SOME SOCIALIST VIEWS ON MONEY, BANKS, AND BANKING
All Socialists wish to abolish private capital. Money embodies private
capital in its most portable form. It can easily be hidden, and as the
Socialists wish to prevent the re-accumulation of new private capital,
the abolition of money, and especially of gold and silver, has
prominently figured in all Socialistic programmes since the time of
Protagoras and of Plato. Socialists wish to effect the exchange of
commodities, the payment of labour, and the settlement of accounts
mainly by book-keeping.
"As there are no wares in the new community neither will there be any
money."[751] "In the Social-Democratic State the citizen will be
granted an income, which will be indicated by labour checks or credit
cards, as advocated by Gronlund, Bellamy, and John Carruthers."[752]
"Under ideal Socialism there would be no money at all and no wages.
The industry of the country would be organised and managed by the
State, much as the Post Office now is; goods of all kinds would be
produced and distributed for use and not for sale, in such quantities
as were needed. Hours of labour would be fixed, and every citizen
would take what he or she liked from the common stock. Food, clothing,
lodging, fuel, transit, amusement, and all other things would be
absolutely free, and the only difference between a Prime Minister and
a collier would be the difference of rank and occupation."[753]
"How will exchange then be carried on? By account facilitated by some
such contrivance as labour checks. When in the Co-operative
Commonwealth money becomes superannuated we shall have nothing but
checks, notes, tickets--whatever you will call them--issued by
authority."[754] And how will international exchange be carried on?
Very simply and easily. By barter. "So much tea is wanted from China.
The Chinese Government is advised of the quantity and asked what
British goods will be acceptable by the Celestials in exchange. There
will be international barter on a grand and equitable scale."[755] It
is quite logical that the Socialists who wish to introduce the
primitive Communism of the prehistoric ages (see Chapter XXIX.), wish
also to reintroduce the aboriginal system of barter.
However, the contemplated form of "international barter on a grand and
equitable scale" will have its difficulties. China, for instance, may
sell much silk and tea to England and take in exchange mostly foreign
manufactured goods from America, Germany, Belgium, and Japan, as she
does at present. It is to be feared that the "grand and equitable
system of international barter" will prove impracticable even if, as
most Socialists somewhat rashly assume, all States should become
Socialistic commonwealths, or if the grand Socialist Republic of the
world should actually be created. We have at present an international
currency, Gold. The contemplated creation of unlimited paper issues in
lieu of gold, the fulfilment of the ideal of many Socialists, would
have a very simple, a very certain, and a very unpleasant consequence.
Foreign merchants, doubting the value of the new paper currency and
the stability of the new Socialist Government, would of course refuse
to part with their goods. Not a pound of cotton, not a bushel of wheat
would reach England from abroad. The nation would be starving, and
Socialist deputations would hasten to search out Lord Rothschild in
the workhouse, where no doubt he would reside, and implore him to
reintroduce capitalism and food into Great Britain.
Some Socialists of the saner kind fear that it will not be possible to
abolish money. Kautsky, for instance, writes: "To abolish money I
consider impossible. Money is the simplest means as yet known which
renders it possible in a mechanism so complicated as the modern system
of production, with its enormously minute subdivision of labour, to
arrange for the smooth circulation of products and their distribution
among the individual members of society; it is the means which enables
everyone to satisfy his needs according to his individual taste
(naturally within the limits of his economic power). As a medium of
circulation, money will remain indispensable so long as nothing better
is found."[756]
Socialists declaim against the immorality of charging
interest--"usury" as they call it (see Chapters IV., IX., and XVII.),
and they are indignant that the banks are unwilling to advance gratis
unlimited funds to Socialist town councils to be wasted as fancy may
direct (see page 258). Therefore they wish to abolish "that most
costly of all modern parasites, the banker."[757] Some very
irreligious, if not atheistic, Anarchist-Socialists, such as Mr.
Morrison Davidson, pretend to object to interest on religious grounds
because, "the Way, the Truth, and the Life said, 'Lend hoping for
nothing again.'"[758] Other Socialists wish to abolish the banks and
the charging of interest for the benefit of the people and of the
Socialist municipal and other councils. "Usury--in that offensive
pregnant little word is contained the secret of Society's worries and
Man's woes. Abolish usury: that is the true Fiscal Reform
Policy."[759]
"Usury can be arrested at present by nationalisation of exchange. The
nationalisation of exchange must be undertaken. Metal must be
demonetised and reduced to the ranks. Banking must be undertaken by
the municipalities and county councils, and by these elective bodies
only, while a durable paper currency issued on the basis of the
ascertained wealth of the nation, and maintained in true relation to
it, shall supersede gold. Then we arrive at a scientific solution of
the question of exchange and put in operation the currency and credit
system of Socialism."[760]
When the banks and the gold currency have been abolished and when
"exchange has been nationalised" the Socialist local authorities will
no longer have any difficulty in procuring the unlimited funds they
need for the execution of their boundless plans. They will raise the
money by the printing of practically unlimited quantities of paper
money issued against the security of "the ascertained wealth of the
nation." If they wish to spend money, they simply "make it" by means
of an ordinary printing press. Could a simpler and more ingenious
system for making money be devised?
