MeulenBthSection five 1. XI. 1951. Your letter of 28. X. 51.
Dear Mr. Meulen,
today I saw at the shelves of my librarian (book dealer? Sometimes libraries sell duplicate volumes, too. - J.Z.) an English edition of David Hume's "An Enquiry concerning Human Understanding". The price was very moderate and I secured the book at once.
We are both admirers of David Hume. I think you will gain the same pleasure as I did by rereading the chapter "Of Liberty and Necessity." I read it in the restaurant where I took my supper. The main point is: David Hume is a determinist. I do hope that his explanations will convince you.
The great completion of Kant (who recommended David Hume to every truth-seeker) is:
Freedom is to be found in the unknown sphere where characters are born, not in single actions.
That actions of men are not less determined as - - say - - a lunar eclipse, is shown in every detective story. The detective takes as self-evident that all actions of men are in every detail determined, though men themselves are convinced to be absolutely free at every moment - - the word "free" here taken in the sense in which you took it in your letters. If the detective known the man's character and the circumstances which influence him, he calculates his actions with the same certainty which is given if he knows when the man falls from a roof 60 feet high: How long until he hits the ground? It's merely a matter of calculation. The more distinctly the author shows all persons of his story as being determined in their actions, the more attractive is his story.
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With much interest I read your letter to "City Press" of 19. X. 51. But in this case my impression is - - I can't help it - - that your arguments, too, are not 100 % individualistic ones.
That "City Press" demands a raising of the Bank Rate is - - there you are right - - illogical. If there exists fully free competition in the monetary sphere, then the Bank Rate of the Bank of England is not very interesting. Competition brings this Rate to the level which corresponds to England's economy. If the Bank of England tries to get a higher rate, then the borrowers say: Keep your money. We go to your competitors. It seems that City Press did not consider this simple consequence of free competition which it demands in other spheres.
On the other hand: I cannot see how - - free competitions supposed - - the curtailing of loans by the Bank of England can influence the situation of the 1 200 000 men here concerned.
You protest against the curtailing. Why? Is - - free competition supposed - - the Bank of England not to be free to curtail its loans as much as it likes????
If it curtails the loans more than is justified by the situation of a really free money market (means of payment market would be a better expression) it gets out of business (to that extent - J.Z.), that's all!
What Individualists expect from their leader is that he demands the repeal of all charters (that is, all those granting monopolies), that of the Bank of England no less than that of all others.
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Very faithfully Yours - signed: U. v. Beckerath.
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2. XI. 1951. Your letter of 28. X. 51.
Dear Mr. Meulen,
Option clause. I reread some pages of Adam Smith concerning the option clause. ("Optional clause" he calls it.) Adam Smith, in his chapter "Of Money" says that the use of option clauses was an abuse.
Here he was, obviously, wrong.
He was wrong
I.) for the reasons which you gave in your book in the passages where you defended the option clause and in strong but just opposition stated that this clause constituted a great progress;
II.) for reasons, which you do not acknowledge, but which seem to me sound, that is: the "debt foundation", (obligation - - formally agreed or practically given - - of debtors to accept their banker's notes at par in their business) must keep not only option notes at par but even irredeemable notes (Irredeemable at the issuer in gold or silver. - J.Z., 20.4.03.), if the notes are not lent out on long-terms.
I refer to Smith's own explanations on the fundamental difference between long-term and short-term business in
the note-issuing business.
Though the notions "long-term" and short"-term" are different only in degree, from the standpoint of theoretical logic, they are different essentially and substantially from the standpoint of banking science and practice. (I contend.)
But I find a difficulty which neither your theory nor my own explain. Please read, in the said chapter, what Adam Smith says of the difference in exchange value between
A.) London and Dumfries,
B.) London and Carlisle.
The difference - - says Adam Smith - - was 4 %, and he ascribes the difference to the use of option notes at Dumfries.
What may have been the real cause of the difference????????
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In the October issue of the Individualist you mention me most honourably at three pages. I confess that I felt great pleasure when I read them.
Still more pleasure would I feel if you would become a decided adherent of Cannan's theory of the optimum population. Cannan's progress away from Malthusianism is enormous and one day - - if science has a future - - all consequences will be derived from that theory. You may yourself utter an opinion on which probability is greater:
The probability that Cannan's simple and so well founded statements will be acknowledged by the majority of the thinking part of men in the world, or the probability that that part of mankind, not yet convinced of Malthusianism, will become Malthusians?
You might come to realise that the latter possibility would be a real disaster, if Cannan is right, and the population has not yet attained its optimal number. Then "birth control* must make situation of the people worse.
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Refugees! (B. uses mostly "fugitives" instead. This term has criminal connotations: "A fugitives from justice." But most refugees are not fugitives from just laws but fugitives from unjust laws and measures. - J.Z., 20.4.03.)
Your publication may, in the present situation, become of great practical influence. (Very great!)
(J.Z.: Only if he had adopted a rightful and sensible program on how to provide productive and well paid work for all of them, very soon, and to assure the sales of their products and services, or the additional goods and services that they would offer, if employed in existing firms. Alas, B. never got M. to seriously discuss the monetary and financial steps that would be required for this. In his unshakeable allegiance to his own system, M. refused to seriously discuss any alternatives to it - and his own system was certainly not suitable to quite rapidly employ millions of unemployed and additional millions of refugees and deserters or free immigrants. - J.Z., 20.4.03.)
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From your publication on page 55 your readers may learn that a very essential point in Kant's philosophy is: Contributing to social reform and to the world's peace first of all (being the greatest possible reform), is the most important and urgent of all duties. I think that this idea will be new to all readers.
Very faithfully Yours - signed: U. v. Beckerath.
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8. 12. 1951.
Dear Mr. Meulen,
some private troubles, bad health, winter and what further belongs to a proletarian life prevented me to write to you, though I hod much cause to write. I hope to retrieve it. (J.Z.: I don't know what he meant here: To recover? To catch up? - J.Z., 20.4.03.) But the month December will be very bad for me. Mason work in my chamber. Moreover, the man, whose furniture I used for 8 years, now demands it and, of course, he must get it. Transport and packing will require much time.
Today I must restrict myself to confirm the receipt of many valuable printed matters and to thank you very much.
(And then he proceeded to write a letter of 6 1/2 pages! - J.Z.)
Yesterday I received the Individualist of December.
A week ago I received:
1.) "City Press", 16. & 23. 11. (From the article "Put the gold back in the Bank", by S. W. Alexander, it seems that A. really demands the restoring of the "right" of note-holders to get them redeemed as in 1913. And exactly that "right" has been the ultimate reason of all our present troubles - - in England, in Germany, in the whole world.)
2.) "National News-Letter" of 22.11.51. Ingenious, as ever, but without any program.
3.) "Truth" of 23. 11. 51. You marked your article "The gold standard", page 553. It seems a great trouble that there seems to be no conformity concerning the meaning of the expression "gold standard". You use it in a different meaning from that of the "Encyclopaedia Britannica" and Clifford Johnston uses it in a meaning which he thinks proper. I wrote to you, frequently, on this matter. It seems: you still insist, that the pricing of commodities in the shops in units of gold (grains, grams etc.) is no essential detail of the gold standard. I know, that Alexander here differs from you and Johnston - - I think - - does, too.
I see here no possibility that one author understands the other.
You say, in your article, that England was the only country in the world that ever adopted a gold standard. You know that encyclopaedias and text books do here differ wholly and, on the contrary, point out that nearly all countries of the world, before 1914, had adopted the gold standard. What concerns Germany, not a single German, French etc. author was ever in doubt that Germany had adopted a gold standard, and English authors before 1914 took it as a self-evident. The fact, that in London it was easy to change a sovereign for 20.43 gold-marks, and vice versa, would have convinced every sceptic.
Another facts, convincing in 1913, was: in every German shop gold coins had to be accepted. The latter fact was, at that time, considered as the most essential detail of the German gold standard. But in France, Italy, Russia, etc. it was the same.
2.
You are opposed to the old system, which legally restricted the quantity of currency to a multiple of the gold existing in the country. (Setting aside, here, the possibility to issue notes, not convertible into gold but only accepted like gold in shops.
You wrote me, some time ago, that such a system would not be illegal in England, though nobody uses it.)
You are very right to oppose such a pernicious system, as the old one. But when you insist, that this restriction is the only essential detail of a gold standard and that, e.g., the pricing of goods in the shops in gold units is no essential detail of a gold standard, many readers will not understand you.
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4.) "The Malthusian", October 1951. The Malthusian's tactics is quite right: Always repeat what one has said. Never enter into arguments, - that creates a good probability of final success. But the next generation (if there is one) will be convinced that this whole propaganda was paid-for by the Russians. We, who know the Malthusians personally, know that this is not so.
5.)"Freethought News", November 1951. I wished Free Thinkers would less restrain their activity to ecclesiastical matters. Kant gave a general theory of conquering prejudices in thinking, quite unknown in England. The word "Freethought" seems no longer suitable in our times. Freethought became nearly a self-evident. But critical thought, that would be something! Kant called his system: "Kritische Philosophie".
6.) "Midland Bank Review", November 1951. In the article "Gold in the Post-
War World", the author says, that the USA will continue to buy and sell monetary gold in any amount from or to other countries at $ 35 an ounce. Will they sell their gold for that price????? I doubt it.
In the article "Symptoms and Sources of Inflation", the author - - as usual - - takes "inflation" as a synonym of "dearness". He says not a word on the monetary side of inflation and tries to prove, from government's finance, that this finance is the real cause of inflation (while it is certainly only the motive to inflate).
7.) "Time and Tide", 24. 11. 51. You marked your article "The Gold Standard". Your standpoint - - of course - - is the same as in your "Truth"- article.
I know that you are an adversary of pricing goods in gold weight units (grains, grams, sovereigns). If that is still your standpoint, then why do you not explain it and give reasons for it?????? You would be the first author (in England), at our time, who enters into that detail. You would find the greatest attention.
On the other hand: Whether you decline pricing in gold or may favour it - - invent a new word for a system, where prices are fixed in gold, but the currency is not redeemable into gold. (J.Z.: Not at any time and by the issuer but, merely, quite freely, on a free gold market, at the market value of a currency. In that case, sound currencies would be kept at par with their nominal gold weight value or close to it and other currencies would be widely or altogether refused or greatly discounted and thereby very much limited in their circulation. - J.Z., 20.4.03.)
Such a word is - - I think - - missing in the English language. The Germans possess such a word, since their great inflation, the term: Gold-Rechen-Waehrung". (Gold-accounting currency. - J.Z.)
8.) "L'Unique" - - 1. 10. - 10. 11. 51. Calls itself an anarchist paper and never speaks of the tyrannical role of currency in past times and in our time. Currency is the greatest tyrant, so as it was and still is. Breaking this tyranny should be the first step of a revolution. But the intelligent men around E. Armand do not see that.
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Three weeks ago I got another mailing:
1.) "City Press", 21. 9., 5. X., 12. X., 26. X. The article of J. E. Eggleston in the issue of 21. 9. "Does this Man Really Speak for Britain?" is very good. But: Why does none of this circle, Eggleston, Alexander, J. H. Clifford Johnston, Winder, etc. simply state the text of the laws to be repealed? Most people think,
3.
that e.g. the "dollar-gap" is an economic consequence of an insufficient degree of austerity. They do not know that it is merely legislatively caused, and that by repealing these laws it would - - of course - - disappear. That people are modern economists!!!!!!!!!!
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In the same issue is published a call of the "Cheap Food League": "Hands off the people's food!" Alexander and the others subscribed to it. Do the subscribers really think that one man will be won by that call??? Do they not know that the same slogan served the "Planning"-party and with great success?? I would have understood a call with the caption: "Hands off the people's money!" That would be new and would at least have aroused attention.
Further: English food is not dear. Convert the English food prices into gold units and you will find that in the average modern food prices are not higher than 1913. Before the League attacks these prices it should demonstrate that Adam Smith was mistaken when he contended, that if it costs 10 (or so) days to produce an ounce of gold and it costs also 10 days of labour to produce a certain quantity of the commodity X., then at last the commodity X will be sold for so much money as an ounce of gold costs. (Maybe Adam Smith spoke of precious metals in general - - at the moment I cannot verify the passage.) Admitted that Adam Smith's economic law never holds good exactly; but it holds always good with sufficient approximation.
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In the issue of 5. X. 51, "City Press" states that second-hand houses in England now cost "over" three times what they cost "pre-war" (I think, he meant 1914). If the gentlemen would count in gold, they would simply find that Adam Smith's law is there also nearly confirmed. It seems that second-hand houses are even cheap, if their price is counted in gold. (Rent legislation - - of course.)
(J.Z.: Those not subject to rent control are often priced relatively high because they are constituting an inflation-proof investment while such investments are made legally scarce in other forms, e.g. by outlawing gold clauses. Growing populations and foreign refuge capital do, naturally, also drive up house prices. - J.Z., 21. 4.03.)
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In the same issue John Woollam publishes an article "Let Japanese goods flow in". He says not one word on the manner in which these goods should be paid. He should have pointed out that if Japanese commodities are paid by means of payment of British origin, then every Japanese bicycle must automatically produce the export needed to pay for the bicycle. How? The means of payment return to England with greater certainty than a pigeon returns to its coop. By their return they pay for the wanted export.
"Pay British and buy where you buy cheapest!" - that would be a good slogan for a new league.
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In the issue of 12. 10. 51 is reported that in Russia many people became very rich. That is also my impression. The Russian officers are excellent merchants, 100 times better (*) than - - say - - Jews are. Jews excel in small business, but Russians swim in world-wide business as sturgeons in the Caspian. (I heard details in Potsdam, where I worked for about 2 years.)
(*) B. was prone to use such exaggerations to make a point. Call it poetic licence, if you like. - J.Z., 21. 4. 03.)
In his article "Britain's great problem" (in general Alexander writes very good, but these captions, saying nothing, are bad German style.), Alexander again demands a pound freely convertible. As in other articles, again he does not say: convertible at the market or convertible at the note issuer's counter, or both? Why not tell it in clear words???? (Or convertible into gold-weight priced goods and services in the shops or into the payment of debts measured by gold weight units. - J.Z., 21.4.03.)
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In the same issue J. F. Eggleston publishes an article "Mr. Gaitskell shoots at the Grasshopper", where (whoever reads the caption is surprised) he speaks of old Gresham's Law and demands (very justly) to transcribe it into modern expressions. What he says is not false but certainly not what should be said.
Money, fit to be pushed, with advantage to debtors upon creditors will drive out other money, fit to be preserved as an investment.
4.
Here is the simple reason why old coins, diminished in weight by wear and tear, drive out new coins coming freshly from the mint. Here, too, is the reason why fiat notes, not at par at the free gold market (the word used in the meaning of 1913) with sovereigns, drive out sovereigns.
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As an answer to Mr. S. W. Alexander's article: "How to save the empire", in the issue of 26. X. 51, I would like to ask him: Do you think that under your system England could accept, with advantage 10 million refugees, without any immigration restrictions - - refugees able and willing to work??? If you think that such an increase in labour power (and in consumer demand - J.Z.) would not be an advantage, then your system is not perfect and you should try to find out its remaining defects.
Perhaps Mr. Alexander would ask back: And would you think it to be an advantage for West-Germany if, next year, 10 millions refugees came there from England, Russia etc.? I would reply: A very great advantage, if West-Germany would establish Free Trade in goods and money, free issue of notes, re-establish the old right to refuse suspect notes (without being obliged to state one's reasons), abolished by a law of 1909 (not earlier) and a reform of the debt-legislation, by which the debtor gets the right to pay him debts by that means of payment which in German could be called "Verrechnungs-wechsel" (clearing cheque or clearing bill - J.Z.), that is: which need not be made good with the usual money but can be made good with commodities and services in common business.
These ideas are now common In the group of the "Sozialpolitische Arbeitegemeinschaft" (Berlin-Friedenau, Fehlerstr. 10) called "Exchange Service". But the Arbeitsgemeinschaft being a club of unemployed, there seems to be no opportunity to print something of these ideas. (50 years ago it would have been possible.)
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A Germany introducing the above-said reforms would soon renounce further American help, would repay all assistance since 1945 and, in a few years, play the role that America now plays in economics.
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From an article of J. F. Eggleston in the said issue I learn that the relevant clauses, on using dollars as a means of payment, etc., are to be found in the Exchange Control Act of 1947. Is there not a single man in Old England, who will copy these legal restrictions, publish them and frame a bill by which all these prescriptions are repealed????
Do you think that more then 10 men in the new Parliament know the Exchange Control Act?????
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Eggleston expresses very good ideas on the British policy in Persia, etc. He should also read Montesquieu's "Sur la Grandeur des Romains" and there he would find that the Romans always had in petto (in reserve, on hand, ready for use? - J.Z., 21.4.03.) pretenders, which, at the right moment, were presented to the people, with
which the Romana were at war. (J.Z.: They were more at war with their governments than with the people! - J.Z., 21.4.03).
England, in the old days, followed a similar policy. Under Gladstone the Shah in Teheran would already have been overthrown by the "rightful" ruler of Persia (probably some chieftain from its South), and that ruler would have concluded a new agreement with Britain. In Egypt a similar policy would have been possible. Its dynasty is hated in the whole country. A prince from the old Osman dynasty would have been a successful competitor. A social and economic program would have been necessary. (Here lies the rub - - neither Churchill nor Eden nor anyone in the whole party possesses such a program.)
(J.Z.: If, in the panarchistic way, not only one government-in-exile is offered as an alternative, which would also have its dissenters, but, instead, full exterritorial autonomy would be offered to all voluntary communities in the country, whose government one fights, then the number of enthusiastic allies there would be multiplied. All the "captive people" and suppressed minorities would be attracted to such a program and even the supporters or the presently ruling regime would not fight desperately, since they could continue to exist as a volunteer community under their own preferred government and would not longer have to suppress or fight their opponents. They would simply have to leave them alone and would be left alone by them. - J.Z., 21.4.03.)
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5.
2.) "The Freeman", 27. 8. & 24. 9. 1951. A good paper, it seems. I will study it.
3.) "The Word", October 1951. From Guy A. Aldred's article "The election" I learn that he will be once more a candidate. I am very much astonished.
What Aldred himself writes displeases me and I think it displeases you, too, and for the same reasons. Obviously, A. is a friend of the Soviets.
There is a long article in the "Word" with the caption "Hindu Sabha Tribute", obviously written by Aldred, where is recommended to "hinduise British politics". From the article I could not derive what is meant and what the fellow wants.
That Aldred visited the Russian embassy and was very kindly received there, displeases me very much.
(J.Z.: How kindly would he have been received there - if he had demanded or petitioned for the release of all political prisoners, or at least of those, who were of his communist-anarchist persuasion and were still alive by then? - J.Z., 21.4.03.)
The "Word" publishes an interesting letter of an 86 years old carpenter on the monetary side of ''socialism". His views are right and clear, though not (he is excused) complete. He had asked several hundreds of voters: how many kinds of paper money are current in this country and nobody could answer. That the man put such a question much impressed me. His letter was - - your article set aside - - the best I ever read in the "Word".
4.) 'The Malthusian", July 1951. In the article: "How fast could a population increase?" it is said that it might double within 17 years. That is quite right and consoling The optimal number of population on earth being about 20 000 millions, men could attain this optimum in 100 years or so.
In the article "Human and effective demand" the editor admits, that the food question is, essentially, a monetary question. Alas, that does not prevent him from remaining a Malthusian. In the same article he admits that much food was burnt during the years, e.g. in the locomotives of South America and that fish were thrown out after large catches. He says that this should not be used as an argument against Malthusianism. I do believe that he would like that, but the facts will be used as arguments and will have their effects as long as there live people capable of appreciating facts.
5.) "The Scots Independent", August 1951. Your article: Scotland's unique contribution to banking" is excellent. I think that very few economists (if any) were familiar with the historical facts you point out. Again, you use the world "gold standard" as you use it in your other writings. If you were to replace the word by "gold redemption standard" or a similar term and used the word "gold standard" in the sense in which the Encyclopaedia Britannica uses it, you would be much better understood and would get general applause.
6.) "National News-Letter", issues of 12. 7., 26. 7., 6. 9., 13. 9., 20. 9., 4. 10., 18. 10. 1951.
In the issue of 4. 10. Stephen King-Hall enumerates the territories acquired by Russia since 1939. He finds 22.7 million inhabitants. I wonder that he did not add East-Germany with nearly 20 millions. Formally the country is independent, but it is occupied by the Russians and (practically) governed by them. Further, it is more severely taxed in favours of the Soviets than Russia herself.
