those who know anything about the credit system know that the one thing which it cannot possibly produce and which it never has produced at any time is a stable price-level. Hundreds of economists have exerted themselves to explain what is called the “credit cycle” or “trade cycle”—namely, the upward and downward movement of prices which continued right through the Nineteenth Century. None, so far, has offered any real hope that the cycle can be avoided under a system of credit.
What is a credit system ? Without trespassing too far on the explanations which follow, it may be described, briefly, as a system in which promises-to-pay money take the place of money itself. Real money, under this system it is true, is issued by the Government; but it is very strictly limited in amount. “Credit” consists of promises-to-pay this real money, which promises are lent to producers and industrialists by bankers and, in time, reach the public as wages, salaries, dividends or profits. Money is never issued except as loans of these promises-to-pay, and consequently the amount of money in the hands of the public corresponds to the amount of the bankers’ loans. Thus the bankers control buying power absolutely.
Most people believe that bankers possess real money to the full amount of all the promises-to-pay issued by them, and consequently the promises of bankers are always readily accepted. In fact, however, this belief is erroneous. Bankers possess only one-tenth of the money they promise to pay. Further, and contrary to general belief, bankers never lend the money deposited with them by their clients. Ordinary banking practice the world over consists in lending promises-to-pay ten times the amount of real money in the banker’s possession. The fact that this is so is proved by the behaviour of the bankers themselves. Every banker stops lending promises when the amount of his promises on loan exceeds by ten times his holding of real money. It is true that bankers demand security for their loans, and it is also true that some bankers try to maintain that their promises-to-pay are based do the value of these securities. But this cannot be so because, if it were so, no need would exist to stop lending when loans had reached ten times the holding of cash. Still less would need exist to cut down loans at once if the cash holding happened to be reduced in amount.
It is of the utmost importance to grasp and understand this practice, because in this practice lies the explanation of the series of booms and slumps which have always attended the operations of the credit system. Obviously, if private promises-to-pay money (I.O.U.s) have been allowed to replace real money as the medium of exchange and if a strict limit is set to the amount of these promises which can be issued, every boom in trade must end when all the promises that can be lent have been lent. If the banker, the promise lender, is limited in his operations to ten times his holding of cash, he will be compelled to refuse further loans often at the very moment when markets are overloaded with goods. The effect of this refusal must be a fall in prices, seeing that the surplus goods cannot be bought at existing price levels—the means of buying them being withheld. For money is buying-power. And, as has been said, money reaches the public only in the form of loans by bankers of their promises-to-pay money. Such a fall in prices always tends to be sharp and is always, necessarily, attended by a fall in wages.
Thus business languishes and the desire to borrow dies away. In these circumstances the lender of promises uses the promises he cannot lend (that is to say, the promises which have been paid back to him by producers who are no longer able to manufacture on the old scale) to buy Government securities and buying power, consequently, oozes away from the commodity markets. But reduced production, in the long run, leads to depletion of stocks. At this point the banker sells his Government securities (which he bought with his “idle” promises), and re-lends these promises to industry—thus flooding the empty markets with the means of exchanging goods and so inflating the prices of such goods as remain in the markets. Prices having risen, everyone sees a profit and wants to borrow money in order to get that profit by manufacturing goods. And so a new boom begins and continues until, once more, all the available promises have been lent to industry and a halt must once more be called. Thus, again, slump succeeds to boom and boom to slump.
Now, it is obvious that one of the weak places in this system is the necessity of ceasing to lend at a point unrelated to the needs of production or consumption. So long as goods are being produced and so long as people exist who need these goods money ought to be available to enable the goods to be bought and used. If such extra money is not made available one of two things must happen : either the goods will have to be destroyed or the price level will have to fall so as to enable the new goods as well as the old goods to be disposed of within the existing buying power of the markets.
But, evidently, this inherent weakness of the credit system may be made to serve the private ends of those who administer it. For the power to lend or not to lend is the power to increase or decrease the quantity of money in the market, and so to raise prices or to lower them; and that is the power of life or death, seeing that every man is burdened with fixed costs, such as rent, which cannot be reduced immediately when prices fall.