"Recently notice has been given by leading bankers of their intention
to discriminate against municipal loans. And as things now stand, it
is certain that, if an organised effort is made generally by the
bankers throughout the country by advising clients against such
investments and by refusing to accept municipal bonds as collateral
security for overdrafts, &c.--a serious check will be put upon public
enterprise. Those who imagine bankers either impotent or incapable of
such treason against the public interest should remember what took
place in the United States in 1893.
"The natural suggestion to be offered as a counter-move to the threat
of the bankers and their Industrial Freedom League is to add to those
enterprises now under municipal control that of banking. And surely
there is nothing which lends itself more easily to municipalisation!
If the credit of a banking house can be employed for promoting
enterprise and earning dividends, why cannot municipalities employ
their own credit directly? In others words, why cannot the credit of a
city be utilised to carry on its municipal works instead of it having
to borrow the credit of a bank and pay interest charges? Consider how
public works are now financed. The London County Council decides to
build decent and respectable houses in some locality for the working
classes. It requires, we will say, _500,000l._ with which to build
dwellings for 2,000 families. Bankers are invited to tender for the
loan, and finally the Council gets this advance on a guarantee of 3
per cent. per annum, the principal being repayable at the end of
thirty-three and a third years. At the end of this period the Council
will have paid the bank _500,000l._ in interest as well as the
_500,000l._ original loan. The charge for the loan is equal to the
entire cost of the whole undertaking; the result is that each family
must pay about twice the amount of rent that it would otherwise have
to pay if the Council had not incurred interest charges through
borrowing other people's credit. Was there ever greater lunacy in
public affairs?
"Suppose that instead of issuing credit in the shape of bonds of large
denomination, the Council issued it in notes of small denominations of
pounds and shillings. Does anyone mean to assert that that credit
which is eagerly purchased by a banker would be refused by a
bricklayer or stonemason? Supposing the London County Council was
empowered to issue its credit in one-pound notes, as well as large
amounts, and supposing it was compulsory that these notes were good
in payment of rates. Is there any question as to their being
acceptable? The plan is so simple and so safe that at first it seems
amazing it should have been so long out of employment."[761]
"Of course gold will drain off abroad--if the foreigners don't follow
in our footsteps at once. If the demonetised gold is withdrawn--well,
we can have a new currency by nationalising the railways and paying
the shareholders 'in current coin'" (which means in unconvertible
notes), "not in redeemable, interest-bearing bonds. So long as solid
wealth rests behind our issue, our financial policy is sound. Of
course, the railway and other shareholders will want fresh
investments; they won't find them, because no man will pay interest to
usurers when he can monetise his credit at the mere cost of banking
and exchange. They must therefore spend it, and the currency will
never be restricted henceforward. And this national ownership of
exchange can be operated to compel every monopolist to sell his
monopoly to the nation."[762]
This insane project is called by the writer, "A scientific way to
Socialism."[763]
Surely science is the most abused word in modern language. The
creation of money by unlimited issues of paper secured by the national
possessions was tried on the grandest scale at the French Revolution.
The "assignats" were secured on the national domains, and their
security seemed absolute to the revolutionaries. The great Mirabeau
had stated on September 27, 1790: "Our assignats are not ordinary
paper money. They are a new creation for which there is no precedent.
What constitutes the value of metal money? Its intrinsic value. Now I
ask you: Does paper which represents the foremost of the possessions
of a nation such as France not possess all the characteristics of
intrinsic and generally accepted value which metal money
possesses?"[764] The "assignats" speedily fell to a discount, although
dealing in them at a discount was made punishable with twenty years'
imprisonment with hard labour,[765] and they fell ultimately to
waste-paper value. A pair of boots worth thirty francs in gold cost
10,000 francs in paper. On paper all were immensely rich. Yet the
masses were starving. Unfortunately people cannot live by consuming
unlimited quantities of credit notes. They can become prosperous
neither by robbing the rich nor by calling a shilling a sovereign, but
only by producing more. Greater wealth means simply increased
consumption, and increased consumption, unless based on increased
production, can only be effected by intrenching upon and diminishing
the national capital, the national reserve store of food, clothing,
tools, &c., and thus causing widespread misery and starvation.
FOOTNOTES:
[751] Bebel, _Woman in the Past, Present, and Future_, p. 192.
[752] Leatham, _Socialism and Character_, p. 90.
[753] Blatchford, _Merrie England_, p. 100.
[754] Gronlund, _Co-operative Commonwealth_, p. 103.
[755] Davidson, _The Old Order and the New_, p. 157.
[756] Kautsky, _The Social Revolution_, p. 14.
[757] Jowett, _The Socialist and the City_, p. 44.
[758] Davidson, _The Old Order and the New_, p. 57.
[759] McLachlan, _The Tyranny of Usury_, p. 1.
[760] _Ibid._ pp. 10, 17.
[761] _How to Finance Municipal Enterprises_, pp. 3-5.
[762] McLachlan, _The Tyranny of Usury_, p. 20.
[763] _Ibid._
[764] _Nouvelle Biographie Generale_, vol. xxxv. p. 39.
[765] Roscher, _System_, p. 227.