In the issue of 6. 9. 51, St. K.-H. repeats the old fable that there was a "tremendous surplus of labour among
the German refugees". He should know, that there is a crazy monetary system, which prevents the refugees to transform their want into demand and that would easily be possible by the reform-system you know.
In the issue of 4.10. you marked the article on paper supply for America and for Europe. St. K.-H. says (e.g.) that if the American papers would reduce their Sunday editions from 112 pages to 72 pages, the British Press could increase its size from 6 to 12
6.
pages daily. Well - - but by simply repealing some paragraphs in her laws Britain could get paper enough to print her papers in 200 pages, if necessary and need not apply to American compassion.
7.) "Individualism", August, October and November 1951.
August: Reports the case of Sir Ernest Benn, who refused to fill out the Census form. (Which I would have filled out, - - why not?) Instead of proving his individualism in this way, Sir Ernest should have framed a program of Individualism.
Until now not a single man in England wrote a program of needed steps, except you, who in clear words demands the repeal of the act of 1844. (But that is not sufficient!!)
In the issue of November you marked the passage on page 20: "Cost of Free insurance". I miss a proposition of what should be done.
Very much displeasing I found the article on page 17: "The Cost of Living". There many textile prices are mentioned. But the price, converted in gold is not evaluated. The author might try to prove that such a conversion would be crazy. That would be his good right. But an economist is not permitted to reckon simply in paper pounds and demand that the reader take them as gold pounds.
B.) "The Libertarian" Vol. 1, No. 2., July-August-September 51. An Indian paper. It pleases me much. Very good is the article "Agriculture", on page 13. Here nothing is said about "birth control" and such things. The reform measures are well-weighed. I regret not to find the most important: credit reform and monetary reform. But the paper is young, and the issue is a beginning.
You marked the article on Confucius, on page 14. It is good, but - - like so many Chinese ones - - in general terms. To speak in general terms is - - as my dead friend Follin said, the greatest sin of a reformer. ("Paroles d'un voyant".)
The article: "Can there Be a Welfare State?" is of great honour for the author and for the "Libertarian".
"As long as the State ... has control over money power, our freedom is conditional".
Why doesn't Sir Ernest Benn write such a splendid sentence????
(J.Z.: In spite of the omission of many freedom ideas in Benn's freedom writings, I found them eminently worth reading. One should not expect too much from a single author, especially from one who was busy most of the time working himself up from rags to riches. - J.Z., 21.4.03.)
Obviously, the author found, by his own reflections, the very reform system, which I tried to spread for so many years. I am quite delighted! At the next occasion I will write to him. This India!! If they continue this way again, they will give the world a new religion, this time founded on economics. (Who was this author? What else did he write on this subject? Monetary freedom advocates of the world unite - and subscribe to full tolerance for all voluntaristic monetary experiments! - J.Z., 21.4.03.)
I do hope to write more in one of my next letters on this Indian periodical. I thank you very much that you sent me this paper.
9.) "The Interpreter", 1.7.51. The article "A new system of exchange", page 4, is really interesting. The principles are not quite clear. My impression is that Proudhon's principles are here repeated. I will write to Mr. Workman. (The Christian basis is perhaps necessary in pious Kentucky, where still today books defending the evolution theory are prohibited in schools and Universities. I will see and report to you.)
(J.Z.: I never saw writings by that author or the correspondence B. had with him. - J.Z., 21.4.03.)
10.) "Tariffs on-parade", by Deryck Abel.
11.) "These youngsters have fire in their bellies", by Harry Willcock. (Youngsters with thoughts and knowledge in their brains would be of at least equal value.)
12.) "Direct Action", June 1948.
13.) "Inflation" by F. A. Harper.
14.) Pages 739/740 of the "Economist" with articles marked by you.
7.
15.) Article "Cooperation with Commonwealth", in "Times" of 22. 9.51 and your letter to the Times of 22. 9. 51, and to "City Press" of 19. 10. 51. In the letter to "City Press" you speak of the probable effect of raising the Bank rate. I got at the British Centre the book "Bank of England, a history", by Sir John Clapham, Cambridge, 1944. My impression of the book is a very good one. Valuable are the tables showing the Bank's income from the Bank-rate
for many years. I see that even when it was highest, it must have been a very trifling part of the country's national product. The trouble, obviously, was not the amount of the Bank rate, it was the Bank's monopoly.
17.) A cut from "Financial Times": "Free gold firm" by "Lombard".
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I hope to write something about 10.) - 17.). Today it is too late and i will no longer delay the letter.
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A part of the "Individualist", December issue, concerns papers you sent me nearly at the same time. I will write on your comments in one of my next letters.
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"Vox populi, vox diaboli", page 70. - - There is much truth in it!
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A letter of yours is still without answer. I gathered much material for you.
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Very faithfully Yours - signed: U. v. Beckerath.
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31. 12. 1951 Your letter of 27. 12. 51, received today.
Dear Mr. Meulen,
9 degrees Celsius in my Chamber (48,2. Fahrenheit), enough for writing. (J.Z.: It would not be for me. Even now, at 16 C., I need multiple layers of clothing. - J.Z., 21.4.03.)
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Let me begin with the last paragraph of your letter.
Before Kant wrote, moralists knew only two kinds of motivation for human actions: egoism and altruism.
Your leading Christian is an altruist. Kant rejects both isms. He says that there can be no duty to make others happy, because even the wisest does not know in what happiness consists of at given circumstances. We do not
know it ourselves, if our own person is concerned. Every century possesses its own ideal of happiness, and every following century shows that it was wrong. This admitted, even a constitution framed with the best intention to make the subjects happy, will, most probably, fail.
Kant said also:
A patriarchal government is always a government where the rulers have the best intentions to make their subjects happy. Kant appeals to experience and says, that such government are, regularly, the most despotic of all. The state of the subjects, under such governments, is regularly far from happiness. In summa:
The principle of achieving happiness for subjects is to be rejected as a government principle or a constitutional principle.
What Kant means he says in the "Kritik der reinen Vernunft", Elementarlehre, II. Teil, II. Abteilung, I. Buch, chapter: "Von den Ideen ueberhaupt", page 276 of the Kehrbach-Reclam edition: (Translated somewhere above! - J.Z.)
"Eine Verfassung von der groessten menschlichen Freiheit, nach Genetzen, welche machen: dass jedes (Buergers) Freiheit mit der andern ihrer zusammen bestehen kann (nicht von der groessten Glueckseligkeit, denn diese wird schon von selbst folgen), ist doch wenigstene eine notwendige Idee, die man nicht bloss im ersten Entwurt einer Staatsverfassung, sondern auch bei allen Gesetzen zum Grunde legen muss, etc."
Kant's philosophy establishes quite new principles, neither contained in antique philosophy nor in Christendom nor in other religions. Those who are pleased that he declines altruism and Christian 'love" and happiness-making as a principle, believe, that he recommended egoism, and the others, who read that he declined egoism as a philosophical or political principle, take as self-evident that he was an altruist. And yet he was able to demonstrate by examples what he meant. Spinoza and Thomas Morus were men whose behaviour he recommended to youths as examples.
To your Christian, Kant simply would have put the question: Do you know, in what your fellow creature's happiness consists? And why do you believe that others know the conditions of your happiness?
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Your remark, that Germany has now reverted to credit restriction is quite right. The relatively good state of economic affairs in Germany is due (I think), firstly to American commitments for war material.
But the partial abolition of the "Zwangswirtschaft" (Planned & directed economy: dirigism -J.Z.) by Prof. Ehrhardt - - the latter certainly influenced by Rittershausen - - also contributed much. - - I estimate about 40 % and the war material orders about 50 %.
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2.
Our discussion on Free Banking does not appear remote in the light of present events in the world. On the very contrary: For people, who not live in the darkness of ignorance of economics, it must be clear that Free Banking (really free banking!) offers the only possible way out of the present situation. But most people live in that darkness and, therefore, they cannot see the light in which Free Banking is put by experience. (Modern men are able to get impressions, they are too silly to get experience.)
But the present situation offers many details and many possibilities. You think that part most important and I another part, and, therefore, we disagree on many points.
Some time ago I wrote to you that my starting point is this:
I imagine being in the midst of a revolution - - in Russia, China, India, Germany, and I imagine further, that the revolution has won its first battle. Now the leaders of the revolution must make decisions on the economics of these countries. The passenger of the street car must pay, the house wife must pay for her cabbage etc., so that the problem of payment and of the means of payment must be solved the very day of the military victory.
There is, technically, no other (J.Z.: honest, sound, efficient, cheap and immediately practicable - J.Z., 21.4.03.) system possible than the system often submitted to your judgement. Every other system leads to a government controlled means of payment, in other words, to an Assignats system, and that system leads, inevitably, to political despotism, even if the leaders of the revolution were angels. (Very well pointed out by Thiers in his "Histoire de la Revolution Francaise.)
You answered, that it is not your intention to give advice to revolutionaries.
Of course, that is your good right. But you admitted, and, probably, still admit, that your system offers no help to revolutionaries. Pity!
(J.Z.: B.'s monetary system is helpful not for totalitarian, nationalistic, collectivist, oppressive and exploitative etc. revolutionaries but only those interested in genuine liberation in all spheres, even in the economic sphere and there even in the monetary and financial sphere, i.e. for revolutionaries with respect for all individual rights and liberties. The others do not deserve that knowledge and even if they had access to it, would not know how to appreciate and apply it. At least to their secret services, their Central Bank directors and Finance Ministers, it has been available for decades. They did not even touch it with a long pole! As far as they are concerned, it might as well be encoded by a code that for them is unbreakable. Most of their own favourite "ideas" and opinions are quite opposed to it. - J.Z., 21.4.03.)
The situation at the evening of a won battle of a revolution is, inevitably so, that trust (in the sense in which you use the word) cannot be an element for economical or monetary reconstruction. The people trust a paper money only if they can, without difficulty, use it as means of payment in the shops and if prices in the shops do not increase almost hourly, as it is usual in times of revolutions made on the basis of the outdated financial schemes (assignats or forced and exclusive currency systems).
A better system may be based on this fact:
The shops are debtors of bankers. And the shops may trust that they will have unpleasant experiences if they do not use the received paper money to pay off their debts. That kind of trust is essentially different from the trust that you mean. The two matters have only the word in common. (I do hope, that in future two different words will be used to signify the two kinds.)
The next step must be - - that's my view - - that the revolutionary government says to the people:
People, you distrust! Do so, and freely use all means by which you protected yourself in times of economic disturbances, fix your prices in gold, in silver or in any other value you yourself think suitable. Buy gold, silver and other commodities. And if you possess gold ingots, you are permitted to coin them. If you distrust the State Mint, then go to private medal makers. But be honest. Gold ingots, whether coined or not, should always bear a stamp which indicates the weight and the fineness. Now- - in this time of general distrust - - more is needed: The stamped indication of the diameter and the thickness, also of the address of the maker and the date of coining.
And you few men, who know a banker whom you trust and who is willing to issue notes, trust him as much as you like, use his notes as measure of value, means of payment and means of hoarding - - no law shall forbid this!
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3.
I omit here the principles of revolutionary taxation; it would become too long.
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The next step would be to admit Free Trade in every economic sector.
(J.Z.: Under panarchism it would also be permitted in every political and social sector for all of their kinds of wanted services, disservices or freely chosen delusions. - J.Z., 21.4.03.)
All officials now used for self-blockade (J.Z.: and other counter-productive obstructionism, under all kinds of false pretences and excuses! - J.Z., 21.4.03.) are used for other activities.
Another step to be taken would be (must be): distinguish between a means of payment, which a creditor cannot refuse and a means of payment, which the creditor can demand from his debtor.
That distinction is out of your sphere. For me it is most essential. I wrote much to you about this matter.
Concerning your remark, that gold should not be a legal tender (a means of payment that debtors can force upon their creditors), Zander used to say, he would oppose to such a regulation, if he knew of one case from history in which a man really and sincerely felt himself prejudiced by receiving gold coins.
(J.Z.: If that is the case, then gold need not be given legal tender power. It is already popular and acceptable enough without this extra "quality". To give it legal tender would be superfluous. Judges would also recognise it then as a customary means of payment, for those able and willing to pay in this way. - J.Z., 21.4.03.)
That a creditor should not be entitled to demand gold, I have often emphasised. If he and his debtors, in ignorance, concluded an agreement, that the creditor should be entitled to demand gold, such an agreement must be treated by courts as a speculation in "futures", where one party promises to furnish goods which that party can only get by good luck. I refer to the many letters, in which I wrote to you about the matter.
(J.Z.: Even if there is a quite free gold market, a sudden and great demand for gold, exerted by all or many of the exchange media, which stood so far at par with their nominal gold weight value, could, at least theoretically, lead to a considerable discount for masses of these exchange media, simply because their total volume, compared with the total volume of gold, available at any time on the world-wide market for gold metal, can be rather large and the total gold stock cannot be greatly and suddenly increased. However, the prolonged existence of a free gold market and of a just, free and peaceful society, with many exchange media and clearing avenues reckoning in gold weight values, will make a "run" on the world market for gold a rather unlikely event. - J.Z., 21. 4. 03.)
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You see that distrust rather than trust (the word used in the sense in which you use it) is the basis of my system. I think, that I do stand here on the basis of facts to be observed in every revolution. That I disagree, widely, from the classics, I do admit. But the classics did not write for revolutions.
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I start from conditions given in every revolution. Opinions of the people, of average businessmen, etc. form part of these conditions. Experience of many hundred of years teaches, that in times of distrust people never use a paper money as a measure of value - - if they are not compelled to do so. As Paul Einzig in a very valuable book: "Primitive money" (I wrote to you about it) (J.Z.: That may have been in letters prior to those accessible to me and now, probably, lost. - J.Z., 21.4.03.) demonstrated: All peoples of the world use that good as a measure of value of which the relatively greatest quantities are available and which can be sold at a market. Example in Italy, 1945: Oil was much used as a measure of value and the value of goods and values in agreements (rents, prices, etc.) were expressed in weights of oil.
I am no fanatic for gold, but to prohibit possessors of gold to use it, with the consent of the seller, as means of payment, that would be tyrannical, I think. However, gold should have competition from oil, kilowatt hours of electricity works, transport miles of railways and some other units not yet proposed, that would be desirable. In India silver would be a mighty competitor, as it was for centuries.
You ask in your letter, page 1: "I cannot think, why you should legally prevent creditors from stipulating payment in gold, whilst at the same time empowering debtors to clear their debts by the offer of gold, thus legally compelling creditors to accept gold."
4.
If a creditor stipulates (that is, with the consent of his debtor) payment in gold coins, that is a kind of gambling. The debtor cannot possibly know whether he can procure the gold at the stipulated moment. If experience should prove that he cannot provide the gold, then courts must treat the agreement as a gambling for which a legislation exists and a voluminous jurisdiction. In the legislation of a revolution, the economic existence of debtors should not be jeopardised by the chances of the bullion market and, therefore, a debtor, who (it will have been, in all cases, by ignorance) promises gold must be judged as a gambler and his creditor too.
It a debtor possesses enough gold then the payment with gold is no risk for him. As far as the creditor is concerned: Zander used to say - - show me the man who felt himself really harmed by the acceptance of gold coins, and I change my opinion. But I will concede to you the legal possibility to exclude, by a formal agreement the payment in gold. I do admit, that today some people, for religious and similar reasons, refuse gold though they agree, that its acceptance would be to their advantage.
The latter kind of payment is always possible, for the gold is already at hand. The former kind of payment may be impossible, as so many crises taught. (Economist held the gold responsible or the gold standard. In reality the kind of agreement was responsible.)
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You speak of the price of gold and of its fluctuations in our time - - in Germany and in other countries. The price varies because goods (including gold - J.Z.) are not priced in gold but in paper. What would be the effect if goods were priced in gold, I often wrote. (J.Z.: Then gold would not even have a price, for the "price" of an ounce of gold would be an ounce of gold. - J.Z., 22.4.03.)
You say: But people trust in paper, and will hardly price goods in gold, it they are not compelled to do so.
I say: Let experience decide. But consider that until now it has never been necessary to compel merchants to price in gold. On the contrary, they must be threatened with hard punishments to compel them to price in paper. But to repeat it: Let experience decide! (J.Z.: How many people are prepared to bet that the paper money of their government will still have the same purchasing power in 2, 10, 20 years? - J.Z., 22.4.03.)
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You insist that gold should remain the basis of credit and only for a remote future will you admit a credit system without a golden basis. (Your book page 309, line 9: "At a later stage etc.")
I demand a system where everybody is permitted to grant and to accept credit even if the last grain of gold has left the country. I start where you end. But liberty is certainly on my side.
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We often corresponded on the "balance of trade". I repeat that there is no gold necessary to make a good a deficit, if the creditor has no legal claim to get gold coins or ingots. Do you think, that in the year 1797 (Your book, page 309, line 12) many agreements were not concluded because the creditor had lost his right to claim gold?
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You say in your letter, that e.g. Germany never had free banking. In a former letter I wrote to you that after 1848 the conditions in Germany, under which a note issuing bank could be opened, were hardly less liberal than in Scotland. I wrote to you as well, that in the year 1870 there were more than 30 note-issuing banks in Germany, many more than in Scotland.
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5.
A real freedom of issue existed in old times neither in Scotland nor anywhere else. Freedom cannot be found where banks are restricted in credit-giving by their treasure in precious metal.
(It seems that silver. sometimes, played a larger role in Scotland than did gold: Your book, page 130, announcement of the British Linen Company.
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In your letter of 9. 11. 51, page 2, you say: "I think you exaggerate the need of everyday commerce for gold." I am so far from exaggerating such a need, that I contend: It is really zero. If the means of payment would be "Verrechnungswechsel" (clearing-bills- J.Z.), then a demand for gold could not arise from external trade.
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It is strange: You decline gold as a measure of value, but demand it as a basis of credit (in the modified forms you explained).
I decline gold as a basis of credit and demand that credit should be possible even if the last grain of gold has left the country. But I think that gold is the best measure of value found until now, provided all goods are priced in gold. Whether gold is the best measure should be tried every day by applying other measures as much as possible.
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In your letter of 9. 11. 51, you say, page 2, line 11: "And if his trust in his bank has diminished, he would hardly be likely to apply to that bank for another loan, lest he find himself unable to buy with the notes." Agreed - - but then less his trust in the bank is important than the trust of others, especially of sellers of goods.
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Your letter of 9. 11. 51, page 2, price of gold.
If all goods (or a great quantity of them) are priced in gold, and the notes of the banker, to whom the shop owes notes, run, too, in gold (J.Z.: do also use gold as their value standard.), then the price quoted at the bullion market is of no importance for the shop and for the note bearers. If a note bearer gets distrust (suspicious - J.Z.), he goes to one of the shops indebted to the note issuer, buys what he thinks fit, and he is rid of the note together with his distrust. The shop sends the note to the note issuer and repays a part of his debt at par and thus without loss.
It's another thing when the notes are a mere paper money, not running on gold units. Then those effects take place which you describe. The effects are not to be overestimated. In West-Berlin the East-mark in used in shops as means of payment for an amount of about 50 000 000 to 60 000 000 a month. Commodities in the West, of course, are priced in West-marks. But the shop girls calculate the daily changing East-mark prices with great accuracy and speed.
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Your letter of 9. 11. 51. I agree with what you write on the Bank of England. It would be best if it were just one bank among other banks, without any privileges, and the very best would be if its charter would be repealed.
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David Hume on Money. We agree. If the quantity of currency changes, prices
1.) do not follow very quickly,
2.) when they do follow, it is always to the disadvantage of somebody.
Hume did not yet possess the notions of clearing, of free banking and of "Verrechnungswechsel" (clearing-bills -J.Z.).
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6.
Determinism. (Your letter of 9. 11. 51., page 3.): "differences of effects". You are right, if these differences are "uncaused", determinism is a false philosophy. Can you imagine a difference or anything else in this world not caused???
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Your letter of 13. 12. 51. Japanese bicycles. You say: "If we are tending to buy more than we sell, we shall have to stop buying, no matter what currency is used." - Certainly! But that is here not the problem. If the Japanese sell cheap bicycles in London and accept British pounds, the problem for Britons is solved. It is the affair of the Japanese to make the best use of the British notes. If they find, that there is nothing profitable to buy in Britain, the Japanese will not sell cheap bicycles in London a second time - - that's all. The Japanese loss (in this case - J.Z.) is not interesting from a British standpoint. (Openly confessed: For me, an Internationalist - it is not so; I regret the Japanese loss - - a fact for which they will care no more than the British will do for their loss.)