The lender of promises-to-pay, however, is compelled by law to make good these promises of his whenever and by whomsoever asked to do so. Here is his chief anxiety. Having lent promises-to-pay ten times the quantity of money in his possession, he must so arrange matters that the largest actual demand on him for fulfilment of his promises, that is to say for real money, shall never exceed one-tenth part of the possible demand. He achieves this purpose by inducing people to use “credit instruments” instead of money. Thus, a cheque may be drawn against a loan from a bank (an overdraft). The person who receives the cheque will pay it into his bank, where it will become a ledger entry in his favour. He himself, in his turn, will write cheques against his “money in the bank.” Obviously no real money is required for such transactions. This is but one example of the many “credit instruments” known to the financial system. Those, on the other hand, who ask for actual money—being a small number as against those who use “credit instruments”—are readily and easily suppnea with it. Let the reader ask himself how much of his own money he spends in actual coin or notes and how much he spends by means of cheques. He will find that his use of real money is, probably, far less than one-tenth of his use of credit instruments (cheques). There is the inner secret of the bankers’ power. Like a juggler who can keep four balls in the air by means of the activities of two hands, the banker is able to meet all the demands on him for real money, and so to create the illusion that he has enough real money to pay all the demands that could conceivably be made.
History, however, shows that any strong “run” on a bank—that is to say any large demand that the promises-to-pay shall be honoured in real money—has always broken it. If the “run” becomes nation-wide and many banks are involved, the Government comes to the rescue. This happened in England in 1847, 1857 and 1866, and, later, in 1914. It happened in America in March last year, 1933. The breaking of a bank means, of course, that all the people who have entrusted their savings to it lose these savings. For their savings are not represented by real money but only by bankers’ promises-to-pay that real money. And bankers possess only one-tenth of the real money they have promised to pay.
In England, after the Napoleonic Wars, the farmers and industrialists tried to break the fetters of this credit system which, without rhyme or reason, so far as they could see, refused the money necessary to the exchange of their goods after a certain fixed quantity of money had been issued. These Farmers and industrialists accused the bankers of being stupid and short-sighted. Why, it was demanded, must every expansion of trade be brought to a standstill before there was any real need for contraction ? Why not, as more goods came into the market, put out more money to buy them ? And so on. The people who argued in this way were unaware that no banker dared to accede to their demands, however much he might wish to do so. They did not know that bankers were lending promises-to-pay money which they did not possess and that, consequently, come what might, they must avoid being caught out by any sudden demand for real money.
How is such a sudden demand likely to arise ? It has already been pointed out that the time chosen by bankers to expand their loans to industry is the time when, stocks having been depleted, markets are more or less empty of goods. If a market in which goods are scarce is suddenly flooded with money, prices must rise, for there will be more buyers than sellers. As soon, however, as goods begin to come to these empty markets prices will tend to fall unless more money is kept flowing in. This is, of course, a vicious system, because it is putting the cart before the horse. The time when more money is needed is not when a market is empty of goods but when it is too full of goods. If the money appears before the goods have appeared, prices must rush up. But if the money appears at the same time as the goods, prices will not rise and will be prevented from falling.
Why, then, do the bankers adopt this system of flooding empty markets with money ? The answer is that their system demands that prices shall be made to rise sharply, or, in other words, that what they call “inflation,” when anybody else performs it, shall take place. The reason why a sharp rise of prices is necessary is that a sharp rise offers the chance of a big profit, and so tempts large numbers of people to borrow promises-to-pay from the bankers and to pay good rates of interest on these promises. This is what bankers speak of as “Confidence.”
Confidence—that is to say, the rise of prices and so of profits—continues so long as money is being pumped into the markets in excess of goods (in the form; for example, of wages paid to people who are employed in building factories from which, ultimately, goods will come). But as soon as the pumping—in of money stops the rise of prices, and with it confidence, will disappear. The bankers, as has been seen, must stop lending when their loans of promises have reached a definite proportion of their holdings of cash, no matter how great may be the quantity of goods in the market at that moment. Consequently, the level of prices will begin to fall just when the newly created goods are becoming most plentiful. Then, as has been seen, producers will be told that there has been “over-production.” Booms and slumps, in other words, are inherent in the nature of a system which is based on the lending of promises-to-pay money that the lender of the promises does not possess. If real money—for example, Treasury Notes—was being issued by the King in accordance with the needs of his people, it would be issued only when goods actually came onto the market. No sharp rises of price would occur in such circumstances, nor would any need exist to refuse to produce more money as more and yet more goods appeared. In other words, men would be enabled to produce and to consume as much as they desired.
