Jim Luckman looked at Sam Bending in open admiration. "Wow," he said
softly. "You're quite a genius, Sam."
"Very well, gentlemen," Condley continued, "we know what this device
will do on a physical level. Now we must consider what it will do on an
economic level. Have you considered what would happen if you put the
Converter on the market, Mr. Bending?"
"Certainly," Bending said, with an angry glance at Olcott. "The Power
Utilities would lose their pants. So what? I figure that any company
which tries to steal and suppress inventions deserves a licking."
Secretary Condley glanced at Olcott as though he were trying to hold
back a smile, then returned his gaze to Bending. "We won't quibble over
the ethics of the situation, Mr. Bending. You are correct in saying that
Power Utilities would be bankrupt. They couldn't stand the competition
of what amounts to almost unlimited free power. And then what would
happen, with every power company in the United States suddenly put out
of business?"
Sam looked puzzled. "What difference would it make? People would just be
getting their power from another source, that's all."
Richard Olcott leaned forward earnestly. "May I interject something
here? I know you are angry with me, Mr. Bending--perhaps with good
reason. But I'd like to point out something that you might not have
recognized. Public Utilities and its co-operative independent companies
are not owned by individuals. Much of the stock is owned by small
share-holders who have only a few shares each. The several billion
dollars that these companies are worth is spread out over the nation,
not just centered with a few wealthy men. In addition, a great many
shares are held by insurance companies and banks. Literally millions of
people would lose money--just as surely as if it had been stolen from
them--if this device went on the market."
Bending frowned. He hadn't thought of it in exactly that way. "Still,"
he said tentatively, "didn't blacksmiths and buggy-whip manufacturers
and horse-breeders lose money after World War I?"
"Not to this extent," Olcott said, shaking his head. "This is not 1918,
Mr. Bending. Sixty years ago, our economy was based on gold, not, as it
is today on production and manpower, centered in the vast interlocking
web of American industry."
Condley said: "Mr. Olcott said a moment ago that millions of people
would lose money just as surely as if it had been stolen from them. I
think it would be more proper to say that the money will be destroyed,
not stolen. A thief, after all, does put money back into circulation
after he steals it. But when vast amounts of wealth are suddenly removed
from circulation completely, the economic balance is disastrously
upset."
* * * * *
Sam Bending was still frowning. His grandfather had been a small
businessman in 1929--not fabulously wealthy, but certainly well off by
the social standards of the day. Two years later, in 1931, he was broke,
wiped out completely, happy and eager to accept any odd job he could get
to support his family.
Sam's father had had to leave school during the Thirties and go to work
in order to bring in enough money to keep the family going. Grandfather
Bending, weakened by long hours of labor that he was physically unfit
for, had become an invalid, and the entire support of the family had
devolved upon Sam's father.
He could remember his dad talking about the breadlines and the free-soup
kitchens. He could remember his grandmother, her hands crippled by
arthritis, aggravated by long hours at a commercial sewing machine in a
clothing center sweat-shop, just so she could bring in that little extra
money that meant so much to her children and her invalid husband.
Could one invention bring all that back again? Could his own
harmless-looking Converter plunge millions back into that kind of
misery? It seemed hardly possible, but Sam couldn't banish the specter
of the Great Depression from his mind.
"Just how far-reaching would this economic upset be?" he asked Condley.
Condley had taken out his gold fountain pen again and was rolling it
between his palms. "Well, that's a question with a long answer, Mr.
Bending. Let's begin small and watch it spread.
"Banks are pretty safe today, aren't they? The Federal Deposit Insurance
Corporation insures all depositors for deposits up to twenty thousand
dollars now. A bank is hedged in by so many legal fences that it is
almost impossible for one to fail in the same way that they failed all
over the country in the early Thirties. Even if one does fail, through
the gross mismanagement or illegal activities of its governing board,
the depositors don't get excited; they know they're covered. There
hasn't been a really disastrous run on a bank for more than thirty
years.
"But banks don't just keep their money in vaults; they invest it. And a
significantly large percentage of that money is invested in power
companies all over the nation. In an attempt to keep their heads above
water, those banks would be forced to make up tremendous losses if Power
Utilities failed overnight. It would force them to draw in outstanding
loans for ready cash. It would mean turning in United States Savings
Bonds, which would put a tremendous strain on the Government.
"In spite of that, most banks won't be able to stay solvent because
their other capital investments will be dropping rapidly in value. As
Mr. Olcott said, our monetary system isn't based on gold, but on
production and goods. If Power Utilities and its members fail, you and
your machine will have destroyed--made worthless--several billion
dollars worth of machinery and equipment. You will have thrown tens of
thousands of people out of work. You will have cut the underpinnings
from beneath the American dollar.
"And it won't stop there. What will happen to the companies that build
the dynamos and the boilers and the atomic plants for the power
companies? What will happen to the copper industry when the need for
millions of miles of copper wire vanishes? They will all suffer
tremendous setbacks, throwing tens of thousands more out of work and
lowering the value of their stock drastically.
"The banks, then, will find their investments suddenly worth only a
fraction of their former value. They'll fail wholesale. And you can see
what that will do to the Federal Deposit Insurance Corporation and other
insurance companies."
Sam Bending nodded slowly. He could see that. Insurance companies base
their business on the prediction that a certain event--death, accident,
or the failure of a bank--will happen to a certain percentage of their
covered clients, and they adjust their rates accordingly. But something
that would change a five-percent-failure rate to a fifty-percent-failure
rate would break the company.