(J.Z.: Another option would be that the Japanese will not sell their bicycles quite as cheaply in Britain or would accept British means of payment only at a discount. Either the increased price for their bicycles or the discount of the British means of exchange, i.e., an exchange rate for British pounds lower than before, could make the bicycle trade favourable for both sides. I am only surprised, once again, that M. still needed lessons on such basics. - J.Z., 22.4.03.)
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The word "Gold Standard". Perhaps you will have an opportunity to read the article "gold standard" in the Encyclopaedia Britannica, latest edition. The economist, who wrote the article, enumerates your gold standard as one of the possible kinds of a gold standard, but not as the gold standard. I found also other authors who are of the same opinion. I will try to get the passages and then I will inform you.
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You write (letter of 13.12.): "My point is that it does not matter whether we pay in pounds which are convertible into Yen in Tokyo, or whether we buy yen with pounds in London."
If the Japanese bicycle merchant has accepted British notes for his cheap bicycles, then it is not interesting for British people whether the notes are converted in Tokyo or elsewhere before they return to England and buy there something. Interesting is only that they do, inevitably, return and by that return finance the import of the bicycles. When the notes return to England, then there is no longer any necessity to buy Yen. For what do you want the Yen? To buy cheap bicycles??? They are already bought and paid, and paid with British means of payment (pounds or others).
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Concerned the possibility to "obtain freely gold in Germany", we were at cross purposes. I reread what you wrote in your book on page 180. There Loubet criticises the frequent changes of the rate of discount in London and the relatively rare changes in Berlin. What may have been the best method is today, after more than 50 years, difficult to decide. It may be that the British method was best. Certainly, the directors of the Bank of England were no blockheads. It may also have been the case that one method was good for Berlin and the other for London. More important, for our discussion, seems the possibility to obtain gold freely in Germany, before 1914.
Here must be distinguished (I wrote about the matter)
1.) redemption of notes into gold,
2.) obtaining gold not for notes but for bills of exchange and similar securities.
I never heard or read that the redemption of notes offered a serious difficulty for the Reichsbank. (You will not believe that it is my intention to defend the Reichsbank from a German and nationalistic standpoint.) The quantity of gold used for that purpose seems never to have been large. (I possess no statistics on this.)
7.
Another matter had been the help (the assistance? - J.Z.) for German merchants who had promised to pay in gold and whose creditors were so unkind to demand gold. (Even when it was scarce and hard, expensive or impossible to obtain rapidly. - J.Z., 22.4.03.) That the Reichsbank raised difficulties here can be understood. All Central banks of the world did the same, the Bank of England not excluded. Before the Reichsbank existed, the practice of German merchants was to beg their creditors for a delay, until their trade gave them a chance for clearing or - - what is practically the same - - to pay e.g., Americans with bills of exchange of American origin. That was not a great matter. The German merchant gave a new bill of exchange, on the basis of a discount high enough to satisfy the creditor.
Once the Reichsbank was established, it acted more and more for the merchants. In other countries it was the same after the establishment of a central bank in these countries.
A very important point is neglected by most authors. Before the cable connecting Europe and America was finished, there was hardly a technical possibility to enter into negotiations if there arose difficulties with the provision of precious metal at the time of maturity. And afterwards the costs of cablegrams were so high, that for smaller amounts the possibility was not given, either. That contributed much to make the crises in old times so severe. I heard of cases, where American merchants had procured precious metals by granting an enormous price and shipped it to Europe, and, at the same time, the European merchants did the same to meet their obligations vis-à-vis American creditors and shipped such metal to America. In the midst of the Atlantic the ships met, and when later on this became known, everybody saw, that the merchants had not used the best method of payment. But merchants at that time were not organised and so every merchant said: why reflect on so "theoretical" matters and for the profit of others? 500 years before the merchant guilds of the Italian towns used a well-organised clearing in their oriental trade and seldom sent precious metal from Constantinople to Italy. After 1492 they sent, from time to time, precious metal from Italy to Oriental places to pay for luxury goods imported from there. The metal came from America. (The quantity remaining in Europe, and increasing the price level there, is generally overestimated.)
What you quote on page 178 from Jackson is a procedure generally used in the whole world. That may be seen from old books for merchants, where the technique of external trade is taught.
The Bank of England protected its gold by furnishing gold coins that were either too light or at the limit of weight, where a gold coin ceases to be legal tender.
The basis of the whole redemption system and the collateral system of granting a legal claim to creditors, to demand precious metal - - this basis was dishonest and rested on ignorance. Therefore, the practices of the central banks had to be, in many respects, dishonest and even fraudulent.
This set aside, at the free bullion market precious metal was in Germany so easily obtained, that foreigners preferred to secured it in Germany.
Form the protocols of the enquiry of 1908 (quoted in your book on page 181) I learn - - - but I will rather copy here the passage from the speech of Freiherr von Wangenheim, page 67:
"Dazu kommt die Gepflogenheit unserer heimischen Banken, jedem auslaendischen Geschaeftsfreunde gegen die kleine Provision von 1/oo jede gewuenschte Menge von deutschen Goldmuenzen zu schicken, welche Goldtransporte namentlich auf dem Ueberlandwege statistisch heute nur sehr unvollstaendig erfasst werden."
(To this must be added the custom of our internal banks to send any wanted quantity of German gold coins to their foreign business friends, for a small commission of 1/oo. Such gold transports, especially when they went on land only, can today be statistically determined only fractionally. - J.Z.)
I wrote to you about this matter in a former letter.
8.
The old stories are of great interest for me insofar as they show, that by average authors, professors politicians etc. many grievances in the economy concerning gold were attributed to economic or monetary properties of gold, while bad payment methods, bad laws, bad payment habits, ignorance of the "experts" and other such things were the real cause.
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A proposal for measures of an economic and a social revolution must also deal with long-term credit.
Your system, essentially consisting in that what bankers in the 18th century called: "raising capital by circulation", is out of the question. If I were to propose such a system, peoples would at once ask: And where is the limit of the system? From your book I cannot get information on this important point. Some time ago, I asked you, what, in your opinion, would be the upper limit of capital provided by "coining" the trust in a banker. I got no answer.
When I engage in proposals myself, I must start from the real conditions of the East. Some of these conditions
are:
1.) There are no bankers trusted by the public
2.) Note-issuing cooperatives, too, are unknown and, therefore, cannot be quickly established.
3.) Your fundamental principle, that is: Slacken the velocity of paper currency, so that for years it would not return
to the issuer, and slow it down by continually strengthening the trust into the banker, that principle is here
impossible and would be at once rejected if one would recommend it.
4.) Notes in your sense are in the East only known in the form of State notes and fiat money. But what is known (though prohibited), are tickets (vouchers, Gutscheine, Bons) accepted like money is in the shops. Factories, cooperatives and transport firms could issue such tickets after there are concluded agreements with the shops, by which the tickets are accepted in the shops.
How quickly such agreements can be concluded is demonstrated by John DeWitt Warner in his article: "The Currency Famine of 1893." It appeared in the volume for 1895 and, a second time, in 1896 of "Sound Currency", published in New York.
That in Russia as well the issue of tickets, which are accepted as money in the shops, is possible within a few hours, was proved by the "coiner-trials" in 1934 or so. The persons concerned were no "coiners" (or forgers - J.Z.) but simply created (emergency money - J.Z.) tickets, when the notes from Moscow, to pay wages with, did not arrive. (For some reason that I do not know.)
Obviously, on the kind of tickets here described, all returning in a very short period to the issuer, no long-term credit can be based. From my former letters you may know my system - - the only one practically possible in the East. People would invent it themselves a short time after the revolution. It is as simple.
(J.Z.: I wish he had here discussed as short-term loans in "ticket-money" as would be possible, desirable and necessary for the payment of wages and salaries with it. Instead, in the following, he discussed only a long-term industrial loan! - J.Z., 22.4.03.)
5.) A value basis not dependent upon the opinions of "experts" - - bankers, officials, authors, etc. - - is indispensable in the East. May it be gold, silver, grain, or whatever, must be permitted, if there arises the least distrust at a given moment and place,. (Propaganda for your system must, of course, be permitted; that belongs to a social state of freedom of expression and information.)
6.) Instalments in repaying the credit are the only thing that here comes into question. (Here I need not state the reasons for this.) How the instalments are to be organised may be seen from generalising the following example:
A Cooperative buys a machine for the price of 10 000 grams of gold, if the price were paid in cash. But the price is paid in 60 monthly instalments and the seller gets 1/2 % monthly interest on the amount not yet paid. The compound interest tables teach, that the instalments would be monthly 193.33 grams of gold. 1/2 % monthly on a gold basis seems a fair interest. (Other interest rates should not be prohibited.) Without interest the monthly rate would be
9.
166.67 grams. The examples proves, what I wrote so often, that industrial long-term credit is hardly raised in price by interest.
Financing machine buying will, probably, be the first occasion for long-term credit in the East. There is no room for such an element as "trust in the banker".
Let me add, that the financing in the foregoing example would be performed so, that the cooperative gives the machine factory 60 "Verrechnungswechsel" of 193.33 grams each, due at monthly intervals.
(Instead of 60 of that size may be chosen: 180 of 50 grams each plus 60 of 43.33 grams each, also due at monthly intervals, so that the last one is made good after 5 years.
I enter into this detail because men of the East, really interested in reforms, demand technical details and are right to do so.
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You see from the example that in every case the store of goods or services ready for sale at the debtor's shop, factory or office is the redemption fund of my system; it is sufficient and necessary. (Bold lettering by me. - J.Z.)
Necessary is also that the "redemption fund" (the goods or services ready for sale) are priced in the same value unit as the ticket by which they are bought or given as "redemption".
Consider that this conformity creates a great independence (though not an absolute independence) from the conditions of the market of the good which serves as a price unit.
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I will not continue this letter, already pretty long, though many of the most interesting points in your letters are not yet answered.
In all differences you meet in our systems, please, consider that our aims are quite different:
My aim: Financing the revolution in the East and provide a good and stable monetary basis for economic life - - the relatively best, so that every alteration would be a deterioration.
Your aim is laid down in your book.
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A happy new year to you and most to your stomach!!!
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Very faithfully Yours - signed: U. v. Beckerath.
____________________________________________________________________________________________
3. I. 1952. Your letter of 13. XII. 51., & your letter of 6. VIII. 51.
Dear Mr. Meulen,
I really missed answering the passage in your letter of 6. VIII. 51, beginning with the words: "Competition with USA." Please, excuse me! Here is my answer:
I cannot see how and to what extent there is created an additional difficulty, if the price of pounds, expressed in dollars, will fluctuate according to the balance of trade (provided such a balance exists) or according to other influences. Consider the case of an American cotton dealer, who accepts pounds for cotton sold at London. (Be sure: he will accept the pounds (if the price is right, taking the exchange rate into consideration - J.Z.), if the English say: accept them or take your cotton back to Savannah!)
What can the American do with the accepted pounds? He can:
1.) buy himself goods in England for the English pounds,
2.) he can sell the pounds
a.) to a person that uses the pounds for buying in England,
b) to a person who offers goods that suits the American,
but at last the pounds must return to England, the only place in the world where their purchasing power is of a well determined magnitude.
Now suppose that the thing happens, which you fear, and the American looses much in selling the pounds. But of what interest is that to the English? English goods are ready for sale to everybody who pays pounds for them. Whether the buyer has got the pounds cheaply or by suffering a loss, has won them or inherited them, for the English seller of goods or services or claims it's all the same.
"It may be that the American says: That was the last time that I sold Savannah cotton to English dealers for English pounds."
Well - - other Americans will sell in England their cotton for pounds and will say to the former:
If you are not able to sell pounds at the exchange market without suffering a loss, you should either use the services of a trained banker or not be an exporter. You should have looked at the exchange list when you sold your cotton and should have fixed your price correspondingly. A trained banker would have sold your pounds for the price indicted at the exchange list or at a price very close to it. Also there exists a futures market. There you could offer (with the help of a banker) your pounds at a price exactly corresponding to the price, which you expected. If your offer was not accepted, then it was because the conditions of your deal were not sound. In this case you must change the conditions or renounce the deal.
You say: The American would prefer gold.
Perhaps, perhaps not. It depends upon the quotations.
What you say in the sentence beginning with the words: "If the pound notes promise etc." is quite right. But to what extent does this refute the usefulness of buying American cotton and paying for it by English pound notes or bills of exchange or other means of payment of English origin, where an Englishman is the debtor or the obliged?
As long as there exist English goods, cheaper than the same goods abroad, there is an economical possibility to give English pounds as a means of payment. But if such goods do not exist, then there is no possibility to establish an import-export business, whether gold be promised or not. If the gold was honestly promised, then the gold, in the case described, is the good, not dearer in England than abroad. If it is not honestly promised (say, promised, while the merchants concerned did not possess gold and were not sure to get it at due time), then the effect must be that foreign merchants will no longer do business with the promisers.
2.
If all goods in England are dearer than the same goods abroad, then no trade between England and foreign nations is possible. From economists like Adam Smith, Goschen, etc. you know, that such a case is practically impossible, though theoretically it may occur.
You always insisted that the real need of trade for gold - - setting aside the needs of jewellers - - is very small and that in practice trade could be performed without gold transportation. You were and are quite right. But if you are here in the right, then I am in the right, when I contend, that, in practice, it will always be possible to sell Savannah cotton in London for English pounds, that, consequently, it is not necessary to wait until English exporters have got foreign exchange to pay the cotton and that the whole modern theory of the necessity to export before importing becomes possible, is a gross error.
Even if the pound would be in a state of continual inflation (the word taken in the sense of 1913) it would be
possible to pay by means of payment of English origin. In such a case, let the English merchants give bills of exchange running on dollars, with the clause that the quotation of the pound at the Exchange in New York shall be authoritative, when the possessor of such a bill buys English goods or services and pays with the said bill.
-----------------------
Very faithfully Yours - signed: U. v. Beckerath.
____________________________________________________________________________________________
4. I. 1952.
Dear Mr. Meulen,
Your letter of 9. XI. 51: "Determinism." A very good refutation of your standpoint you can find in Shakespeare's "Midsummer Night's Dream". All persons involved are convinced to be perfectly free in their actions, but they are bewitched and act not less predetermined than do steam engines. What Shakespeare here demonstrates in a little exaggerated manner is true for all situations in every life. We are all bewitched.
Your letter of 9. XI. 51. "The Post office". You are right from the standpoint of a judge - - yes, it is probably unjust, but: "summum jus, summa injuria". (Summa jus? = J.Z.) Take the USA. There journals are forwarded gratis. That's unjust from your standpoint. And yet most Americans and many Non-Americans (I, too) are convinced that everybody profits more than loses by this regulation.
(J.Z.: Is there to remain a postal monopoly, i.e., no competition and consumer-sovereignty and individual secessionism and exterritorial autonomy among volunteers in this sphere? Is the pricing system really disfunctional there? Shall we accept, for these asserted or assumed advantages, all the disadvantages and inefficiencies and high costs of a monopolised system? My own and free choice would here greatly differ from that of B. Anyhow, by now the e-mail system has made me largely independent from postal services, as far as mere information exchange is concerned, that are not tied to either paper, floppies, microfiche or CD-ROMs. But I would gladly bear monopoly postage charges - if I could send and receive very large quantities of libertarian information on CD-ROMs. Even if postage would then be zero, or still higher than the present monopoly charge, that would hardly be significant for the transportation of the equivalent of up to 2,000 books on a single CD-ROM. About 10 CD-ROMs, mailed singly or together, could then supply me with a life-time's reading matter! - J.Z., 23.4.03. - Still: Where are the first 10 libertarian CD-ROMs, filled with scarce libertarian texts??? - J.Z., 27.5.03.)
Happiness. What you say is not without foundation. But the Germans living in the Eastern zone and being, at every hour, in danger of becoming tortured, do not share your opinion.
Determinism again. If you declare to be able to imagine uncaused effects or effects partly caused and partly uncaused, I'll burn my David Hume and may become a Meulenist.
---------------------
Your letter of 27. XII. 51. Scotch notes and the clearing house.
What you say is all right. But I contend (and not only I) that Scotch bankers did not, by far, all what they could have done for Scotland's economy, if only the amount of their credits had not been limited by their stocks of gold (or silver). And it was limited in this way. The option clause only protected the stock of precious metal. It did not enable the banker to grant all credits which, by "my" system, could have been granted with perfect security, the word "security" taken
a.) in the sense of commercial security and
b.) In the sense that the notes were always at par with precious metal or so few farthings under par that nobody would have minded it.
---------------------------
I beg to recommend to you as light reading (your letter of 13. XlI., last line) Montesquieu's "Sur la grandeur des
Romains", and all writings of Machiavelli. They are pleasant and full of important political truths. (And that spirit was misunderstood for centuries!)
--------------------------
I do hope that I have now answered all your letters.
--------------------------
Very faithfully Yours - signed: U. v. Beckerath.
___________________________________________________________________________________________
5. I. 1952.
Dear Mr. Meulen,
anti - Chrysists overlook (inter alia) that, if there exists only one really free bullion market in the world, and, the Place, where this market is held, is in commercial relations with other places, that are without a bullion market, that then it is easily possible to determine the value-relation of gold (silver, etc.) to the paper money of the other places that possess no bullion market. The procedure is very simple: by "cross- rating". Example: in every issue of the "Financial Times", a table of cross-ratings is published. (J.Z.: One of the many things in my life and times and reading matter, that I never noticed! - J.Z., 23.4.03.)
In the German law on stable-value mortgages of 23. 6.1923 (Gesetz Ueber wertbestaendige Hypotheken) (J.Z.: Law on value-preserved mortgages. Apparently, it was passed in the middle of Germany's worst inflation! - J.Z., 23.4.03.) gold was admitted as measure of value. In one of the by-laws for its execution, there was determined that the basis should be the price of gold at London. The price to be applied to German mortgages was easily determined by cross rating. In this way there was taken care, in a quite reasonable manner, of the possibility, that the German bullion market was too scantily supplied with gold and, therefore, a reliable quotation was not possible.
Cross ratings provided a means to establish gold prices for all commodities in Germany, though the quantity of gold at the bullion market may have been (sometimes - J.Z.) very small.
----------------------------
The generally heard objection: There may no be enough gold in a country to determine its value, especially its relation to paper money, with sufficient reliability - - this objection is unfounded. As long as cross rating is not prohibited, the gold value can be determined with sufficient exactness.
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Irredeemable paper money always is convertible. It is convertible into commodities. (And tax receipts! - J.Z.) If the paper money runs on a single commodity, grain, silver, gold, and the goods and services of the country are priced in the same commodity, grain, silver, gold, then the stock of that single commodity at the market, together with the quantity of goods ready for sale, represents a conversion facility on a much broader basis than the old redemption obligation of note issuing banks. If the proper money gets a discount at the market of that single commodity, then the paper money is at once brought to the market of other commodities which are priced in that single commodity and so it is converted, although not redeemed.
If the commodity-owners are debtors, obliged to pay their debts in notes, the commodity-sellers do at once use the opportunity and pay off their debts with the discounted notes they had accepted. So the notes disappear from circulation and cannot act as a cause of inflation, this word taken in the sense of 1913. But if commodity owners are not debtors, then the above cheek on inflation cannot act. If there are other checks, the price level may remain unchanged. Such other checks may be a great amount of taxes not yet paid, though due and payable in notes.
------------------------
Let me remark that until now an economic and monetary theory of irredeemable paper money, in connection with a free bullion market, Free Trade, a system of "fixed" prices in the shops, eliminating such a whimsical thing as trust (the word used in the sense in which you use it) from the elements providing parity with precious metal, but including the right to
2.)
refuse paper money in usual business and including, further, the right of Free Banking, that such a system has never been seriously discussed by economists and, certainly, cannot be discussed merely on the basis of classical or modern economic theory.
--------------------------------
Let me remark, too, that in a revolutionary system of means of payment - - the word "revolutionary" taken in the sense of "anti-fascist", so that the aim of revolution is to create as much liberty as possible and not new restrictions and suppressions (withdrawal of gold coins by the government would be such a suppression) - - that in this revolutionary system, the readiness of debtors to accept paper-money at its nominal value is an absolute necessity. Upon no other class of men can such an obligation can be imposed without tyranny.