The artificially produced rise of prices which heralds and accompanies every boom, and which represents a true inflation, imposes a further stress on the credit system. When prices are low wages also are low, and hence less money is needed to pay wages. Wages are paid not by cheque but in actual money. Consequently a rise of prices, which sooner or later means a rise of wages also, imposes a bigger demand for actual money on the banking system. Bankers find that the employers who have borrowed from them want more pounds, shillings and pence each week when pay-day comes round. That demand is an increased demand that promises-to-pay shall be honoured in actual money. Hence the need of stopping the rise of prices.
The credit system, in short, is a fraudulent system. It is based on what are essentially false promises. It professes, falsely, to keep prices stable, whereas, in fact, it cannot operate at all unless prices can be made to rise and fall. It professes to abhor both inflations and deflations, whereas, in fact, it exists by means of inflations (flooding empty markets with money and so raising prices), and of deflations (draining money away from overstocked markets). Bankers may and do defend themselves by saying that the credit system cannot be made to work except by the methods they employ. This is true. But the moral is not that these methods must be employed but rather that the credit system itself must be abolished. Money must serve industry and not industry money. Prices must not remain the playthings of the creators and lenders of promises-to-pay non-existent money. That is another way of saying that the power of life and death over producers and workpeople, the whole nation, must be taken from the hands of private people without any real substance and restored to the hands of the people’s representative—namely, the King.
The financial panics which occurred in England in the early years of the Nineteenth Century were due, primarily, to the resistance offered by producers to the bankers. The farmers and industrialists compelled the bankers occasion ally to go on lending promises-to-pay beyond the “limits of safety” of the credit system. Prices and wages were thus forced up and up, until the demands for real money exceeded the bankers’ holdings. “Runs” then took place, and banks broke. But instead of these “runs” convincing people that there was something inherently vicious in the system (namely, the issue of money in advance of the arrival of goods on the market) the conclusion was drawn that what was wrong was an excessive prolongation of the booms. It the banks has stopped lending when their promises-to-pay amounted to ten times their holdings of cash, it was argued, the “runs” would not have taken place. Consequently, instead of putting an end to the credit system and regaining the control of money, the Government of the day established the gold standard, a device by which, when prices rose, gold would be caused to flow out of the country, and when gold flowed out of the country home bankers would be compelled to cut down their loans. On the face of it the gold standard seemed to offer a means of abolishing both booms and slumps. Actually, however, it achieved no such result. The credit system remained; indeed, gold gave the credit system a new guarantee and a new prestige. It is simply untrue that, after the gold standard began to operate, booms and slumps ceased. They have never ceased and never can cease so long as the credit system lasts. All that happened was that the more extreme movements were “ironed out.”
“Being on the gold standard,” in fact, is a most misleading term. So is the term “off the gold standard.” The truth is that so long as the credit system operates every nation, whether “on” or “off” gold, is in the same position. Its price-level remains at the mercy of the world’s bankers. Only that nation which abolishes the private ownership of credit will have reached freedom. Indeed it is true to say that only that nation which abolishes credit will be free—because the term National Credit is meaningless. A national credit system is not a credit system at all but a currency system, seeing that a nation has the power to make its credit instruments legal tender. The King, in other words, does not need to “promise to pay” real money. Any money issued by him, whether in the form of coin or notes or figures in a ledger, is real money for the wood reason that he is the fountain of money.
The English farmers and industrialists were defeated by and subjected to the credit system and passed, in consequence, under the dominion of international finance. If some industrialists and some noblemen were given “plums” by their conquerors, that was only to consolidate the position of these conquerors. England was conquered as effectively as she had been conquered by the Normans, and Englishmen, unhappily, were little better than victims of a Money System which, being founded on false promises, could not be other than a taskmaster, dispensing to all its victims an “inexorable economic law.”