And the unemployment rate would go up even higher. And Sam thought of
something the Secretary hadn't even mentioned. State and Federal
Unemployment Insurance. What would that drain do to the treasuries of
the various governments involved?
Sam Bending felt as if the thing were snowballing on him. Where would
the State and Federal Governments get that money? Taxes? Don't be silly.
How can you collect sales taxes when sales are dropping off because of
unemployment? How can you get income taxes from depleted incomes? How
can you charge luxury taxes when no one is buying luxuries?
Certainly essentials like food, rent, and clothing couldn't be taxed.
People would buy as cheaply as possible, which would force down prices.
Which would--
* * * * *
"Where would it go from there?" Sam asked Condley in a shaken voice.
Condley glanced over at the Russian. "I believe Dr. Artomonov can answer
that one for you."
Artomonov was a red-faced, fleshy man with almost no hair and a huge,
bristling, gray mustache. His eyes were a startling blue. "Mr. Bending,"
he said in excellent English, "you may recall that your depression of
the Thirties was not confined to America. All of Europe became involved.
The same will happen again, to a greater degree, if your machine is
released to the world at this time." He brushed at his mustache with a
fingertip.
"You may wonder what I am doing here, Mr. Bending. You might think that
the traditional rivalry which has existed between our countries for so
many decades would preclude my being admitted to such a secret session
as this one. I might have thought so, too, fifteen years ago. But when
something threatens _both_ our countries, the picture changes. We fought
together during the Motherland War--what you call World War II--because
of the common threat of German Nazi terrorism. We co-operated to
suppress the brush-fires that threatened us in Europe and the Middle
East during the so-called Tense War. In big things we must co-operate.
"Again we are both threatened by a common source, Mr. Bending, and again
we must co-operate."
Sam Bending felt a chill. The thought that he and his machine were a
threat as great as that, a threat to the two greatest nations of Earth,
was appalling.
"I am not a scientist, Mr. Bending," the Russian went on. "My title
comes from a degree in economics and political science, not in physical
science. As soon as this machine was demonstrated to me, however, I
could appreciate its power--not only physically, but economically. I
immediately contacted my superiors in Moscow to discuss the problem.
"Naturally, we would like to know the ... ah ... 'elegant' principle
behind its operation. Equally naturally"--he smiled politely at
Secretary Condley--"you will not tell us. However, my superiors in
Moscow assure me that we need not worry on that score; a machine
identically similar to yours was invented by one of our brilliant young
scientists at the University of Moscow over four years ago. As a
patriot, of course, he was willing to have the machine suppressed, and
no news of it has leaked out."
Sam Bending found it difficult to keep from smiling. _Sure_, he thought,
_and a man named Popov invented radio, and Yablochkov invented the
electric light_.
"You see, Mr. Bending," Dr Artomonov continued, "while we do not have
the unstable setup of money-based capitalism, and while we do not need
to worry about such antiquated and dangerous things as fluctuating stock
markets, we would still find your machine a threat. Communism is based
on the work of the people; our economy is based on the labor of the
working man. It is thus stable, because every man must work.
"But we, too, have a vast, power network, the destruction of which would
cause the unemployment of millions of our citizens. The unemployment
alone would cause repercussions all over the Soviet Republics which
would be difficult to deal with. We would eventually recover, of
course, because of the inherent stability of our system, but the shock
would not be good for us.
"The same thing would happen in every industrialized nation on Earth,"
Artomonov went on. "In my work with the United Nations, I have studied
just such problems. European governments would fall overnight. In
Germany, in the 1920s, it was cheaper to burn bundles of one-mark notes
than it was to buy firewood with them. Such things will be repeated,
not only in the Germanies, but all over Europe.
"Some countries, of course, will not be so drastically effected. China,
and other parts of Asia which have not built up a vast industrial
system, will be affected only slightly. The South American countries
still have a more or less agricultural economy and will not be bothered
greatly.
"But the great industrial civilizations of East and West will collapse."
With one breath, Artomonov was saying that the Soviet Union could
weather the storm, and with another he was hinting that it probably
wouldn't. But Sam Bending could see the point in spite of the Russian's
tortuous logic.
"I think that is all I have to say for the moment," Artomonov said,
"except to emphasize one point. The Great Depression hit the world some
fifty years ago. It was a terrible thing for everyone concerned. But it
was as nothing at all--a mere zephyr of ill wind--compared to what the
Depression of the Eighties will be if your machine goes on the market."
* * * * *
There was silence for a minute. Sam Bending was thinking hard, and the
others could see it--and they knew there was no point in interrupting at
that moment.
"Just a second," Sam said. "There's one thing that I don't really quite
see. I can see that the situation you outline would develop if every
power plant in America--or in the Soviet Union or Europe--were to be
suddenly replaced by Converters. I can see that chaos would result." He
paused, marshaling his thoughts, then went on, with a tinge of anger in
his voice.
"But that's not the way it will work! You can't do a thing like that
overnight. To mass produce the Converter will take time--factories will
have to be tooled up for it, and all that. And distribution will take
time. It seems to me that there would be plenty of time to adjust."
Condley started to say something, but Dr. Artomonov burst in
explosively.
"Don't you see, Mr. Bending? The threat of the machine is enough! Even
here in your own country, just the knowledge that such machines were to
be made at some time in the immediate future would have a disastrous
effect! Who would invest in Power Utilities if they knew that within a
short time it would be bankrupt? No one would want to buy such stock,
and those who had it would be frantically trying to sell what they had.
The effect on the banking system would be the same as if the machine
were already being used. Your Mr. Roosevelt pointed out that fear was
the problem."