One may say (e.g., a fascist might): But tax payers are debtors of the State, and to impose upon them the obligation to accept State notes at par would, from that standpoint, not be tyrannical. But the tax payers get no loan from the government. Insofar they are not debtors. They are (legally, not morally! - J.Z.) obliged people, not indebted people. The difference is important.
(Moreover, most of them pay only a fraction of their taxes directly. Most are automatically deducted from their incomes or are already included in the prices they pay. To that extent they do not participate directly in the reflux of tax foundation paper money. - J.Z., 23. 4. 03.)
Tax payments without using a means of payment that is connected with the danger of becoming a tyrannical means, could be performed in this way:
The obliged tax payer gives the government his "Verrechnungswechsel" (clearing bill - J.Z.), which he (the tax payer) obliges himself to accept at par in his business. Then the government can convert these Verrechnungswechsel at a large bank, whose paper is accepted in great districts.
The business of such great banks would be the object of a new theory of banking. (Elements are to be found in your book.) A very modest commencement is to be found in Andrews' "The Science of Society", a book much read in circles of individualist anarchists two generations ago.
--------------------------
In order for a revolutionary system of paper money to become technically possible, it must run on commodity terms, gold, silver, grain, etc., so that the money can get a discount at the market. The possibility of a discount is the best safety-valve in case of misuse (e.g., over-emission) and refusing the paper money is the best means to get the safety-valve to work.
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When you are opposed to clauses imposing on debtors the obligation to accept the creditor's paper money (notes) at par and at every time and in every quantity, until the debt is paid, that is - - from your standpoint - - quite consistent.
In the centre of your system is: interest rate reduction for producers, thus creating increased production and so
increased employment.
In a system, where continuous distrust (towards politicians, in the future, in other governments, in the own government and, perhaps, even in bankers) or the possibility of such a distrust, is an essential element,
1.) long-term credit is impossible without the formal exclusion of accepting the creditor's notes in any quantity, at any time and at par, except for the amount of due payments,
2. in consequence of 1, long-term credit costs interest, as long as the demand for long-term credit is greater than the
offer.
3. You think it possible and, consequently, propose to replace, in your system, all elements, which, in other systems make interest inevitable, by trust, of the note bearers in the issuer.
In a revolutionary system such a proceeding is impossible, inter alia because distrust in the other factors, which you do not mention - - politicians, future, foreign governments, etc. will arise at short intervals. This kind of distrust may the note issuer bring into a position where he must say: ultra posse nemo obligator (Beyond the possible, I am not obliged. - ? - J.Z.), though he is considered as a merchant only and in the usual sense of the word perfectly trustworthy.
(J.Z.: Why should the goods and service providers accept the money issued by third parties, when they are not commercially or legally obliged to do so? Especially when it is already depreciated and further depreciating or they suspect that it may soon be worth even less? They might simply say: I am not interested in your confidence trick, comic opera or circus performance tickets. Others may value them but I do not. Pay me with sound currency. Or they may accept them only to the extent that taxes can be coercively imposed upon them and extracted from them, at any time, and are made payable in these notes of third parties. Otherwise, they would accept only the ticket money issued by themselves, and similar issuers of "optional money", that obliges only the issuer, unless the money of third parties is given the legal tender, fiat money, forced currency and exclusive currency privilege. [Forced value and forced acceptance] ) - J.Z., 23.4.03.)
Some, time ago we had a discussion on the points here explained and you answered: A system may be good for a revolution and may yet not be the best for the case in which normal conditions are restored.
Maybe you are right. But, certainly, some people will say: Let us keep the system which worked so well even during a revolution. (When all other systems tend to fail! - J.Z., 23. 4. 03.) Times are still unquiet. Every day it may become necessary to provide for a second revolution or for a war.
On the other hand, I always emphasised always liberty of opinion and, consequently, all possibilities of propaganda (and self-concerned and tolerant actions! - J.Z., 23.4.03.) for adherents of other systems than the here sketched revolutionary system.
-----------------------------------------
Let me here - - in short - - allege still some details of your system, which exclude its application in Germany or in countries of the East.
1.) The system of an invariable unit of value cannot be established in Germany, Russia, Poland, etc. Here prices of a former period are forgotten and the papers in which they were recorded are burnt. Also the prices were different in different districts, the different quarters of Berlin not excluded. (Was it not the same in London? For Paris the difference is proven.)
2.) Redeeming notes at the market price of gold, by the note-issuing banker and sending the public simply to the bullion market (or goldsmith - - your book, page 312), where you recommend this procedure for a later period),
would, in the said countries, be considered as, economically, the same thing. But people would ask, suspiciously: Why does the banker insist on going to the market for us?
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(Concerning England you should - - I think - - form a bill, by which the present legal obstacles to your system are removed, if Parliament accepts it.)
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In the revolutionary system no protection of gold (the word taken in the sense in which you use it in your book and in which Central Banks use it ) is provided. Gold, in this system, only serves as a measure of value or as raw material for jewels, artificial teeth, etc. Gold may serve as a measure of value, whether it may be ready at hand or quoted at a distant place.
Further: When all commodities of the country, or a great part of them, are priced in gold units, then the stock of the commodities ready for sale, works as an immense gold redemption fund, provided the commodity owners must accept the notes at par. (Put in bold by me. - J.Z.)
Prof. Hirsch, in the year 1930, estimated the value of goods, ready for sale in Germany, at about 30 000 millions of gold-marks. That was more than the 10-fold of that what the Reichsbank had ready for redemption in gold at the time before 1914.
The difference in favour of the commodity redemption system was: Obviously, the Reichsbank promised - - concerning redemption - - always more than it was able to fulfil in the case of a run. But the 30 000 millions in form of a stock of commodities were at hand, were no swindle and were, at the time of the crisis, besides the tax foundation, the element which kept, pending the crisis, the notes at par with gold.
(J.Z.: To this amount must be added the total value of all services ready for sale and the value of all debts immediately or very soon due. They also exert a demand, suction or reflux pressure upon all the notes issued, thus giving them a strong pressure towards their par-value. - J.Z., 23.4.03.)
--------------------------
4.
Let me speak quite openly.
That you will not recommend your system, worked out in years of peace, under conditions very different from the present, for quite other purposes than are to be faced today, that you - - I say - - will not present this system to revolutionaries, who follow quite different aims, that I do understand.
But why will you not contribute something to a plan for a monetary system for a liberated Russia, Poland, Germany, etc.? (And one that would greatly help in the liberation of any despotically ruled country? - J.Z., 23.4.03.)
Criticise the here sketched system, and consider the aim of the system, and you will have already contributed something.
---------------------------
Benjamin R. Tucker did an immense preparatory work. But as a revolutionary system - - under the present conditions, this work cannot be used
1.) because he did not distinguish long-term loans and short term loans, or - - in other words - - exchange of
present goods for other present goods and exchange of present goods for future goods, still to be produced,
2.) because he grossly overestimated the burden of interest and confounded the necessity to pay interest in legal
tender (always scarce) and the quantity of interest to be paid.
If Ford owed only one dollar, but to be paid in gold, and he does not possess this dollar, then he is bankrupt. But one should then not say, that the interest burden for Ford was too high.
Benjamin R. Tucker is insofar excused as all economists of his time overestimated the economic weight of interest. For production purposes interest is (in most cases! - J.Z., 23. 4. 03.) a nearly negligible factor, as may be proven by - - say 100 - - randomly taken reports of great producers. (Or small producers).
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Let me here allege an important fact:
The quantity of gold hoarded was at all times so great, and still is so great, that the price of gold is nearly independent from current production. Current production may lower its price (its value relation to other goods) (very gradually, seeing the total quantity of the stock accumulated over thousands of years - J.Z., 24. 3. 03.), but the diminution of production in practically without influence. My opinion is that the events at the bullion market in the last years confirm this old relationship.
-------------------------------
Increased production by low interest: Suppose: interest is extremely high - - but when the interest-receivers spend the interest, then the quantity of demand is as great as it was before. It is only shifted.
It is the same as in the case of increased wages. Production is dearer but total demand remains the same, so that the same quantity of goods is sold as before. The demand has merely been shifted.
Very faithfully Yours - signed: U. v. Beckerath.
____________________________________________________________________________________________
17. II. 1952.
Your letter of 9. II. 52, received 15. II. (six days from London to Berlin, longer than usual).
Dear Mr. Meulen,
first of all: excuse my long silence. Though my problem of heating is solved, I still suffer from winter sickness. It's the same in every winter and has been for many years. In the night, when normal people sleep, I cannot, and in the morning, when normal people rise, I begin to sleep, but not 7 or 8 hours, like normal people do, but much more, sometimes 12, and 14 hours are not seldom. Winter must be over before I become more active.
(J.Z.: I still believe that drinking much coffee in the evening and in the first part of the night contributed firstly to this sleeplessness and then to exhaustion and prolonged sleep during the day. At least in this respect he may not have been sufficiently observant and thoughtful. - J.Z., 23.4.03.)
Rittershausen sent me from Mannheim and by railway a great quantity of coal, though they suffer from coal shortage at Mannheim no less than here. That's friendship! Also, I had the good luck to be able to buy some coal, so that my chamber is as warm as yours.
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Rittershausen's letter of 5.II. 52. I return here enclosed.
I regret very much that I wrote on the share of American commitments in Germany's recovery. If I would have known that Rittershausen, too, wrote to you on this subject, then I would certainty have been silent, which, as the well known Arab proverb teaches, always is the best way. ("Am Baume des Schweigens haengt seine Frucht: der Friede".) (On the tree of silence hangs its fruit: peace. - J.Z.) In no case - - of course - - will I begin a discussion with Rittershausen, in an English paper about such a matter. All the more when there is much truth in what he explains. When I enter here into some details it is because I trust in you that you will not print my modest contributions.
Rittershausen is insofar in the right, as German factories certainly do not manufacture cannons, shells, aeroplanes and such things. But I read in German papers that the factories manufacture things needed to manufacture war material. That these semi-manufactured products are exported to the USA nobody will suppose. Whether they are finished in France, Belgium or in England, I do not know. But I am convinced that no official statistic will reveal the way of these semi-manufactured products if the assertion of the papers would be true that they are manufactured. Concerning this point I think: If the assertion would be true, then English papers will observe the fact not any less than German papers. If English papers do not mention the kind of production here in question, then Rittershausen is certainly in the right to saw that this production does not exists. For a long time I could not study the English papers in the British Centre: my health was too bad. Therefore, I do not know what opinion the English press uttered.
Less attention deserves the often repeated assertion of the Eastern press that the Bundesrepublik produces things only to be used for industrial, agricultural etc. purposes, because the Allied's industry is fully occupied with the production of war material, so that it cannot sufficiently supply the West with tools, certain auxiliary engines, etc. The Bundesrepublik, say the Soviets - - fills the gap and so, indirectly, but efficiently helps to produce war material/ News from the East are always suspect.
I believe myself that even very large commitments from abroad would not have been a considerable help for Germany if there would not have been allowed a more liberal impact of supply and demand by the minister Erhard. (Germany still lives under dictatorship, but Erhard is no Hitler and is a better economist than the German professors - - Rittershausen excepted - - were in the years after 1945.)
2.
Therefore, I beg you to print his correction and, if you think that there is something to be added, refer - - please - - only to English papers (if these papers were occupied with the matter) and not to my present letter. Also, I beg you to consider this letter as one for you personally and not for anyone else.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
The word "Staatshaushalt" is translated by Toussaint-Langenscheidt's Dictionary by: "Finances of the State". I think it is practically the same as "budget". In the passage here in question Rittershausen means the expenses-part of this budget.
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I try to translate the passage marked by you on page 2, beginning with: "Man hebt Bankguthaben ab …" and ending with: "… des alten berechnet".
People withdraw their accounts with the banks. People sell also the few gilt-edged papers which survived war and currency reform. What concerns the latter: By the currency reform the gilt-edged (but not the quite lost public loans) were reduced in value so that a paper formerly of 100 marks now possesses a nominal value of, say, 6 marks. The interest in now calculated from the remaining 6 marks. That interest-rate is different and varies from 4 % or 5 % to zero.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
What Rittershausen says of the general tendency in Germany to use commodities as investment is quite right. This tendency is general in all countries where the currency is fiat money, but this is no novelty for you: The English papers wrote and wrote much about it.
As in the whole world, the people in Germany fear rising prices. By what causes prices may rise the people do not exactly know. The better informed know, that the greatest danger at the moment is a devaluation. Devaluations, at the present state of "development" are the best means to cheat all people whose wealth consists in claims to money, creditors in general and workers as wage-receivers. These people, ignorant as they are and mislead by the new language (dearness = inflation, etc.) do not knot why prices suddenly rise and make shopkeepers, Jews, Freemasons, Jesuit's, the Pope, the "international haute-finance", "speculators" etc. responsible. Most feared is the "international haute-finance", corresponding to the old experience that powers which do not exist are most feared. While in the pubs workers and the so-called "educated" discuss the question: "Who really makes prices rise?", all are convinced that prices will rise for some reason. Printing of forced currency-notes and devaluations are never discussed as causes of rising prices. But a few people know the connection well.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
What Rittershausen says of credit restrictions is true. But I draw the conclusion that no government possesses the right to introduce a monetary or economic system by which a single man, the note-bank-president, is endowed with the power to restrict credit. To introduce such a system violates the monetary rights of man and citizen. These rights exist, though they are till (until - J.Z.) now (not still - - thank you!!) not published.
In England and in the whole world, the whole peoples with the exception of about 10 men - - I estimate - - (Do you belong to the 10?) takes the now granted rights of the bank-president as self-evident. What a decline since 1852!!!!!!!!!!
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Very truly yours - signed: U. v. Beckerath.
____________________________________________________________________________________________
18. II. 1952. Your letter of 9. II. 1952.
Dear Mr. Meulen,
some of your letters are not yet answered, a lot of most interesting printed matters is not yet confirmed - - I think I will be able to catch up with it in March.
----------------------------
You wore so kind as to print my remark on Gresham's law at page 10 of the "Individualist", 1952. Thank you very much. I cannot believe that I am the first, who discovered the completion of Gresham's law. I would not be astonished if an author like Goschen would have detected it at his time, - - a time whose economic thought was so far superior to ours. But I cannot verify my conjecture, Goschen's main work being burned in November 1943. If you discover that another said the same as I, you would oblige me much if you told me. You know that I like to refer to elder authors to strengthen my position. Here I take as a model the most successful social reformer of all times: Kong Fu Tse. He always referred to ancient law-givers and moralists as Yao, Shoon and others (who, probably, never lived. The greater was their authority and, by referring to them, Kong Fu Tse's).
- - - - - - - - - - - - - - -
There is much honour to be asked by an author of your rank for my opinion about your article "Control of Imports", in No. 1 of the "Individualist", 1952.
(J.Z.: Here B. "lays it on a bit thick", for, according to this letter exchange, M. had always been a rather slow learner regarding the details of Free Trade and the monetary aspects of it and may never have comprehended all of B.'s explanations nor was he able to refute them. - J.Z., 23. 4. 04.)
I will try to tell something reasonable, but from an old anti-etatist you will not expect any concession to etatism and may the idea in question be ever so modern and generally acknowledged. My motto is that of old Abaelard:
"Si omnes patres sic, at ego non sic!"
What you say is all right, except - - that's my opinion - - that the round-about way of buying with foreign currency is necessary and that paying for imports with means of payment of domestic origin (Verrechnungswechsel) is neither possible nor necessary.
Please investigate whether your adversaries did not also start from the same presupposition and drew exactly
from this supposition their arguments to impose State control on imports.
But you know this kind of logic - - now used in all countries - - as well as I do:
1.) buying imports with foreign currency is necessary, not only because it is prescribed by the State and even the
mere offering of domestic currency is prohibited, but because the State, in this case took the right measure.
Here - - say the moderns - - an economic necessity is given.
2.) foreign currency must be procured. In practice there is no other possibility to procure foreign currency than by
export. Loans only differ (postpone - J.Z.) that necessity.
(If No. 1 would be right, then No. 2 would be right, too. But No. 1 is not right. I demand a chance for the principle opposed to the "foreign-exchange-control-principle". I am glad that here "City Press" and its collaborators do fully share my opinion. Certainly, they found the reasons for their demand quite independently from living or dead economists. They are excellent men. I always regretted that you do not assist them in this demand and only generally approve their demand for greater economic freedom in external trade. But the last consequence of greater freedom in external trade is the permission to offer means of payment of domestic origin to foreign exporters.)
(J.Z.: Although M. must have known that the English Pound was once the major currency in international trade, everywhere gladly accepted and offered without hesitation, it had become, by the usual governmental and central bank mismanagement, one of the "soft" currencies and thus was no longer as welcome as the somewhat less mismanaged and deteriorated U.S. dollar was. But this was no reason to assume that the official British means of payment and all alternative private ones, would always have to be of an inferior and less acceptable quality and then to perpetuate this belief in corresponding legislation. - J.Z., 23. 4. 03.)
3.) The fact, that every country (government) in the world is quite ready to sacrifice what can be sacrificed, if
export is made possible by the sacrifice, is acknowledged by the planners and controllers, but represented by them as a model for the own country. Use the said tendency in foreign countries as a help to get the imports from the foreign countries without buying foreign currencies - - no - - never - - we do not discuss that - - don't like it - - and now shut up! And the subjects obey. In the year 1852 they would not have obeyed so willingly.
(J.Z.: Even then and after the long battle of the Anti-Corn-Law League and its propaganda, they did not throw out all of the remaining restrictions on Free Trade and thus, step by step, Protectionism could be re-introduced. - J.Z., 23.4.03.)
4.) No. 3 being beyond the limits of this discussion, the export-possibilities are to be found out, studied and, if found, the necessary sacrifices to realise these possibilities are to be imposed upon the people - - that's clear! (Says the controller.) - - The sacrifices are exactly the inconveniences you speak of in your article and represent them with great clarity.
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What the collaborators of City Press do not know is: The freedom they demand leads inevitably to the "Verrechnungswechsel" (billet d'echange de compensation - - that is: where the holder does not have the right to demand cash, but can only demand clearing or immediate use as mean of payment vis-à-vis" the man who is obliged by the billet de compensation.
It seems the English language does not possess a fit expression. That would not be astonishing insofar as it does not possess an expression, either, for the German Verrechnungsscheck (Clearing-cheque) - - used in Germany for decades - - and the French "chéque de compensation", used in France, too, for decades.
The English "crossed cheque" is a quite different thing, though it replaces in many cases the chéque de compensation.)
-----------------------------
The fault of the City Press - men is that they gladly acknowledge the privileges of the Bank of England, the note-issue monopoly, the right of the Bank of England to impose a "Bank rate" upon the country, and - - worst of all - - they want to renew the old vicissitude that the Bank of England should be obliged to redeem its notes at par in gold (coins?? they do not speak about it) and on demand. Even King Solomon, with his gold treasure and the celebrated magic ring, by which he was the master of all ghosts, would, in the long run, not have been able to meet the program of the City Press. (Please do not print this attack. If I were here to publicly express an opinion, then I would express myself more politely.)
------------------------------
In your article you speak of the probable results of a referendum. Here you are perfectly right. But why not begin with the preparations for a referendum? Why not announce the preparations???? The mere announcement would arouse the greatest attention.
A referendum needs a slogan. I propose:
You - - Englishmen - - use the whole world as your market, but pay British!!
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Private profit, page 4. Please investigate the reports of the German joint stock companies. 50 years ago the profit there was - - in the average - - as great as the amount of the wages. Now, in the average, the amount of profits is about 1/10th of that what the employed and the State receive, together. That indicates an economic and - - more than that - a mental bankruptcy. The time has come for the cooperative principle to take over the whole business.
--------------------------------
Very faithfully Yours - signed: U. v. Beckerath.
____________________________________________________________________________________________
U. v. Beckerath, 1. 5. 1952.
(1) Berlin-Friedenau,
Schmargendorfer Strasse 21, III.
American Sector.
Dear Mr. Meulen,
that was a long sickness - - an anaemia with reduction of blood pressure to about a half of normal and aggravated by an insomnia night for night (with few exceptions) for about 6 months. I was not able to write or to work seriously. For some days now I feel much better and I do hope to be restored in the course of May - - insofar as a man of 70 can be restored.
-------------------------------
If I would have been able to write to you the many things I was thinking of in the long sleepless nights, you would have received a voluminous manuscript, but it may be that you do not lose much by not getting it.