The sign and seal of this enslavement was the loss by the English Government of the control of the price-level, which remained, and remains, wholly at the mercy of the financial powers. The credit system and the private control of the price-level are two names for the same thing. (The gold standard is merely a regulator of this private control; it could be used equally well as a regulator of a national currency system. As things stand it is a promise-lender’s lure which secures to the owners of gold the power to resist and overcome their opponents.)
Government control of the price-level, therefore, is incompatible with the existing financial system. Stable prices enable producers to get out of debt and so to escape from the promise-lender’s clutches. There is the secret of the fury against commodity dollars ( i.e., dollars with a fixed purchasing power), which the bankers are now displaying. If a Government determines to fix prices and hold them fixed, it is adopting a course the end of which is the escape of its people from usury and the consequent destruction of usury. Because, once good borrowers have got out of debt, promise-lending becomes too dangerous to be carried on on any considerable scale. As the promise-lenders, perforce, withdraw from the field, the Government must step in with real money—or the price-level will fall. Thus, when the power to move the level of prices up or down is taken out of private hands, a private credit system will inevitably become a currency system, a system, that is to say, not of promises-to-pay non-existent money, but of money itself. If these facts are borne in mind the assault which was made on the American price-level soon after the War will be understood.
The Great War did for America what the Napoleonic Wars had done for England; America became the creditor of Europe and the owner of most of the world’s gold. It is explained in the text how this situation gave rise to demands that American agriculture and American industry should at once be brought into subjection to American (and world) finance—that American prices and wages, in short, should be reduced to the world level and made easily movable up and down according to the needs of the lenders of promises-to-pay. It is shown in the text how stubborn was the resistance offered by the American industrialists and farmers to this onslaught; but it is shown also that resistance was gradually being destroyed and broken down by a series of catastrophes not unlike those by which the resistance of Englishmen had been subdued a century before. I ventured to prophesy that the outlook for the World Economic Conference was not very bright, but I feared greatly, nevertheless, that American production, like English production, would go down before the onslaught of the promise-lenders.
That fear grew as the year 1933 advanced. Twelve million hungry and often desperate men walked the streets and highways of the United States. Women and children of these men went uncared for, except by private charity, amid an abundance of goods. Farmers were banding together to beat off the usurers’ men from their hearths; workers in some instances actually faced machine guns and tear-gas bombs in order to retain the roofs over their children’s heads. Would a people, stripped and stricken, as armies do not strip nor strike, hold out longer against the demands of “sound finance”?
In the middle of these doubtings came the thought that it was indeed miraculous that so long and so stout a resistance had been offered. My reader will judge of that when he comes to the descriptions of the various calamities which the American people suffered. This was the people against whom the promise-lenders had hurled every invective in their vocabulary. This was “Uncle Shylock” glutting himself with gold. This was the land of the “Almighty dollar.” These were the “poor boobs” from “way back” who knew nothing and understood nothing, the worshippers of prosperity and of their “inflated” standard of living. The Americans lost their prosperity and their standard of living. But not their courage. They continued to resist the demands that their tariff’ should be lowered and their gold allowed to run out, and this although all their leaders promised them abundant prosperity if they would only give way. I have heard all the purely materialistic explanations of this resistance and I confess that they do not wholly satisfy me. No doubt Americans are anxious to preserve what they can of their possessions; no doubt they are human beings with the weaknesses of human beings, the greeds and fears and ambitions. But this resistance seems to me to transcend such motives. It may have begun as a protest against loss of trade; it continued when ruin was in full possession and when none could see even a ray of hope. I doubted, then, the materialism of America and began to see, as I thought, another spirit, young perhaps, but heroic and faithful. Could it be that, under the surface of things, the Christian spirit was alive and quick in this great land ?
And then, in March, the rumble of a new earthquake, the collapse of the banks, with the promise-lenders croaking dismally, “I told you so,” and licking their lips at the thought of final, overwhelming triumph. Across that clamour of downfall the voice of the new President reached Europe and the world, promising a “re-dedication” of the people and asking, in that re-dedication, the help of Almighty God.