-------------------------------
I was not quite idle in these months. It is strange, that some of my acquaintances were in a similar situation as I, that is: they could not sleep in the night. We resolved to meet simply in the evening, when the normal man goes to bed and to use the nights for discussing the things interesting for as. We met twice a week.
Insomnia seems to be widespread here - - perhaps by the great quantities of chloride of lime which are added to the water of Berlin, most in the American sector. Some days ago the authorities promised to reduce the admixture.
------------------------------
Our themes of discussion were the same as those of the last year:
1.) by what organisation of the economy would it be possible to provide every fugitive from the East within a
few hours with employment and the necessary means of payment, without inflation?
2.) by what organisation of the economy would it be possible to rebuild long-term credit and, correspondingly,
get employment by construction of houses, etc.?
3.) how must the East be economically reconstructed?
4.) is it possible to use in Europe the methods of Mao Tse Tung to extinguish a war?
and the 100 questions arising by discussing the details.
-------------------------------
Our standpoint was: If there exists a science of political economy which is better than a mere compilation of the many opinions of economists, then this science must be able to solve the questions. And we are all convinced: It is possible.
------------------------------
I hope to write to you a long letter next week.
------------------------------
Very faithfully Yours - signed: U. v. Beckerath.
____________________________________________________________________________________________
U. v. Beckerath, …. 2. 5. 1952.
Dear Mr. Meulen,
perhaps you remember from a former letter of mine about Malthusianism, that I do not see a reason to except animals and plants from the modern theory that to every kind of things (insects, stars, stones, empires, with no exception) belongs
1.) a maximal number of things existing at the same time,
2.) a maximal number of things existing during the time while the kind exists as a species or race,
3.) a maximal time of duration,
4.) a maximal possible length (for human beings the maximum seems to be about three yards),
5.) a minimal possible length (Buffon measured the length of a female dwarf of 17 inches - 43.4 centimetres), etc.,
so that it would not be true that there is a tendency in plants and animals to increase ad infinitum, as Malthus supposed.
The same theory I find expressed in an old book: "Denkdummheiten, Merkworte zur geistigen Selbstzucht" (Stupidities & Thoughts on Mental Self-Discipline - J.Z.), by Dr. George Biedenkapp, 1896. (Page 51ff, and at once applied it to Malthusianism.)
When I was a young man, I lived at Frankfurt on the Main. An old anarchist, whom I knew, was well acquainted with Dr. Biedenkapp and told me (it may have been in the year 1904 or so), that the Dr. was a good connoisseur of the anarchist movement, felt much sympathy for it and often gave assistance in money and otherwise to anarchists arrested. But he was strongly opposed to bomb-throwing.
From book catalogues I know that Biedenkapp wrote many books on scientific subjects.
The modern theory starts from Einstein, but, obviously, the priority must be ascribed to Biedenkapp.
--------------------------------
Chamisso, as naturalist not less great than as poet, remarks that the Polynesian word taboo is used in Hebrew in the same significance as in the Polynesian language. (He visited the islands in the years 1815-1818.)
-------------------------------
Some weeks ago an aeroplane found out that Greenland is a group of islands. But Chamisso says, in the report of his voyage: "Es haben … Walfische, die bei Spitzbergen harpuniert worden sind, und die man in derselben Jahreszeit in der Davisstrasse wiedergefunden hat, sowie andere Umstaende der Vermutung Gewicht gegeben, dass Groenland eine Insel oder eine Gruppe von Inseln sei." (Wales … harpooned and lost near Spitzbergen but very soon afterwards found in the Davis passage, as well as other circumstances, gave weight to the supposition that Greenland is either an island or a group of islands. - J.Z.)
-------------------------------
In the book of the German socialist Rodbertus "Zur Erkenntnis unserer staatswirtschaftlichen Zustaende" (On Understanding the Conditions of our Public Economy - J.Z.), published 1842 (He was a Marxist before Marx had written his books, so that many say that Marx took his views from Rodbertus, but I don't believe it *) is mentioned a book: "Des crises financières etc." by Chitti. This author proposed a paper money, inconvertible into precious metal but constantly kept al pari with precious metal. It may be, that Chitti was the first to point out the idea of such a paper money. The libraries of Germany being destroyed, I am not able to study Chitti.
(*) (J.Z.: Many years ago I read a study which detailed other authors and books whose ideas Marx freely took and incorporated into his system without crediting them. However, since his whole system is full of flaws and holes, such efforts to discredit him are not very useful. Only the history of truthful ideas is worth recording. As for Chitti's non-redeemable but par-value paper money: I never saw it or even a hint towards it, elsewhere. But once a hint towards this title is incorporated into a well-published free banking bibliography, it will soon become either confirmed and completed or pointed out as unfounded. - It is high time to finally pull all information on free banking and monetary freedom together - and to publish it, permanently and cheaply, e.g., on CD-ROMs. - J.Z., 24.4.03. - Meulen provided his report on Chitti in one of his letters. I would still like to see a report from someone closer than M. was to the full monetary freedom position. - J.Z., 27.5.03.)
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Very faithfully Yours - signed: U. v. Beckerath.
____________________________________________________________________________________________
2. 5. 1952. your latter of 29. 4. 52, received today.
Dear Mr. Meulen,
I had posted my letter of yesterday at 1 o'clock in the morning and, a few hours later, I receive your letter. Three remarkable events at the same time:
1.) your letter,
2.) a considerable improvement of my health (lack of fresh air and sedentary life were the real causes of the sickness - - now my window is opened day and night),
3.) a visit of Rittershausen.
-----------------------------------
I congratulate you upon your improvement of health; that's a change of things, which I hardly dared to hope for. If it would be certain, that the improvement is due to your abstinence from tea and coffee, I would give up both even today (no - - next week - - being what the Berliners call a "Voll-Eule" or a "Schnaps-Drossel", as far as spirits are concerned. I am that - concerning coffee and tea.)
That gardening is a good thing for people doing brain-work would be proved by your example, it here a proof would be needed. But for me it would be less beneficent. After some minutes, I would got a feeling that I must now and at once write down the thought now passing through my brain; I would leave the work and would sit down before the typewriter. And Goethe said: "Denke nur niemand, dass man auf ihn als den Heiland gewartet habe!" - I do acknowledge this sentence and am doing the contrary. (There were no gardening opportunities for B. in a high density quarter of at least 3 storey buildings and if a there had been, he would have had to climb up and down the stairs, 3 floors, between a garden and his typewriter. - J.Z.)
-----------------------------------
I thank you most heartily for your (more than) kind offer to lodge me for a holiday at Wimbledon. But:
1.) When you say, that you will not worry me with economics discussions, I can only answer, that economics and social reform are my real life. My interest for both was not diminished during the winter, though I could not do much in that field, and now I swim in the matter, like a frog, frozen for several winter months in his pond, swims merrily in the spring water.
2.) My comrades of the "Arbeitsgemeinschaft der Sozialreformer" were glad to see the resurrected, are all animated by their former fanaticism and invited me to contribute to the work without delay. Which I will do within the limits of my capacity. (J.Z.: Without him this group would not have produced much. - Some time later, in 1952, I had joined this group. - J.Z., 24. 5. 1952.)
The day before yesterday, Rittershausen visited me in the evening and at about 10 o'clock I told him some details of the Arbeitsgemeinschaft. He became curious and I took him without much ceremony to the session which we held usually at Wednesdays. The fellows were very glad to see him, for I had for a long time told them much of him. (You, too, are not unknown in this sphere.)
We had a very interesting discussion, inter alia of a money without forced currency. Such a money is here in general use - - the "Ost-mark" - - the quotation of which changes often, and not seldom from day to day.
Every shop accepts Ost-mark and the sales girls perform the necessary multiplications and divisions rapidly. (Today the quotation is: 100 Ost-mark = 26.55 West-mark. By a little division the girl finds out that one West-mark is worth 3.77 Ost-mark, and if the man of the East (who is severely punished, if the Eastern policemen catch him) has bought something for (say) 47 West-Pfennig, the girl multiplies like an old mathematician and says: 1,77 Ost-mark. please.
Rittershausen was delighted to hear how exactly the fellows distinguished a currency not forced, as the Eastern is in West-Berlin and a forced one, as the same currency is in East-Berlin - - a trip of 5 railway-minutes distance.
If the quantity of Ost-mark is (say) doubled, prices in the East will, approximately, double too. But in the West
2.
prices will remain stable. Merely the quotation will be reduced to (about) 1/2.
We spoke also about other matters, in the first line of our old problem: Create a state of affairs in the West, so that every refugee from the East gets a well-paid job within a few hours, but at least on the next day. The boys said: If there exists a real science of political economy, then that science must provide a solution to the problem, which Rittershausen admitted. The impression was very good - - I think - - mutually.
---------------------------------
Let me add that in my whole life of 70 years I was never worried about a discussion on social and economic reform.
------------------------------------------------------------------------------------------------------------------------------------------
If you know an author named Chitti, please tell me. In the work of the Pre-Marxist Rodbertus ("Zur Erkenntnis unserer staatswirtschaftlichen Zustaende") he is mentioned.
-----------------------------------
I owe you several long letters and hope to pay my letter-debt in the course of May.
-----------------------------------
Very faithfully Yours - signed: U. v. Beckerath.
____________________________________________________________________________________________
U. v. Beckerath, … 8. 6. 1952.
Dear Mr Meulen,
yesterday I received by your kindness:
1.) The Individualist, June 1952, 6 copies.
2.) "How Switzerland is governed", by Hans Huber, Zuerich, 1946,
3.) Clipping from "Economist", May 10, 1952, critique of the book "The next million years", by Charles Galton
Darwin.
I thank you very much*
During my long sleepless nights I read two books (inter alia.):
a.) Hans Delbrueck, "Regierung und Volkswille", Berlin 1914,
b.) Aristoteles, "Vom Staate der Athener".
Delbrueck played a considerable and honourable role in the years after 1918.
The book of Aristotle was published in February 1891 by the British Museum. The romance of its rediscovery you will certainly find in English translations.
Both authors treat the system of constituting the government in old Athens. The system was essentially: drawing by lot. From the speech of Socrates before his judges, I learn that it was permitted to declare, before the secretary of the citizens' roll, that one had no intention to accept the office in question if one's name should be drawn. In this case the name was taken from the roll, for the drawing in question. But there seem to have existed offices whose acceptance could not be refused. It seems that the office of victual distribution was such an office, for it is known that Socrates was for some time distributor in his district though - - as he declared before his judges - - he constantly refused offices.
I get from both books the impression that the Athenian system was by far the least possible evil of constituting a government and that it would be easy to modernise it.
From another book of Aristotle - - "Politeia" - - of which the "Philosophische Bibliothek" published a translation, which seems to be very good, I learn that many democratic communities had accepted a system like that of Athens and that the principle of drawing offices by lot was generally considered as the most efficient bulwark of democracy. (No more "professional" politicians!!! - J.Z., 24.4.03.)
Delbrueck says that our party system would certainly disappear if the Athenian system would be applied. In Athens there did not exist parties in the modern sense, though there was always an opposition of the poor citizens against the rich ones. The contrast became visible in the "ekklesia", the assembly of all blameless citizens of Athens. But the executive power, the senate of the 500, was constituted by lot.
For Berlin the Athenian system would be a great improvement.
That is what I will say today concerning your article in the Individualist, pages 26 & 27 and the book of Huber. I hope to write more on it if my health will be improved.
What you say at page 27, at the passage beginning with the words: "Moreover, we exaggerate etc." is perfectly true. Some years ago, a Frenchman - - a very prudent man - - said to me: The many dozens of changes of the ministries since 1871 saved France from perhaps a dozen bloody revolutions.
(J.Z.: Sometimes one gets the impression that a "gentleman" agreement is involved among all potential candidates, to make sure that all of them will get, at least for some time, the salaries of ministers and, perhaps also, the permanent pensions they have voted for them. Thus, with a minimum of risk and responsibility, all of them get maximum financial benefits and also considerable publicity. That is, after all, the main aim of most politicians. - Is it so very different in other countries? - J.Z., 24.4.03.)
Your doubts on page 29 concerning the Swiss lay judges seem well founded.
(J.Z.: Isn't every court system at least somewhat suspect and certainly not optimal for all kinds of peoples and their groups? To each his own! - J.Z., 24.4.03.)
A book describing the experiences with this
2.
system would be very desirable. We know from the history of Athens that her lay judges were far from being ideal judges, and yet the Athenians preserved the system.
Huber mentions the system of Basle, where the members of the faculty of law of the University are eo ipso judges in the courts of appeal, though these courts are appointed by election. (J.Z.: These courts, or the lower courts? - J.Z., 24.4.03.)
That reminds a little of the old German system, where the faculties of law were eo ipso courts of appeal for their district. Thus the law faculties were daily in contact with real life and could detect inconvenience in legislation. I possessed a volume of decisions of some faculties, printed about 1700, concerning civil laws and criminal laws (those on sorcery included ). My impression was: not bad. (All burnt.)
------------------------
Your leading article interested me very much. At line 5, page 25, you speak of working harder and producing more as a means to avoid poverty. Well - - but if an economic system is so organised, that quantity and quality of the work are strictly prescribed by trade union rules - - as it is in most leading industries in England - - working harder and producing more is impossible.
The trade unions are insofar excused as their principles as fond do not differ from those of the Universities or - - still more exactly spoken - - the principles of the Universities are the vulgar principles expressed in terms of the new economic language. Both - - from Keynes to the last trade union secretary - - take it as self-evident that there can be no other monetary principle for England than the present principle of monopolised paper money, being not only legal tender but also a forced currency (notions never used in modern economics, the publications of Rittershausen excepted).
We both know that repealing of the act of 1844 and repealing all acts restraining liberty in the supply of means of payment would create a quite changed situation and - - most importantly - - could remove all motives with which trade unions now try to restrict quantity and quality of British output.
What concerns the modern economics language, if used in papers read by common people, it reminds me of a little joke offered to a congress of analytical chemists by its reception committee, which was also responsible for dinners, suppers and such things. The bill of fare was written in terms of scientific chemistry, cabbage was called coal hydrate, etc. For common readers it was Chinese, but these scientists understood that menu well and were much amused. (What the reader of modern economical papers probably will be in the year 2000.) (Alas, not yet! - J.Z., 24.4.03.)
What concerns the last sentence of your article, let me remark, that the relative differences in income are, very probably, greater in Russia than in the "capitalist" world. A manager of a Russian factory gets now a greater part of the factory's output in the form of salary than he formerly got as factory owner in the form of "Mehrwert* (surplus value). Russian politicians replied that the work of modern Russian managers is worth much more than that of the factory owners at the time of the Tsars. Perhaps it is really so.
(*) (J.Z.: At least by now sound statistics could be freely offered on this aspects. Are they? - J.Z., 24. 4. 03.)
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Page 27, line 12 from the bottom. Are the 123 m and the 113 m - millions of the same purchasing power?
Australia's import restrictions. Here we agree, the Australian L should be freely sold and bought, at Melbourne not less than at London. Let me add: If the government devaluates its currency, all "captains of industry" applaud and, certainly, for the moment export
3.
is increased. (It the goods were given gratis to foreigners, then the export would increase much more.) But if by the normal work of the exchange exactly the same devaluation is produced, then all consider it as a national calamity.
Is the best measure of value for the Australian Pound the present one, which - - on the whole - - is no measure at all?????
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I was very much pleased by your distinction of inflation by over-issue of paper money and rising of prices by causes like bad harvests or destruction of wealth. I think that you are the first economist for decades, who distinguishes these notions, so well distinguished by former economists.
What concerns the symptom of inflation, I say (agreeing with elder economists): Inflation exists if the country does not longer accept the money for the value, which it would accept if there were no forced currency.
(You and all modern economists - - say: the country's productive resources should be in harmony with the quantity of issued paper money.)
I contend: To determine a priori the volume of paper money, needed to correspond to the country's productive resources, is impossible. Socrates himself could not estimate it. But where the issue of notes is no longer monopolised and restricted and - - on the other hand - - the people have the right to refuse suspect means of payment, there the monetary liberty creates, with (almost - J.Z.) mathematical exactness, the required amount of means of payment - - in form of notes or standardised cheques (to be made good by compensation only - -Verrechnungs-Scheck in German, Cheques de compensation in French) or other suitable means.
Without forced currency no inflation is possible. Without forced currency means of payment may get a lower value, but prices in the general market remain unchanged.
If the Banker A issues too much, the merchants refuse his notes and say to the customer: Give me notes of the Banker B or C or pay an agio of X %.
But if the notes of the Banker A are a forced currency, then prices rise by inflation.
Is deflation the opposite of inflation?? Si omnes patres sic at ego non sic, said old Abaelard. I say:
The opposite of inflation is liberty of note issue, of better quality than State notes, so as you (in splendid scientific isolation) demanded it for decades.
As inflation presupposes, essentially, forced currency and money monopoly, the contrary of inflation must be a thing which removes these essential preconditions, and that is exactly the great aim of your life:
Free issue of notes not endowed with forced currency.
On the other hand: The opposite of deflation is by no means inflation. Deflation is impossible where the people possess what the Americans 100 years ago called "the right of issue" and where there are bankers able to use that right with the necessary prudence.
(If they are not prudent, they will be out of business, within a few days, just like a baker, producing bad bread, will be out of business in a few days - - but the country's bread will not be worse than before.)
So the opposite of deflation, too, is liberty of note issue.
(Most clearly demonstrated by John DeWitt Warner in the journal "Sound Currency", New York, 1895 and 1896, article: "The Currency Famine of 1893.")
There is no logical contradiction in the fact that the same thing is the opposite of so different things as inflation and deflation. The solution is: The liberty of issue is in both cases differently used, one time to remove a bad currency, and one time to remove a lack of currency. These are the possibilities of liberty.
(J.Z.: General liberty has also many different opposites: Majority despotism, absolute monarchy, dictatorship, tyranny, aristocracy, mobocracy, totalitarianism, one party regime, military dictatorships, etc., etc. - J.Z., 24.4.03.)
4.
Let me add: a lack of income may be a motive for a government to inflate. (Before 1914 governments often became bankrupt when their expenses exceeded their income, so practice proves that inflation is far from being a necessary or unavoidable means in case of a deficit.) It is not a cause of inflation. So inflation involves a heavy guilt for those who inflate.
(Lansburgh - - a good author about 30 years - - editor of "Die Bank", demanded a gallows standard ("Galgenwaehrung") for Germany. At the Potsdamer Platz in Berlin a great gibbet should be erected and the Minister of Finance should be hanged there the very day an inflation was stated. (Started or noticed? - J.Z.)
But there you may be in the rights that lastly and under modern conditions inflation can only be stopped by a political action. An action of the kind needed here is called a revolution. A monetary revolution, like that kind of revolution by which the Germans, in 1923, enforced a stable currency!
(The true history of that revolution is not yet written. It is hardly less romantic than the French of 1789.)
Let me remind you of a passage of the never to be forgotten Benjamin R. Tucker, who, in "Instead of a Book", page 415, says:
"… a determined body of people … by issuing their own money in defiance of legal prohibition ... government will go by the board."
Never, before Tucker, was such a word spoken. Certain governments may tremble!
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Most interesting is your communication (page 32), that in the USA the total dividend payments were only 5.3 % of total wages. (Paid by the companies which paid the dividends?) In Germany it is now nearly the same. I take it as the first symptom of a quite new organization of society, an organisation which, at the times of the old International Working Men's Association, was called "Cooperative Socialism".
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"Incentives for export." (page 33.) For a long time I could no more visit the reading room of the British Centre. But formerly I read there, in some paper - - or it may have been in one of the papers you wore so kind to send to me - - that many non-German factories, occupied with the fabrication of war materials, transferred part of these orders to German factories. If that is true (and I am convinced that it is true), then Germany is no less (J.Z.: no less or also somewhat?) occupied in making producing war materials than are other countries, though only in an indirect way (please do not publish this opinion - - I will not disturb Rittershausen), and thus her exports are not of (J.Z.: all of!) the kind which, in usual commercial language are called "exports".
(J.Z.: Do most exporters and economists really distinguish exports for peaceful purposes and exports for military purposes? - J.Z.,, 24.4.03.)
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I must finish.
A lot of letters and most valuable printed matters are not yet answered. My health - - though improving - - does not leave me much time.
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Very faithfully Yours - signed: U. v. Beckerath.
____________________________________________________________________________________________
9. 6. 1952.
Dear Mr. Meulen,
I beg, to recommend as reading, before sleeping, Gobineau, "La renaissance" - - if you do not yet know the book. I discovered it some weeks ago and confess: It is one of the best books I ever read. Deep philosophy, perfect knowledge of life and an astonishing historical erudition are to be found at every page. The book supposes readers well informed in history, for Gobineau treats it with much poetic licence in some chapters, so - - that's my opinion - - in the chapter where he describes Cesare Borgia's death. Also the murder of the Condottieri at Sinigaglia is repre-sented in another manner in other books. Certainly, the characters of the persons involved are represented by Gobineau with the greatest truth and with most impressive art.
Machiavelli is treated as the man that he was: a perfect gentleman and friend of the Italian people. For centuries he was calumniated, but now - - and for some decades - - his honour seems completely restored. I think that Machiavelli, in his heart, was an anarchist and that the true meaning of his books, like the "Principe" is: See, reader, that is the unavoidable behaviour of a prince, if his intention is to serve his country more than anything in the world. No ruler at all would be the ideal. This ideal being impossible, democracy is the least evil. ("If the people rages there may be a courageous citizen who speaks to the people and brings them on the right way. But if a despot rages, there is no help - - ", says Machiavelli.
(J.Z.: Alas, neither Gobineau nor Machiavelli explored the exterritorial autonomy option. - Could anyone have reasoned with the many mass murderers among the people in Rwanda? Would even a foreign military intervention have been helpful enough in this case? Was it again, then and there, territorial despotism, which had, for a long time, fed hatreds and finally inflamed about a million people to slaughter about a million others? What had driven them to that slaughter, then and there? Real or imagined wrongs? I don't know. Do you? - J.Z., 24.4.03.)
Very faithfully Yours - signed: U. v. Beckerath.
____________________________________________________________________________________________
U. v. Beckerath, … 14. 6. 1952. Your letter of 11. 5. 52.
Dear Mr. Meulen,
the slow progress of my convalescence may excuse the long delay in answering your letters.
-------------------------
What you say of the dangers of thinking too much is true and very well said. I did not know that Spencer was a victim of excess thinking. We may say: he suffered for us.
(J.Z.: However "dangerous" this activity may be, as an exclusive one, if not accompanied by sufficient physical exercise, I believe the dangers arising from not thinking enough, are much larger, for oneself as well as for others with whom one is in contact. - J.Z., 24.4.03.)
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Your remark that walking and thinking furiously all the time is no good at all, is confirmed by Kant, who says:
If two friends are walking and their conversation to of a very mental nature, they soon become tired and look for a place fit for sitting.
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West-mark - East-mark. For the Etatists it may be a very difficult problem. Liberty in trade would solve the problem very easily, and insofar as the people of Berlin simply took the liberty here needed (though they were not permitted to do so) they solved all related problems in the most natural and simple way.
(J.Z.: Alas, they did not try to get away from exclusive and forced currencies on both sides. Just using both of them competitively, as far as they could get away with this, in spite of monetary despotism on both sides, was not yet good enough. - J.Z., 24.4.03.)
When the governments "solve" the relation of East-mark to West-mark, they will impose some tyrannical nonsense and if the subjects endure it, they will proudly praise the success of their "experts".
-----------------------
Auxiliary (international - J.Z.) language. Here we agree. Certainly, no auxiliary language can be so perfect, that no further improvements would be possible. Therefore, I think, it would be good to accept one of the (numerous! - J.Z.) proposed languages, with all its imperfections, to get the possibility of beginning its general use. I regret that Esperanto was not generally accepted, though I am a priori convinced that it was not the best auxiliary language that human genius may invent. But the merit of Zamenhof was very great. I am afraid that many of his adversaries declined Esperanto simply because Zamenhof was a Jew.
Please consider the possibility of publishing 3 lines or 4 in the Individualist in that auxiliary language which you think to be the best, and also in English - - in each issue.
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Maximum of size of all corporal things. There is a theory - - Goethe was an adherent - - that insects and plants really are one thing and belong together, so as e.g. head and stomach. Both are the product of the same force of nature. Now the question arises: Is it possible for the forces of nature to act in two (or more) organisms and yet remain one and the same force of nature? Goethe says: Yes, and the coexistence of plants and insects is an example of that unity, though we are at the present state of knowledge not able to conceive the connection. But the fact that fertilisation of so many plants is only possible with the help of insects leads us to acknowledge the theory of the acting of one force in several bodies, though we do not conveive it. (Do we perfectly conceive the mutual influence of brain to stomach and stomach to brain?)
Some years after Goethe's death the theory was enlarged and it was contended that some classes of plants and the bipeds called humans are in a similar (metaphysical??) way connected as are plants and insects. (Kant assumed it some decades before, but remained quite unnoticed. The reason is: the book in which he published his views - - 1763 - - had the strange title: "Der einzig moegliche
2.
Beweisgrund zu einer Demonstration fuer das Dasein Gottes". ("The only possible method to prove the existence of God".) Here he defined "God" in a way, which would have brought him at once to the stake in Spain and by which the connoisseur may see that Kant was a 100 % atheist. Kant had to be very cautious and had taken precautions. He proceeded in the same way as Spinoza did. Spinoza called nature "Deus" and continually admired the wisdom and greatness of Deus and invited his contemporaries to study more the wonderful laws of Deus. The censors were really deceived and, in the first years, the clergy, too. But at last they discovered what a man Spinoza was and would accuse him. But by then it was too late. Spinoza was dead and his books were in the hands of all people interested in religious and philosophical matters.
How few learned men read the above-mentioned book, may be seen from the fact that it is often said by astronomers: What a pity that Kant did not say in which way he calculated the time of rotation of Saturn. Kant found out a very good, though - - of course. approximate - - result. But in the mentioned book Kant said, quite openly, how he calculated the 5 hours and 40 minutes in the "seventh consideration" of the book. The "modern" value is: 10 hours 14 minutes.
Kant published in the said book a lot of physical discoveries of which most were discovered a second time about 100 years later and brought much fame to the later discoverers. I cannot enter into details in this letter.)
If the theory would be true, then the larger size of oranges, apples, etc. produced by the ability of gardeners would be natural and the smallness of the fruits, some hundred years ago, when men were not yet interested in them, was unnatural.
(J.Z.: I do not follow him there. The relationship between microbes and larger life-forms may be even closer. For e.g. bees and ants one life-form in many separate bodies, has often been recognized, by Maeterlinck and others. Cells were shown to be a symbiosis of various relatively simple life forms and the genetic code, now at least recorded, though not yet fully understood, has shown many links between man and animals, perhaps even plants and insects. From some of them we differ only by a small fraction of our genetic code. - J.Z., 24.4.03.)
The influence of man on plants may - - of course - - also be misused, as seems to be the case with the recently won varieties of roses, orchids and others. Some decades after the first of these roses (Marshall Niel!), orchids and others were produced, the whole variety died out and it was not possible to grow others of the same kind. The "metaphysical" force of the variety was exhausted.
(J.Z.: I think that a more prosaic scientific explanation might be possible and even likely. - J.Z., 24.4.03.)
Friedrich Wilhelm I of Prussia (who died 1740) was one of the greatest tyrants of his age, whom the contemporaries called the "modern Nero" - - though he was "virtuous" in the Christian sense of the word. He tried to produce a race of tall men. You know, that he ordered to capture all giants in the whole of Europe for his "Garde-Kompagnie".
(Maybe, he was a closet-homosexual, with a thing for tall guys? As soldiers they would simply have formed better targets. - J.Z., 24.4.03.)
He tried to marry his giants with tall girls to get boys not less tall than the fathers. But most of his giants were sick - - most giants are constantly sick - - and the result did not fulfil his expectations. (Others contend that it was not quite unsuccessful and that the tallness of the Brandenburgian race is to be ascribed to the endeavours of the King.)
My personal conjecture is that the tallness of the Araucans in South Chile, where men of 2 metres, not seldom, are to be found, is the "natural" size of man. How bad lodgings may degenerate a race may be seen from the example of the German race. The Romans were afraid of the tallness of the Germans. But in the Middle Ages the tallness even of the knights diminished, so that armour of that time is too small for men of our time. That was for the first time observed at the 500-years jubilee of the University of Heidelberg, when some of the students wore old armour in the festive procession. It was necessary to select little men. That was in the 80's of the 19th century.
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3.
I thank you for the interesting clipping from the "Economist" with the review of Charles Galton Darwin's (obviously a descendant of the great Darwin and then probably a personal friend of Zander's sons) "The Next Million Years."
Charles Galton Darwin seems to be a Malthusian of the old style and does not know - - it seems - - Cannan's great and important notion of an optimum population. Insofar the book cannot possess the value which it perhaps would possess it the author would have studied Cannan.
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To confound
1.) a lack of victuals in the household of average people and
2.) overpopulation
is an inevitable wrong conclusion for mankind - - it seems - - in its present state of development except for the "white ravens", like Cannan. The daily "Die Welt" publishes an interesting article by Derrick Sington in Nr. 129 of 7. 6. 52, concerning the island of Bali (Indonesia). Of course his first impression is that of a terrible overpopulation. That impression is not altered by his own statement that the farm rent for peasants amounted to 75 % of the crop, and that the government of Indonesia had reduced it to 50 %. (He says nothing of the execution of the law.) He does not ask whether it could not happen, that the crop was sufficient to nourish the peasant but that a certain percentage of the crop delivered as farm rent would makes it insufficient. What I miss in the article are examples of under-nourishment. My own impression from elder reports of travellers is: The Rajahs (to whom all land belongs) leave the peasants only the minimum of existence. But the land in so fertile, that a land rent of 75% was possible.
More interesting would be an investigation into the mental condition that endures, without resistance, a tyranny like the reported. About 60 years ago, a high Dutch official, Dekker, pseudonym Multatuli - - published, from his own experiences, won in the 60's (or 50's) in Indonesia, a book (not very well written): "Max Havelaar". Here, for the first time, the world was informed of the tyranny of the native rulers. Every Dutch official had to take an oath to protect the natives against tyranny and exploitation, but if one tried to fulfil his oath, he was dismissed, so was the author. The natives came to Dekker in the night and told him how the ruler, Radhen Adhipatti, had taken from them not only the crop but also the buffaloes. But never had one of them the courage to complain openly and to accuse the ruler. A few united peasants would have been sufficient to overthrow the small military power of the ruler! But there was no Watt Tyler to be found among them. It is known today that Dekker himself planned a revolution against the Netherlands and that he entertained deliberations with the colonial ministry of Napoleon III, in order to get some military assistance. Would the Javanese have followed him?????
The influence of the landlords on the peasants, in the whole East, for so many centuries, is one of the most astonishing facts in history. Only in China did agrarian revolutions take place, from time to time.
My theory is: If the father of a man is 15 years old and the mother 13, then the child is a being without any interest in social and economical matters and is absolutely unable to conceive the first ideas necessary to change social and economic conditions. And for centuries (or longer) the peasants in the East marry at that age or younger.
Very faithfully Yours - signed: U. v. Beckerath.
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U. v. Beckerath, … 15. 6. 1952. Your letter of 17. 1. 52.
Dear Mr. Meulen,
in one of my following letters I hope to write to you something on King-Hall and the many National News-Letters sent to me by your kindness.
King-Hall said to you that he had long been familiar with your views. Certainly he is not. If he would be, he would not take the importance of the Hansard Society as equal with that of Free Banking. If the Hansard Society would today disappear, tomorrow it would be replaced by another, probably of the same high quality. But when, in 1844, the freedom of banking disappeared, the retrograde development of mentality, not only in England but in Europe, began. A few years after the Peel's Act most people did not longer conceive
I.) that Free Banking is a right of the people, not less in degree than the right of free speech.
ll.) that Free Banking is a necessity not less than the right of free walking in the streets.
Both - - the right and the necessity - - are explained in your book and only in your book, as far as England is concerned. Obviously, King-Hall did not read these chapters.
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I do not enter into the details of your discussion with K.-H. concerning the UNO. Formally, it still exists. In reality it exists no more. That's all. Is its resurrection possible???
What may be possible is a second Hanseatic League. Two communities may begin it. Others will follow.
One of the subjects of protection by the league may be the monetary independence of each member.
That an ignorant minister (in reality his not less ignorant "ministerial counsel") determines, by one stroke of the pen, the monetary (which means the economical and so each inhabitant's personal) fate of millions is not a state worthy of men who deserve that name.
If one Berlin paper would print an essay on such a subject (which certainly no paper would dare), I would gladly write this essay, demonstrating that Berlin would be the community most fit to summon other communities to unite. (J.Z.: I wish that he had left at least a draft for such an essay or, that, if he wrote it, I could still get a copy of it. At one stage, after WW II, he proposed a neutral Brandenburg State, including East and West Berlin, but the draft of this was not returned to him, when he had lent it out. In 1919, in a Braunschweig paper, he published a proposal for a federal German Republic, largely based on the Swiss model. I have so far been unable to get a copy of this article. - J.Z., 24.4.03.)
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You were so kind to add two clippings to your letter:
I.) A cut from "Telegraph" of 15. 1. 1952, article "Republic only a stop-gap" by Lothian Graham-Scott, Count de Tancarville.
The article is very well written. The present situation is so severely felt in Western Germany, the political sense is so imperfectly developed, that the time, when there existed Bavaria, Wuerttemberg, Baden, Hesse-Darmstadt, Hesse-Nassau, Oldenburg, Hanover and Brunswick (mentioned by the count) now is seen in the most favourable light, and the former state is considered by many people of the middle-classes (most by women) as a paradise lost. That the state was still more evil than the present - - who knows it???
It requires knowledge of Germany's economic history to know it and very few persons possess such a knowledge. The libraries are destroyed, and so it seems impossible to revive this knowledge.
The count's statement is underlined by the fact that more and more papers publish details about the life of living and dead members of the former governing houses, most of the Hohenzollerns. This tendency is now stronger than at the time when the count wrote his article. If there were more activity among the Germans, a return to the political state before 1866 would seem
2.
possible. But the economic questions, the fear of the inflationary tendency from the 11 000 millions DM currency, prevail.
II.) The Economist of 12. 1.1952, page 84, article (review): "The Malthusian controversy", by Kenneth Smith. The Economist displeases me much. Not only he says nothing of Cannan's notion of an "optimal population", he also does not mention that for some years the agrarian productive forces of the world are fettered by laws, prescriptions, etc. The most striking is the prescription of Truman to diminish the wheat area by 17 %, a prescription not yet repealed as far as I know. From the Courrier de France I learnt that all the great plans to develop the agrarian power in French Africa are postponed, because the new produced victuals, very probably, could not be sold. (I admit that the estimate may be true and yet only monetary causes may be responsible.)
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In a books printed at Danzig, 1848, "Des Deutschen Volkes Erhebung im Jahre 1848, sein Kampt um freie Institutionen und und Siegesjubel", by Lasker and Gerhard (both known from the history of the revolution) I found this passage: (The authors speak of the firing of soldiers on peaceful citizens, only to terrify them, so at Berlin, on the 18. III. 1848 and on 12. VIII, 1845 (before the revolution) at Leipzig.):
"Der Meuchelmoerder, wer es auch immer gewesen, der den Befehl dazu gegeben, ist zwar dem verdienten Stricke entgangen. Doch er haengt, so lange eine Erinnerung an diese Schandtat wach bleibt, an dem Galgen der oeffentlichen Verachtung.
Die wedelnden Gehorsams-Maschinen aber, welche huendisch genug gesinnt waren, diesem Befehl nachzukommen und auf ihre unschuldigen Brueder zu schiessen, verdienen den Namen Menschen nicht. Der verruchteste Boesewicht ist noch ein schlechter Mensch: er tut das Nichtswuerdige aber aus eignem schlechten Antriebe. Wer aber nur aus treuem Gehorsam seine Brueder mordet, der steht im Superlativ der Gemeinheit auf der Stufe des unvernuenftigen Viehes."
(J.Z.: The assassin, whoever it was, who gave the order for this, escaped the well-earned rope. But he remains hanged, as long as this foul deed is remembered, on the gallows of public contempt.
The tail-wagging obedience machines, mentally dog-like enough to obey the order to shoot at their innocent brothers, do not deserve the name human beings. Even the worst criminal is not yet a bad human being. He still does the abominable out of his own rotten urge. But whoever murders, only out of loyal obedience, even his own brother, he represents the superlative of vileness, on the level of the irrational beast." - J.Z., 25.4.03.)
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Before me lies the report of the Demag Aktiengesellschaft (share company J.Z.), Duisburg, for the year 1951. The sum of wages + "soziale Abgaben" (social insurance deductions. Taxes, here, too? - J.Z.) has been: 30 878 987 + 2 780 465 DM.
The dividend to shareholders is 6 % of the capital of 42 400 000 DM or 2 544 000 DM.
(1/4 dividend tax is to be deducted.) So the shareholders get less than 1/10 of that what the workers and employees get. The income of the managers is included in the above wages.
That confirms what you say in the June-issue of the Individualist under the heading "Wages and Profits".
The numbers of this report are quite typical. 50 years ago it was, in the average (about) so, that the share holders' income was about the same as labour's income, at the great companies. (Aktien-Gesellschaften.)
Very faithfully Yours - signed: U. v. Beckerath.
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U. v. Beckerath, … 16. 6. 1952. Your letter of 21. 2. 1952.
Dear Mr. Meulen,
with great pleasure I read again that your health had improved so well. I hope that things are now - - 4 months later - - unchanged and I beg you to write me some lines about it.
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What you say of the golden days, when we as merry baboons (or men or a now missing link) yellowed Greenland's then tropic woods and the necessity to continue that kind of living in a modern form and not to replace it, suddenly, by a sedentary life, is very true. (Very true!)
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The year 1852, in my letter of 17. II. 1952, last line. I mentioned that year because the time distance between 1952 and 1852 is a "round" number = 100 years.
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Your remark at page 2 of our letter, line 3 ff.
I take it as a fact (though I cannot exactly prove it) that the USA and other countries would still send goods to England, to the utmost limit of England's consuming power, is achievable, if the following conditions would be fulfilled:
I.) There would be no legal obstacles, so as the foreign exchange control.
II.) That reliable means of payment are offered by English importers, though, possibly
a.) in England there are no Dollars at the market,
b.) in New York and in the whole world no English pounds - - that word taken in its usual commercial sense - -
are at the market.
Such a situation may arise.
In this case "Verrechnungswechsel" or "Verrechnungsschecks" (clearing bills or clearing cheques - J.Z.) are at hand, exactly in the quantity required. (J.Z.: Well, at hand like paper and ink. They are merely outlawed! - J.Z., 25.4.03.)
You say: "… since US will find it less profitable to export to us … ". Consider, that the US is eager to export to England, whether it is profitable or not. The US - - in her present economic condition - - has only the choice to export at any price, and even if it must be gratis, or to suffer from unemployment. The latter the US fear not less than people feared pestilence in the Middle Ages, and the US have much reason to fear it or - - more exactly spoken - - the political consequences of it. Exportation gratis??? Yes - - by the help of the Import-Export Banks, their credit guaranties and the re-insurance of these guaranties by the US-Government. Things will be completely changed once there is full employment in the US and this full employment is ensured for several months or so. The US are far from that.
If the imports are paid by "Verrechnungswechsel" (whose measure of value may be whatever the foreigner wishes - - Dollars, Pounds, Taels, Cowries - - the latter a very good currency, unjustly neglected) there are neither payments necessary in Dollars, bought in London, nor pounds in the US, to be used to buy Dollars. Then, practically, though not legally, the state of 1913 is restored.
You suppose - - as do all others - - that the Americans insist on being paid in Dollars. Even if there would exist a law prescribing that, the American producers would extort from their government the repeal of that law, if the English would insist on paying for imports from America with means of payment at hand and good to be used as purchasing means in England.
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2.
Article of the Punch about the late king. Our mutual friend John Law wrote an excellent little dissertation on the usefulness of kings and said: Where a king governs and there is no doubt about his successor, the country is safe from suffering the usual quarrels of other countries when their ruler changes. That advantage outweighs by far all disadvantages of a hereditary kingdom. This admitted, the king is the most useful person in the realm and, insofar, may be considered as a holy person. A veneration which goes too far, from a philosopher's standpoint, is not so dangerous an it seems and, in all cases, not so dangerous as are tendencies to replace the hereditary king by an elected one or by a republic of the antique style.