I confess that, until that moment, I had had very little hope of President Roosevelt. I thought that he was “a sound money man,” pledged to reduce the tariff and extinguish the War Debts. I confess further that since that day in March I have sometimes doubted him. But nothing which followed removed the thrill which his words occasioned. This man, in Ibsen’s phrase, possessed “the King-thought.”
It became clear very soon that the promise-lenders had good hope of making capital out of the banking crisis. Statements that the crisis indicated merely how right Finance had been and how wrong was the opposition to it began to appear, and the new President was advised to keep the small banks closed and “cut out the deadwood,” which means the savings of large numbers of men and women. The banking system, it was demanded, must now be centralized like the English banking system. Prophecies that the tariff would soon be lowered were made freely, and there was a new, jubilant note in all the bankers’ talk. The references to “money changers” in President Roosevelt’s inaugural address seemed to have been forgotten. After all, he was a politician and, no doubt, had to say something in the very trying circumstances.
This attitude convinced most people that the American resistance was about to come to an end in the way desired by international finance. The eager preparations for the World Economic Conference confirmed that melancholy belief. On all sides financiers described President Roosevelt as a “big man,” and foretold how he would break the resistance of Congress, that stubborn obstacle to the fulfilment of their wishes. Even America’s sudden abandonment of the gold standard did not suffice to shake this faith, though it occasioned a sharp spasm of alarm and indignation. On the eve of the World Conference, it was everywhere held that a universal return to the gold standard as the prop of the credit system was about to take place. All, indeed, that remained in doubt was the relationship which ought to exist between the pound and the dollar.
It is well to understand what this attitude meant. The international financiers proposed that the “return to gold” should be the signal for a great expansion of credit throughout the world—that is to say, of a great increase in the volume of promise-lending. Prices would undoubtedly have risen sharply under this stimulus, for stocks were exhausted. It would then have been proclaimed to a joyous world that, once again, salvation had come through the banking system and the gold standard.
Incidentally, however, other plans were held in mind. A universal return to gold would have been the signal for a flight to the pound from both the dollar and the franc, for the reason that England was considered a safer place for money than either New York or Paris. This flight of “short-term money” must have made pounds dear and dollars and francs cheap (for money increases and decreases in value according to the demand for it). President Roosevelt would thus have been assailed by demands for gold with which to buy pounds, or, in other words, people would have changed their dollars into gold and bought their pounds with the gold instead of buying their pounds directly with the depreciated dollars.
Thus, if President Roosevelt had done what it was hoped and believed and expected that he would do, the World Economic Conference would have been followed by a huge, even a torrential, outflow of gold from America to London. London, in consequence, would have regained her dominant position as the holder of the world’s stock of gold and the promise-lenders, free at last of the shackles of American resistance, would have triumphed once more.
But President Roosevelt appears to have foreseen this danger. No sooner was the World Conference in being than he refused absolutely to stabilize his dollar. What he was concerned about, he declared, was not stabilization but price raising, and, after that, price fixing. He had made this clear two months earlier in the statement issued by him and by the British Prime Minister:
“ The necessity for an increase in the general level of commodity prices was recognized as primary and fundamental. . . . We must, when circumstances permit, reestablish an international monetary standard which will operate successfully without depressing prices. . . .”
The promise-lenders knew of no international monetary standard which would operate successfully without sooner or later depressing prices, nor did they wish to hear about such a standard seeing that fixation of price, as has been shown, is incompatible with the system of promise-lending. Consequently, this plain warning of what was coming was brushed aside. When the blow fell on June 18, 1933, it produced consternation. The Conference had failed. There was to be no return to gold, no outflow of gold from America, no expansion of credit, no inflation in the world’s empty markets, no rise of price-level, no boom. On the contrary, the dreadful spectre of fixed prices (the “commodity dollar”) loomed before the masters of the credit system. Appeal after appeal was sent to Washington. On July 3, the President cabled his own message :
It would be a “catastrophe amounting to a world tragedy” if the Conference should forsake its great purpose of helping mankind because of the failure to agree upon a “proposal of a purely artificial and temporary expedient affecting the monetary exchange of a few nations only.” The demand for a return to gold was a “specious policy” full of “basic economic errors” and “fetishes of so-called international bankers.”