There is - - I think - - much truth in that, and as long as the theory of best government is not yet developed and the result of the theory acknowledged, a kingdom as the English seems to me the least evil and the far-going respect of the people for the king as one of the necessary props of the institution.
My view would be another one, if the institution of monarchy in England would have been an obstacle to social. economical and other progress. It was not, for more than 100 years. If England would have the bad luck to get a king like - - say - - the last King of Bavaria (Ludwig II.) who must be deposed, I would recommend for the future a government as the old Venetian - - a signoria, but with more rights of the people.
Every government is good which permits individuals a legal condition so as Herbert Spencer described it in chapter 19 of his Social Statics (elder editions - - in the later editions Spencer omitted this brilliant chapter, getting what the Germans call "Angst vor der eignen Kurage").
(J.Z.: "Fear of the own courage". Why didn't B. here and in other letters describe dePudt's "panarchism" as the best theory for governments and free societies, of all wanted types, all only for their voluntary followers, at their own expense and risk and all only on the basis of exterritorial autonomy? Did he really consider it impossible to get this idea across to an individualist anarchist like Henry Meulen? He didn't have de Puydt's full text yet. I supplied it to him, a few years later. But he had found a description of the idea somewhere in Roscher and may also have seen the summary of it by Max Nettlau in Landauer's paper. - J.Z., 25.4.03.)
The glorifying of Hitler was only to be compared with the glorifying of the Roman Caesars or of Stalin. That of the English king was, by comparison with it, a cool politeness.
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What you may about the German rule of putting a verb at the end of a sentence, with many sub-clauses before it, is perfectly true. Some German writers recommended abolishing it by law and at a fixed date. In Hamburg the usage is more in correspondence with the usage in all other languages. Jews, generally, speak more logically, and that may be a reason for Germans to retain the bad old habit. (*) (Is it so old? It may be that in the Middle Ages or in Gothic the habit did not yet exist.)
(*) (J.Z.: I never read or heard about that link to antisemitism in Germany & consider it extremely unlikely. - J.Z., 25.4.03.)
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I do not posses a copy of Andrews book. I thank you very much for your kind offer to send me a copy. I will gladly accept it once I get a little more time than now. I must be in bed for about 12 hours, but of the remaining 12 every minute is occupied, though often by household matters.
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Very faithfully Yours - signed: U. v. Beckerath.
___________________________________________________________________________________________
U. v. Beckerath, … 17. 6. 1952. Your letter of 14. I. 52.
Dear Mr. Meulen,
Free Banking. Your remarks on revolutions are well founded, but: how could the present tyranny in Russia be otherwise broken than by a revolution??? Do you think that the Kremlin will ever permit the people to practice Free Banking??? You do not think so. And a Free Banking practised without being permitted is a revolution - - at its first stage a monetary revolutions, and if the Kremlin tries to suppress Free Banking with its usual methods and the people try to resist, then the monetary revolution develops into another one. Do you think that even free speech on Free Banking ever will be permitted by the Kremlin? If, in Russia, people speak freely on Free Banking, they commit a revolutionary act.
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Gold coins in circulation. Zander's opinion was that: Certainly, never a case occurred when a man felt himself really prejudiced by receiving gold coins. But the same man, who admits that he in not personally disadvantaged thereby, may say (and many do so): My religion or my philosophy prohibits the acceptance of gold coins, for similar reasons for which it prohibits theft and cheating. That the acceptance, for me personally, would not be harmful, is not important. The happiness of mankind requires that all people trained in economical thought decline gold coins, though their acceptance would be an advantage for them. The example of such people will induce the others.
That is the general standpoint of adherents of Silvio Gsell.
My own standpoint now is this: I do no longer demand a cours forcé for gold coins. But I am convinced: If gold coins are admitted and, therefore (here we do not agree), soon in general use, the same people, now declining the course forcé for gold coins, will demand it at the first news that a man declined it for religious or similar reasons. The same people will say: a man has not the right to disturb in this way the general circulation of means of payment, and a fortiori he has not, if he confesses that he, personally, is not harmed thereby, but that his intention is only to give an example.
You say: People generally sell their sovereigns to a jeweller. I think there are more people that buy sovereigns or other gold coins from a jeweller than those, who sell them.
(J.Z.: Where would the jeweller get them for sale, unless he buys them first? Unless he has an arrangement with a private mint. Accurate imitations of sovereigns were minted, at least a few years later. - J.Z., 25.4.03.)
I repeat my opinion that the present difficulty to use gold coins in shops is produced by the prohibition to price goods in gold coins.
(J.Z.: English paper pounds being legal tender, and the exclusive means of exchange, combined with the mentality even expressed by Henry Meulen, and remaining quite unshakeable by B., to think in terms of paper pounds, as value standard, would have forced shop keepers and professionals to express the prices of their goods and services in paper pounds, rather than in gold coins, even if there had been no other and special law forcing them to do so. - J.Z., 25.4.03.)
You say (page 29 first line): "In most countries it has not been found necessary to prohibit the pricing of goods in
gold." Please: tell me one country, where it is not prohibited. (It seems that Panama and Colombia are now on the way to permit pricing in gold.)
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I thank you very much for the trouble you took to correct my English. These corrections are my only possibility to perceive my faults.
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You object to my remark "that freedom cannot be found where credit is restricted". I hope we agree, when I say: Freedom cannot be found where credit (that means, the free intercourse between creditor and debtor) is restricted by laws or bad economical habits of the people or of certain classes, as merchants.
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Japanese bicycles. If it would be permitted to pay for the Japanese bicycles with "Verrechnungswechsel", then the Japanese merchants
2.
would easily find out means and ways to convert the Verrechnungswechsel into English goods - - cheaper in England than in Japan - - or to sell the Verrechnungswechsel to a merchant - - say at Uruguay - - who brings goods, cheaper in England than in Uruguay, to Uruguay and brings goods from Uruguay to Japan, cheaper in Uruguay than in Japan.
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A free gold market in Germany. (Do we agree to use now the word "free gold market" in its original sense, that is: free bullion market????)
When before 1914 merchants wanted gold to pay their foreign debts and applied to their Central Bank for gold (English to the Bank of England, Germans to the Reichsbank), they did not make their application in the way of presenting notes for redemption. They did not possess so many notes. They wanted immediate loans paid out in gold.
What concerns the 1 % commission mentioned by Wangenheim, it is of a different nature from the interest increase of 1 % per anno. A commission is not per anno.
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Upper limit of bank note circulation and the trust attached to bank notes.
I ask again - - as I did 20 years ago - - (Almost all that older correspondence seems totally lost now. - J.Z., 25.4.03.) what kind of trust??? In English commercial language, since more than 200 years, the word trust, in this connection, meant always: Trust that the banker converted the banknote at its nominal value and with a little delay (option clause) or oven on demand.
But we agree that the public should have the right to decline all kind of paper money without stating reasons. By this agreement we cut this knot of Gordium. (Gordian knot - J.Z.)
You know - - I hope - - my method of providing production with credit.
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Post Office in US and newspapers. Since more than a year I could not visit the American Library. I hope to get there the prescriptions for the mailing of newspapers and will write to you.
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Option Clause notes. From your book and other writings I learn that Scotland did not possess gold (or silver - - in old times more used than gold) enough to maintain the system of (immediately and at every time it was demanded) convertibility. That was the reason for which the Optional Notes were invented.
Whether merchants issued tickets, accepted by the merchants as cash but not convertible into current money, should be investigated.
In London, at the time of Charles I., more than 3 000 merchants issued "tradesmen's tokens" as Roscher reports. Most historians do not know this or do not mention it, and yet it is a very important fact.
If the Scotch merchants issued no tradesmen's tokens or no inconvertible tickets, then I would like to know the true reasons for this. In some countries merchants did abhor every kind of paper money, simply by ignorance, as in Hamburg. But the Scotch were - - I think - - not ignorant.
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Difference of note systems. Every one of us thinks his system to be the best. That's natural. May practice decide, once it is permitted.
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Foot note in my letter of 5. I. 52, page 4. Your reply.
You distinguish
I.) spending interest,
II.) re-investing interest.
3.
If a sum of money - - interest or whatever it may be - - is invested that means: it is lent to a debtor and it means further, the debtor spends it - - for buildings, machines, etc.
Whether the money is spent for victuals, which the interest-receiver consumes, or by a debtor for goods like buildings, machines, etc., is economically not so important.
From your remark on J. A. Hobson, I get the impression that his ideas on investing are economically not well founded.
The quantity of labour "moved" by immediate spending of received interest and by reinvesting it, is mathematically the same.
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That many staple goods are bought and sold on a profit basis as low as 1 % (not per anno) is true. In the years 1925 - 1929 - - the best years in Germany's history - - staple commodities, too, were sold on that profit basis, but interest was very high. 8 % mortgage bonds were sold at par or a little more. And yet: never did Germany produce more - - excepting the inflation period - - and never was the standard of living so high and never the demand for fresh credit so great.
Here may be applied the old philosophical principle, that every event and every condition may be explained by as many "causes" as one likes. Critique (Proper criticism? - J.Z.) will find out the true reasons. (The German critical opinion at that time consisted, in general, in simply denying the surprising phenomenon.)
If capital produces 20 % p. a., then an interest of 10 % p.a. is low. And if capital produces only 2 % p a., then an interest of 2 1/2 % p.a. is too high. In the years 1924 - 1929 Germany's plant - - in industry and agriculture - - was improved to such a degree, that fresh capital, certainly and in most cases, produced more then 20 % per annum).
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I beg to answer to your philosophical remarks in one of my following letters.
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The "Berliner Wirtschaftsblatt" of 8. III. 1952 reports on page 2 that American firms increase their exporting possibilities by renouncing payment in Dollars and accepting the means of payment which the Non-Americans do possess. The Berliner Wirtschaftsblatt refers to a report of Mr. Strong, Vice President of the American National Bank and Trust Company, Chicago. I think you can get the Report at London and, therefore, do not, at the moment, enter into details.
Today the "Tagesspiegel" publishes an article where is explained that many German firms simply do not longer obey the prescriptions on foreign exchange and import and export by the methods of 1913 - - cheating the authorities but honestly serving their customers. It's an interesting article. The "Tagesspiegel" demands abolition of foreign exchange controls.
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The Russian revolutionary party publishes a German journal, of which I send you a copy. I was not able to find one proposal to free Russia - - only declamations. These people are no danger for the Kremlin.
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Very faithfully Yours signed: U. v. Beckerath.
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19. 6. 1952.
Dear Mr. Meulen,
the "Tagesspiegel" in its issue of 1. 6. 1952 reports that the coal miners of the Bullcroft-mine in Yorkshire (1658 people) protested against the admission of 31 Italian coal miners and enforced their dismissal by a strike. Did these workers know what they did? What they did is that:
I.) These workers declared the principle of international solidarity between workers as non-existent for them. Instead, they endorsed the principle which was formerly called "capitalistic".
II.) By their actions, they also declared: Workers have the right to exercise the same privilege of exclusive disposition over land and other means of production which employers exercise. The presupposition for using this privilege is only the power to use it.
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Even 20 lost strikes would not have been such a moral defeat (and, lastly, also economic defeat, though the workers are far from seeing that) as this one won strike.
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Neither the employer nor the workers have a right to exclude others from the right to use the land.
(J.Z.: I believe that here he meant not only the particular block of land used by this mine, but the whole country: England, or any other country. - J.Z., 25.4.03.)
There are very few people that reflected seriously upon the great problem here to be solved. Henry George was one of them.
His supposition was: The government is the lawful trustee of the population and has the right and the duty to organise the possession of land, so that there can arise no monopoly. But his supposition was false. At the time when Henry George lived, it was difficult to see that it is false and why it is false. Today we are taught by the
East.
Another man, who seriously reflected on the problem was Theodor Hertzka. In his book "Freiland" he proposed a law, by which every factory or landed estate would be obliged to accept everybody, willing to work there, as an employee. Instead of explaining here the details, I refer to the book. I think there exist English translations. (Probably printed in the year 1890 or so.) "Freiland", at his time, was a "best seller". Hertzka published a sequel, "Reise nach Freiland", issued by Reclam, published about 1890.
Hertzka was well known at his time. He was the reformer of the Austrian railway tariffs and knew economic matters from the side of practice.
(J.Z.: These 2 titles, in English and German, were published in my PEACE PLANS series, on microfiche, also some other titles, but these in German only. - B. added very important qualifications to Hertzka's proposals. -J.Z., 25.4.03.)
Today only these few lines on this matter.
Very faithfully yours - signed: U. v. Beckerath.
___________________________________________________________________________________________
22. 6. 1952. Your letter of 14. I. 1952.
Dear Mr. Meulen,
you say: "I cannot advocate a banking system suitable for a revolutionary period, if it is inferior for normal times."
What are normal times???????? I expect a historical period which by no historian of the 18th or the 19th century would have been considered as normal.
One of the characteristics of normal times is: treaties and agreements can be concluded to be fulfilled 30 years (or so) later and no man of good sense says: The parties are crazy! 30 years!!! May be that the world does not longer exist 30 years later! Maybe vast deserts will extend where now the English, the Germans, the French, etc. live.
Are such apprehensions quite unfounded?
Such a monetary system, as now prevails in the whole world (since about 1914) seems to be normal to more then 90 % of the people. The system is far from being normal. Never before in history were the measure of value and the means of payment to such an extent prescribed by the governments and created by the governments, while the people simply forgot that other kinds of measure of value and means of payment are possible, and this fact: that the people completely forgot the monetary conditions, considered as normal until 1914 and prevailing, for several thousand years before 1914, this fact makes the present period of history in my opinion the most abnormal ever recorded.
You may answer: The monetary system of the time before 1914 was bad. Experience showed that it was bad.
You would be right. The system was bad, but it was considered as the normal system for many centuries.
(Why was the system so bad?? It granted to creditors a claim to precious metal, also at times, when the most careful debtor was unable to procure precious metal. But science and the people did not perceive this inconvenience. They all thought that precious metal, as a measure of value was the true cause of the many evils of the old system - - one of the most disastrous mischiefs ever arisen in human brains.)
We - - you - - I - - and some others - - try to get a new system into operation, which, in times to come, can be considered as normal. We agree that a simple restoration of the old system would not be desirable. I could not provide economic (and even political) conditions deserving rightly the term normal, and that without a complete liberty for economic and monetary experiments (made at the experimenters' own risk and expense) the system cannot be discovered which, in future, will be considered as normal.
But such a complete liberty has hardly ever existed and if it existed, then it was not used. Example: The existing liberty for the issue of inconvertible standardised cheques (or whatever the right name might be) in England, but used by nobody, though its use could bring about a great reform in all spheres of life.
(J.Z.: Henry Meulen was the only man I know of, who ever asserted that this liberty still exists in England. I very highly doubt that. He never brought forward as proof any reference. Nor did anyone else. Some digging in English law libraries and in juridical decisions on issues of private emergency etc. money issues, merely convertible into goods and services, would probably reveal that H. M. was wrong here as well, as he was on so many other points. - Due to his particular system, he never felt compelled to test this liberty, since he did not consider it to be interesting, useful, valuable or liberating enough. Not did any of his readers, to my knowledge. About 50 million people, several generations of them, never trying out their legal liberties in this sphere, through none of England's deflations, inflations and "normal" times? This is hard to impossible to believe. Much more likely it is that they tested the law - and found it much too "unfriendly", if not outright monopolistic, threatening and penalising. And there was H. M., advocating "Free Banking" from about 1917 to 1978 and never attempting to test the supposedly legal freedom to open and run free banks and clearing centres, that would not promise to redeem their notes in English government "pounds" or in rare metals! Even if he had not considered that approach to be ideal, not in accordance with his notions of an "ideal" note-issuing bank, he should have considered this legal option as a loophole for some very interesting monetary experiments of his own - and that of his few followers. Instead, at least against U. v. B., he argued and argued against this monetary freedom - for decades! With such friends - who needs enemies? - J.Z., 25.4.03.)
We both regret that we do not agree on the details of the newly to be established system.
I demand the permission (taken, if not granted by the government) to used standardised medals of gold as
I.) measure of value,
II.) as a means of payments freely accepted and not to be extorted by a law suit, and not as the main means of payment, but an one which exists and permits daily the control of the value of all kinds of other means of payment.
(And of other value standards! - J.Z., 25.4.03.)
I demand, too, the free use of all other kinds of measure of value and of means of payment, so that, if another monetary element than gold will seem suitable to replace gold, it may be at once discovered and take the place which it deserves in the economy. (One day gold will be replaced - - no institution of mankind being for all eternity.)
------------------
2.
You demand (or rather advise) a special system of redemption, which supposes that prices in shops are not fixed in weight quantities of gold but in paper units, which are not connected to any good.
You suppose, that the public will adopt such a system also if it is free to use gold (grams of gold, sovereigns, gold franc, ducats etc.) as a measure of value.
I demand that you should have all liberty to try this system and demand for myself nothing than that "my" system should not be prohibited.
But I hope, that you will admit, that your system would not be considered, by any economist as normal (may its virtues be ever so great). It is quite new. It is entirely your own invention and, if it is ever practised, it should bear (and will do so) your name.
Let me remind you of two other details of your system, which - - if they fulfil your expectations - - would grant a quite new basis of note issue, until now never proposed, but certainly would not have been considered as normal by any note-issuing institute and a fortiori not by a Scotch banker before 1844. These two details are:
I.) You expect that it several bankers issue notes, not based on a measure of value as sovereigns or other fixed weights of gold, but merely being paper pounds (or similarly named), that these notes of several bankers will be of the same value (purchasing power in shops).
II.) That trust into a banker may, in future, not be defined (by the public) as before 1914, but that the element of trust - - considered as the most essential before 1914 - - will no longer be considered as essential. That essential element, is the readiness to redeem the issued note at their nominal value, say a fixed weight of precious metal, on demand or with a delay of some weeks or months (optional notes).
I admit - - of course - - that those elements, which you consider as essential to inspire trust, were also considered so by the public and by science before 1914. But - - to repeat it - - they were not considered as being sufficient. (Honesty, prudence, experience etc.)
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The present state of humanity may be - - I think - - compared to that in which it was before Prometheus
discovered fire. Normal at that time may have been the practice to eat prisoners of war uncooked and unfried, and many other habits now appearing backward. After Prometheus' discovery was acknowledged, the old notion of what is normal could no longer be applied.
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Very faithfully Yours - signed: U. v. Beckerath.
____________________________________________________________________________________________
U. v. Beckerath, … 30. 6. 1952. Your letter of 27. cr., received today.
Dear Mr. Meulen,
yes, my health begins to improve. Today 75 degrees Fahrenheit in my chamber. That's what I want.
---------------------
Choosing politicians by lot. The book by Aristotle will please you much. But you are right: The ordinary man will hardly have the courage to abolish old laws.
(At Athens the custom was this: When a man proposed the abolition of a law (or a new law? - J.Z.) to the assembly of the people, there was erected a gibbet in the middle of the place where the assembly sat. The man was led to the gibbet and a rope was fastened at his neck. When the assembly rejected his proposal, the man was at once hanged.)
But here Jefferson proved to be a great statesman (though he was an adversary of all kinds of paper money). Jefferson said: The period, for which any law is valid, should not exceed a generation, 30 years or so. The constitution should declare: Every law ceases automatically to be valid a generation (e.g., 30 years) after its enactment. If the English constitution would provide an article so as Jefferson proposed it, the act of 1844 would have been abolished for many decades.
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Inflation and rising prices. The true reason why we cannot agree and even cannot understand one another, is:
You suppose a kind of money as normal money, whose unit bears no relation to a commodity such as gold, silver, wheat, cowries etc.
(J.Z.: Rather, M. wanted a fluctuating relationship, in relation to a supposedly more stable and ideal paper pound standard, properly managed, better than it is usually managed today by central bankers! - J.Z., 25.4.03.),
I say: If the people and the merchants are permitted to issue private notes, they will certainly begin with notes whose nominal value unit will be a weight of gold, as a sovereign, a gram gold, etc.
(J.Z.: In the beginning (unless they are in the middle of a galloping inflation), when more and for the moment sound enough exchange media are more important to them than a sound value standard, they might, rather, continue with the same paper value standard, the governmental one, which already exists, for their first issues. As soon as they find that value standard, too, to be insufficient for their purposes, they will use others which are more to their liking. - J.Z., 25.4.03.)
(Propaganda for your proposals will always be possible, but the issue will not begin with the realisation of your proposals.)