Never was challenge spoken in tones of a loftier scorn. All these delegates, it was declared by implication, had been brought to London not to help a broken world to rise again and not to give that world a newer and better system than the system which had ruined it, but only to re-establish promise-lending.
Bewildered British statesmen who, with the best will in the world, had called the Conference, felt hurt that, for some reason not understood by any one of them, the American President had turned his back on them. They tried to keep the Conference in being. When their efforts failed they congratulated themselves that, in any case, they had done what they could.
But the masters of finance were in a very different mood. If they did not, as yet, fear President Roosevelt, they wished to discredit him as statesman and leader. The magicians of all the “cities” and “streets” made ready to cast their darkest spells on this uncomfortable occupant of the White House. What did he know about high finance ? They would soon show him that the credit system is greater than the power of a President.
They reckoned without the “King-thought.” In these months since his inauguration President Roosevelt had been engaged on a task lying far beyond the comprehension of Wall Street. He had been establishing himself in the love and confidence of the people, using the wireless to this end with astonishing skill. The Press, that greatest invention and engine of finance, by which Kings and peoples had everywhere been separated and held asunder, was circumvented. No matter what the headlines might say, the President could explain quietly, of an evening, what was really in his mind. Nor had he stopped at explanation. He had gone in person to many Christian bodies and delivered to them addresses in which he bade them realize that they were the vanguard of the “New Deal.” Thus leader and people become one in the spirit of service which is the spirit of Christ, and thus, once again, were established the pillars of European civilization on their ancient foundations. America received from the hands of her President the spiritual inheritance of Christendom.
And so when the bankers’ offensive against the President was launched last November it failed of its object. Had not this American people been spectators of the Senate Banking Inquiry ? The scales had fallen from millions of eyes. President and people were one man. Congress knew another master and made ready to serve him. In other words, the essential features of Christian Monarchy had been given to America instead of the greed system of international finance or the fear system of dictatorship. The greed system has ever masqueraded under the name of democracy—a name to which it has no title. It has been maintained by popularly elected chambers of politicians who, whatever their qualities, have seldom, anywhere, so much as questioned the right of a private monopoly to control price-levels, create promise-money and take possession of their neighbours’ goods, by the mere process of writing figures in ledgers. Politicians who permit and support a system whereby the power of life and death over every citizen is given to a private monopoly cannot reasonably be described as upholders of popular rights, of liberty or of democracy. They are more truthfully described as the ignorant functionaries, even the lackeys, of a wholly irresponsible and entirely unrepresentative dictatorship, the aims and objects of which are everywhere opposed to those of the citizens who elect the politicians. Financial democracy is a system of pillage disguised under a cloak of philosophical liberalism which, unhappily, has deceived many honest men, including creative artists, lovers of peace and lovers of freedom.
In these circumstances the idea that the gold standard, or any other standard by which the credit system may from time to time be bolstered up, can offer the smallest protection against the rapacity of “politicians” is illusory. “Politicians” and the credit system are part and parcel of the same financial “democracy.” It is not the peculations of a few rogues that signify, but the wholesale annexation of the work and goods of nations which power to change the level of prices bestows. The bankers make much capital of the fear of politicians which infects many honest minds, and so are enabled to carry out operations of their own on the most gigantic scale without a word of criticism. Any politician who possessed enough knowledge of the secrets of finance to offer an effective resistance would soon discover what the public has been taught to believe about politicians when they dare to trespass on the consecrated ground of monetary policy.
But the politicians, certainly, are in no position to criticize the dictators. Who can exert a dictatorship more absolute than that by which the prices men shall obtain for their labour and goods can be determined ? Dictatorship has many forms; the most powerful and probably the most evil form of dictatorship is that secret form known as the credit system, whereby, under a veneer of political liberty, men are divided and ruled by the fear of hunger. All dictatorship is hateful ; but if a choice of evils must be made, most men would prefer to face bayonets rather than to be compelled and coerced by the spectacle of the undernourishment of their children.
I shall have failed utterly in the purpose of this book if I do not make it clear that Christian Monarchy has as little resemblance to dictatorship as it has to financial democracy. Greed and fear can have no part in loyalty. Christian Monarchy took centuries to build up and make perfect. It represents, as I believe, the last word which has so far been spoken in political wisdom. I know of no substitute for it nor can I conceive of any substitute.
But in saying that I am not setting out to prove that Kings are invariably good men. Many a rogue and many a fool has sat on a throne. Many a King has sold himself to money-lenders. Many a King has denied or attacked that Christian faith on which his throne was built. Such instances can be matched from any kind of government which men have ever found. What I am insisting upon is that the Christian religion affords a basis for a kind of government, Christian Monarchy, which more than any other kind of government enables men to realize the chief end of man—namely, that he may know the Lord his God and so order his life that time and eternity become one event in the love of the Lord Jesus Christ. Christian Monarchy is not only not irreconcilable with democracy; it is the only conceivable guarantee of democracy, of liberty, and of an ordered progress whether in the production of goods or in the development of mind and spirit. Such institutions as parliaments regain at once their true function when the union of King and people affords them protection against private interests and the secret assaults of money. But there cannot, as has been said, be a consecrated King without a consecrated people. Christian Monarchy, therefore, is always leadership by consent. It is always leadership by love—in the first instance, love of the Lord Jesus Christ and one’s neighbour. It is my personal belief that the resistance to finance today springs from an outpouring over the world of the spirit of Christianity—that, in short, we are witnessing a real renaissance. The love-song of Christ rises once more above the din of the merchants of money and power.
It is worth noting that, already, President Roosevelt has embarked on policies the aim of which is the nationalization of money and of land but not of private enterprise. The Christian King held both land and money (the means of production and exchange) in trusteeship for his people. His people were free to serve one another in any individual enterprise and to take for themselves the products of such enterprise. The doctrines of Socialism and Communism have their origin in a misunderstanding of the nature and power of the credit system. They represent attempts to achieve the impossible—namely, to adapt the system of private credit to the uses of mankind. It is significant that many bankers and financial leaders speak well of Socialism, of “National Socialism,” of Fascism, of Nazi-ism, and even, occasionally, of Bolshevism. It was from the financiers that the world heard first about the blessings of “rationalization.” The world is hearing now about “planned economy,” which, it is to be feared, means a regimentation of men and women in the interest of the credit system. Christian Monarchy stands far away and far above all these devices for perpetuating the rule of the promise-lenders. The dictatorship of finance with its false liberalism flows over easily into the dictatorship of bayonets, which, again, can be re-converted at will into the dictatorship of finance. Christian Monarchy has no part in this tragic kaleidoscope.
It remains to ask what is the purpose behind the financial policy which President Roosevelt put into operation on February 1 of this present year. I speak with diffidence because I speak without any special knowledge; but I believe that what we are now witnessing is an attempt to give to the world the blessing of national control of the price-level. If the nations of the world agreed to maintain a stable price-level then exchanges would automatically be stabilized and the gold standard could be turned from the uses of the private monopoly of credit to the uses of mankind. It may be that the President feels that his new gold standard cannot succeed until the old gold standard has been abandoned by all the nations. It is reasonably clear that, if the old gold standard can be defeated in open conflict with the new, the masters of the monopoly of credit will have suffered what must, sooner or later, prove to be a mortal blow. A stable price-level, as has been said, means the use by men of all their powers of production and the enjoyment by men—of all the goods produced by them. I am far from feeling assured of victory. But this, at any rate, is sure. If the Roosevelt policy succeeds humanity will have been rescued from the power both of greed and of fear. That is the prospect of a new world. I beg my readers to realize that salvation, if it comes, will have come from consecration and not from force or any orgy of aggression. “God,” said President Roosevelt, “is marching on.” The sole guarantee which men can have of their civilization is the spirit which, in the beginning, called that civilization into being, and gave form, in the first instance, to its lively organs. We in England possess still the inestimable blessing of a Christian Monarchy. How much we owe to that Monarchy is but little understood by the mass of the people, for the truth about the Nineteenth Century has not yet emerged. Englishmen, today, who are seized of the nature and extent of the struggle in progress must pray, as perhaps they have not prayed before, “God save the King.”