If such (commodity-value - J.Z.) notes-exist and are generally used, then the occurrence of an over-emission is very easily observed. At the free market a note of 1 Pound will not longer buy a sovereign but less. In other words: These notes get a discount. But prices, when fixed in the substance of the nominal value of the notes, remain unchanged. So no inflation takes place (of the price level - J.Z.) but only a devaluation (or depreciation - J.Z.) (not by the government but by the market) of the over-issued paper money. The next step is: the devaluated notes are generally rejected and more prudent note-issuers than the former, will issue fresh notes, which they know to keep at per with the unit which constitute the nominal value of the notes.
If the unit of the paper money does not possess a relation to a commodity (gold, silver, wheat, cowries, etc.) but is simply called "Pound" or "HoHo" and prices are fixed in this Pound or HoHo, an over-emission is not at once recognised as an over-emission. Thus, for the time, in which it is not recognised as an over-emission, there will be an inflation, exactly as if the paper money would be a forced currency. The people's and the merchant's ignorance acts then exactly as the power of the State did, say, at the time of the Assignats.
But - - all things in this world having a maximum size and a maximum time of existence - - such a monetary condition will not be for all times. On the contrary: In countries such as England and France and some others, the people will observe the seeming rise in the value of foreign exchange, will talk of it in the pubs, will then be enlightened by the intelligent minority (certainly existing in England, France, etc.), will reject the over-issued notes and will change the pricing system. Some days later the people will perceive that now an hour of labour purchases exactly the same amount of goods as before the over-issue took place. Many will not forget the lesson.
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2.
Now I can answer to your remark about the value for which a country would accept a currency, if the currency would not be legal tender.
The market decides. If the currency begins to get a discount at the market, then there will be no possibility to issue more of this paper money. That is the natural mark (and limit - J.Z.).
When a bank obliges its debtors to accept the own bank notes - - as long as they are debtors - - for their nominal value (that is: without discount, even though the general market may accept these notes, if at all, only with a discount) then the possessors of these bank notes can still buy, at these debtors (shops, first of all), whatever they have to sell, in goods or services, at the par value of these bank notes, at the former prices, though the notes are not endowed with legal tender for everybody. For these debtors (and, naturally, for the issuing bank, which must accept its own IOUs at their nominal value - J.Z.), these notes are then still legal tender, because the agreement between the issuing bank and its debtors compels these debtors to accept the notes at par in their normal business.
----------------------
The "goods" which a government sells are tax receipts.
(J.Z.: Supposedly for services rendered or to come, whether they are wanted or not, and whether they are really disservices, and this at monopoly prices, determined by the government itself. It is thus astonishing why the following questions is rarely put and remains unanswered: Why do so many people accept "taxation" as quite natural and necessary and show no interest at all for voluntary taxation and subscription alternatives? Few really love taxes, politicians and bureaucrats, or all of the laws and budget items and yet: How many are interested so far in individual secessionism and exterritorial autonomy??? - Almost all people have experienced inflations and deflations and at least observed large-scale unemployment. Nevertheless, not even most of the victims of these government-caused phenomena show a serious interest in inflation-and deflation-proof exchange media, which would also prevent mass unemployment and economic crises. Likewise, when it comes to wars and civil wars: How many seriously consider all the steps required to prevent them? They rather suffer these man-made disasters - or engage in mere protests, in which they utter some of their numerous false ides and opinions on theses subjects. - all too self-satisfied with them. - J.Z., 25.4.03, 27.5.03.)
If the tax offices accept the government's paper money at its nominal value, the government is able to issue an amount nearly equal to 1/4 of the yearly income of the government. That's a fraction found empirically by
Lorenz von Stein about 80 years ago. It still holds good. The reason could be easily demonstrated - - easily but not in a few words.
(J.Z.: So why don't governments, always short of cash, explore this relatively sound income option (apart from the wrongfulness of compulsory taxation) to its natural limit? Apparently, they do not know their own business and its business potential sufficiently and all its subsidised universities, financial studies, official and unofficial advisors and experts, do not advise them sufficiently. Certainly, this knowledge belongs to the total knowledge of the "science" of public finance. - J.Z., 25.4.03.)
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You are very right to say that when private note issue is denied the whole business becomes confused.
(J.Z.: Alas, all too many, Meulen included, still became confused by all the freedom options which full monetary freedom offers us - and more or less desperately or narrow-mindedly still hang on to only a fraction of it, assuming that this fraction would be all there is to it. Even thinkers like Rothbard believed that everything else would be fraudulent! - J.Z., 25.4.03.)
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I cannot see inhowfar (to what extent - J.Z.) the deposits with banks would be (a rough) estimate of a country's ability to devote capital to fresh production and in what connection
a.) the note issue,
b.) the want of capital to provide fresh means of production, (machines, houses, etc.),
are connected with the inflation problem and are connected to each other.
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Opposite of inflation. What I would say is: The opposite is not deflation.
From the standpoint of Aristotle's logic the opposite of inflation would simply be: non- inflation.
But in a popular sense (J.Z.: Alas, not yet! - J.Z.) (being not quite without merit), the opposite of inflation as well as of deflation is: freedom of issue.
Kant recommended to scientists not to neglect a popular representation of their systems. Also he recommended to talk with intelligent non-scientists about the essentials of scientific systems.
Kant says, in his treatise on Logic:
"Die Schule hat ihre Vorurteile, so wie der gemeine Verstand. Eines verbessert hier das andere. Es ist daher wichtig, eine Erkenntnis an Menschen zu pruefen, deren Verstand an keiner Schule haengt."
(Edition of the "Philonophische Bibliothek", page 53.)
Attempt at a translation: "The schools of though have their prejudices and common sense has its prejudices, too. The one can here improves the other. Therefore it is important to test an insight among men, whose reason is not attached to any school of thought."
Maximum size in plants etc.
You are right insofar as the Darwinian principle of natural selection (if considered as the only principle leading the acts of nature concerning the species) is not always in harmony with the modern principle of the maximum size. But Darwin himself was far from contending that the principle of natural selection was the only principle to be taken into consideration in the existence and the variations of the species. He himself established the principle of sexual selection as of no less importance. Also Darwin certainly admitted the influence of climate, nourishment,
3.
etc. You are certainly right to say that chance plays a great part in causing the survival of species. But Kant says, that here one must consider the Universe as the room in which species live. The whole quantity of elephants, flies, cats and others - - counted in quintals, may remain the same (or nearly the same) in the universe. Analogon: The quantify of the human race remains about the same at every second (counted in quintals) though, in the average in every second a man is born and another dies. Chance seems to be deciding. It is as good as eliminated if the whole earth is considered.
You are right, that if there is a force directing the energies of both insects and plants, it seems to make a lot of mistakes.
I.) There may be real mistakes, if our manner to consider these things is the manner here to be applied,
II.) The mistakes may only seem to be mistakes and the way of the natural force may yet be the way of least
resistance.
One must not forget that individuals are that element which costs nature much less than the printing of notes costs a banker. If nature creates 1 million of individuals and one individual remains and propagates the species, nature has attained what it would attain. But it is a cruel and prodigal being and not our friend. It should be replaced by something better, as Schopenhauer contended - - referring to the many, who were of the same opinion. (Leopardi - - the great poet - - the most impressive; Buddha hardly less.)
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The "Individualist" at Canberra. I read it with the greatest pleasure and share your opinion that such a fact must be considered as encouraging.
(Perhaps at the ANL in Canberra some issues of THE INDIVIDUALIST can be found which are not yet in my collection and microfiched by me. However, to get photocopies of these, too, and to include them in my microfiched collection, has at least at present a low priority for me. - J.Z., 25.4.03.)
But, nevertheless, it remains true, that presently no German paper would dare to print something on Free Banking. They lack "Zivilkurage" - - a fault generally spread among Germans, as Bismarck stated in a celebrated speech at the Reichstag.
----------------------------
You say: "How Germany treats her nationals is a matter for Germans."
(J.Z.: Obviously, he had not learnt enough from the example set by Hitler's treatment of Germans and what it ultimately meant for the rest of the world as well. - J.Z., 25.4.03.)
Here I differ widely from you. The treatment of nationals in Germany is a matter for every man in the whole world. It they are treated too well, the world may be sure that these nationals (or their offspring) will one day perform what Hitler wanted attain but could not, and the earth will again be what it was in 1945 or worse. If they are treated too bad (say, by torturing everyone [many! - J.Z.] to death), they will rouse sympathy and pity in the whole world, for it is now clear that the greatest part of them consisted simply of thoroughbred idiots, of a similar kind as the old crusaders. But sympathy with and pity for these people would be a dangerous thing.
For me no national matters exist. I concede to no prince, parliament, conqueror or politician or any other the right to reserve a territory and to declare: this territory is mine and the atrocities I commit here or assist here or pardon and protect here, are my affair! Is say: Every man would have the right to kill such a monopolist if he can and should be assisted by all other men not unworthy of this name. (Panarchism & tyrannicide. - J.Z.)
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Payments to USA. You say: If England has no Dollars, it means that the USA has not bought from us.
Suppose there came 100 000 men from Mars, quite willing to trade with men. Then it would be - - by your theory - - impossible to open the trade with them, because they had not yet bought from the sons of the Earth.
Let the American and the English merchants themselves decide what trade is to be considered as normal, how much credit must be granted and be sure: A day after freedom is established, England will be full of American (German, Uruguay, Chinese, etc.) goods. If England pays for these goods with "Verrechnungswechsel", then the last imported feather will be paid for by English goods, thus automatically financing the import.
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4.
Going to bed is important insofar as it secures fresh energy for our economic fight. The latter remains the most important. (Yes.)
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What concerns the damaged envelopes: I regret that I cannot hang the Jack in the post office who damaged them. But I will do what I can, that is: use better envelopes or two envelopes, as I do today.
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Among the printed matters you were so kind to send to me, there were many striking ones. I hope to write about them.
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Your letter of 14. I. 52 is not yet quite answered. I hope to answer fully in July.
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Sunday I was in the "Grunewald" (a vast forest) near Berlin. It was pretty much destroyed by the war and the many who stole fire-wood there at the time of blockade and before and after. Now this forest is being restored and many thousands of square metres are afforested. There I had also seen the very great building, which in April 1945 was nearly finished and was destined, by Hitler, for a military academy. Only for that reason the building was destroyed - - I do not know, whether by the order of the Allies or by the Magistrate, which was, in the year 1945, completely communistic. With a little labour it could have been finished as one of the greatest hospitals in the world - - situated in the middle of the great wood. Craziness governs the world.
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Very faithfully Yours - signed: U. v. Beckerath.
____________________________________________________________________________________________
4. 8. 1952. Your letter of 1. 8. 52, received today.
Dear Mr. Meulen,
I did not yet confirm receiving a lot of interesting printed matters, first of all: Stephen Pearl Andrews, "The Science of Society". Thank you very much! I hope to enter into details of the printed matters in one of my following letters.
Your last letters are not yet answered. But I will now answer firstly to your letter of 1.8.
-------------------
You were so kind as to look for the book of Chitti, "Des crises financières". I had found the book mentioned in an extract from: Rodbertus, "Zur Erkenntnis unserer staatewirtschaftlichen Zustaende", which in Germany is considered as one of the classical socialistic books. (Rodbortus was a rich lord of a manor.) The book was published 1842 - - long before Marx published his writings. Many ideas of Marx were clearly expressed by Rodbertus, so that the enemies of Marx still contend that he stole them from Rodbertus. But that's impossible, I think. If Marx would have taken his ideas from Rodbertus, then the "Kapital" and "Zur Kritik der politischen Oekonomie" would have been better written. Also Marx was impartial enough to mention predecessors, if he knew them. (That was denied by other others. M. certainly did not treat Proudhon or Stirner fairly. - J.Z., 25.4.03.)
From your interesting and valuable researches I learn that Chitti does not deserve to be considered as a theorist who contributed to the advancement of the money theory. Like all writers of that time he had a despotic mind. (All? - J.Z.) That a Government possesses a natural right to regulate the circulating medium, the measure of value and the right of issue was for him, obviously, self-evident. Here Andrews, Warren and their successors opened a new era by claiming for individuals the right of trying different methods by experiments. (At the own risk and costs!) Here was linked real science to morals and political economy, and Andrews and Warren were justly very proud of it. Marx, Rodbertus, Chitti and so many others were far from granting such liberties to individuals.
-----------------------
Andrews' book is certainly one of the most valuable ever written. I read it for the first time about 50 years ago, and I must confess that I forgot several important details. All the more I thank you for having sent to me such a treasure of progressive ideas. But all progressives must also thank Mr. Bhavan, to whose care the world is probably
indebted for the book of Andrews, that of Greene and perhaps of some others of not inferior value.
Andrews proclaims the unlimited right of everybody to issue notes. He proclaims, too, the unlimited right to decline the acceptance of notes, provided the man (worker, shopkeeper, etc.) did not expressly oblige himself to accept the notes of an appointed issuer.
I regret that Andrews did not proclaim the latter right as distinctly as the right of issue. Average people invariably combine the idea of issue with the notion of forced currency (they know no other and, consequently, think that there cannot exist any other kinds of currency). Therefore, average people are adversaries of the right of issue and say: What? Everybody shall have the right to compel me to accept his, probably bad, notes? Many thousands of different kinds of means of payment in circulation? And that shall be a progress? Never!
An investigation into the right to decline paper money of every kind (with the above mentioned exception) shows, that this right, ruthlessly (B. wrote: "reckless". - J.Z.) applied to all means of payment issued by unknown issuers, will drive out all notes, cheques, etc. from circulation, except
2.
those of well known issuers. Example, if the system would be applied to Berlin: Notes of the Senate, the transport societies and of shop-associations, say, of several hundred shops, would circulate without difficulty. Great factories like Siemens (about 40 000 workers) would issue, as means of payments for wages, tickets accepted at the canteens of Siemens. Those canteens would then be great stores, such as Woolworth, so that the workers of Siemens could get there get all the commodities they went.
The tickets would be destroyed after having been received at the canteens; they would not "circulate", the word used in its usual sense. But they would be widely used.
By agreement, the canteen of one great factory would serve as well as a canteen for several or many others. It would have branches in the different quarters of the town.
Trust would not be an element of the system, rather one could say that the system is grounded on the possibility to express, at any time, the distrust of the note bearers. Everybody could see the commodities at the shelves of the stores, or of the canteens, obliged to accept the notes. As soon as the quantity of goods offered would seem to be diminished, all note-holders would come in and exchange their papers for goods.
Long-term credit would be provided by means quite different from simple note issuing.
(Certainly, if It would be economically possible to provide trust in the issuers in such a quantity, that many more such notes could be issued than could be made good, by exchanging the notes for goods, in the case of a run - - well, it would be a nice and simple matter. But until now no such device has been invented, one that will maintain this kind of trust at times of unrest. Nor, until now, has any device been invented to determine the right quantity of issued notes if trust is to be an essential element of a system for the issue of notes.)
The problem of long-term credit in not quite solved by Andrews. What he says in numbers 231, 220, etc. is not sufficient. Labour, done in excess of the worker's immediate wants, is also entitled to its full reward (share in what it helps to produce) as labour of, say, a fisherman or a hunter.
That common language does not carefully enough distinguish between
a) capital as a product of labour ("vorgetane Arbeit") (pre-done labour - J.Z.) and
b) capital as a monopoly, and between
c) interest as a just share in the product of "vorgetane Arbeit" (I do not know the adequate English expression) &
d) interest, say, for the use of monopolised currency,
that imperfection of common language, cannot be a reason, for scientific economists, to confound the notions which common language does confound.
Andrews did not investigate the legitimacy of this claim.
--------------------------
Andrews is impartial enough not to demand a prohibition of standardised ingots of gold or silver and their use as a means of payment by debtors. (Provided that they are well enough supplied with them. - J.Z., 26.4.03.)
His investigation did not go so far as to show him, that all, what is said by reformers against gold and silver, is really only true if creditors are entitled to extort from their debtors gold or silver, whether gold or silver (sufficiently - J.Z.) circulates or not.
I cannot find any author, who has investigated this matter in full. But Zander knows this matter and I discussed it with him for several months, in his lodging, his amiable wife providing us with the most excellent pap I ever ate, in great quantities.
3.
Andrews did not detect, that the situation of debtors is hardly changed if the creditor is entitled to demand "labour notes" instead of a quantity of gold or silver at a fixed date. Labour notes, like all other currency, are not always available when they are wanted. Andrews did not realise that a new theory (and practice! - J.Z., 26.4.03) of clearing is needed.
Please look at No. 244. (I do suppose, that you, too, possess a copy.)
What Andrews says here of the scarcity of the circulating medium, if it consists of precious metal, is true under the condition that the creditor is entitled to claim precious metal from his debtor. It is no longer true when
1.) everybody possesses the right to issue,
2.) creditors are only entitled to get their claim realised by clearing.
(Paying wages by tickets, accepted in well supplied canteens, is a kind of clearing, though those concerned, employers and employed, do not become aware that it is so.)
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Andrews speaks in some chapters about the natural measure of value, always in an ingenious manner.
But he supposes, that the quantity of labour, applied by a special person to a special purpose, and the average quantity of labour applied by average people to a work of an average kind, are not essentially different.
These two kinds of labour are wholly and essentially different.
The element "market" is not contained in the first mentioned kind of labour. But, as soon as one speaks of average labour of average people, one introduces the element market - - an element which easily solves the problems not to be solved by the most impartial judge, who tries to appreciate the just price of a special labour of a single person, if the judge proceeds from the individual repugnance of the labourer concerned.
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I do not acknowledge the cost principle, but I say (and some men, more intelligent than I am, told it long before me): the value principle is a good regulator wherever no monopolies exist.
Any price, obviously too high, is a violation of other people's rights, but only if the price is offered by a monopolist. The removal of monopolies is, generally, a political matter and it may require a political and social revolution.
(The Indian Satyagraha is, for social and political purposes, much superior to the guillotine method. I think that here we do fully agree.)
Let me remark here, that the problem of the difference of a thing's value, the word taken in the sense of Andrews, and the thing's market value, has been profoundly investigated by Marshall. He called the difference the "consumer's rent". If he would have known Andrews' book, he would, probably, have said: What Andrews wants to achieve is achieved by a market, whose visitors are not monopolists. It is attained in a way quite different from the methods of Andrews and it is only approximately achieved. But the approximation is so good, that there is really no difference between the just price, fixed - - say, by an angel (an economically trained one) - - and the market price.
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What Andrews says in No. 59 is pure Marxism. It is very difficult to escape Marxism if the individual value is taken as the normal value and the market value is not taken as the normal value. Marxism in this sense existed long before Marx.
(J.Z.: The "subjective value theory", combined with the "law of supply and demand", seems to combine the two value approaches. Under full economic, political and social laissez faire, realized by competing panarchies, the individuals would tend to work most productively in freely chosen jobs that would please them most, so that their subjective evaluations of their activities would largely, but, naturally, not completely, agree with those of a quite freed market, a market in which even quite unusual innovators could easily get into touch with like-minded people and with all of their potential customers. - J.Z., 26.4.03.).
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I have to stop now. I cannot write much, my health being still bad. But I do not give up the hope that I will be restored. But with the greatest pleasure I read that your health improved so much.
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4.
England's present expenditure of L 700 millions compared with the L 200 millions spent 1914.
Count in gold or in units of purchasing power, considering the increased productive forces since 1914 (How to estimate the units of productive capacity? I don't know!), and you will find the difference not so great - - if there remains a difference at all.
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Germany's reparations and England's present expenditures.
One must consider that Germany really paid reparations only in the years 1919 - 1923 (about). In the following years the amount of the reparations was - - for the greatest part - - lent out to German debtors and appeared in the statistics as "loans from abroad". It was money that had never left Germany. In the years 1924 - 1929 Germany was one of the richest countries of the world.
An interesting comparison would be:
a.) the costs for rearmament,
b.) the costs directly paid and indirectly born by unemployment after 1919 in England.
It may be that b.) was greater than a.) is. I found some interesting numbers in some work by Keynes, but I forgot the title. Keynes compared the costs of unemployment with the costs of a war.
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I hope not to be taken for a nationalist, but I think that the costs of the armies now occupying the German territory and born by German taxpayers, should be taken into account.
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In medieval towns the cost for defence pro capita and counted in percentages of the social product were - - I estimate - - much greater than they are today, in England as well as in Germany. The citizens constantly trained themselves in the use of arms, and that required time. They paid for all arms themselves. I think that at least 1/4 of the labour of every man was used for military purposes.
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In my next letter I hope to enter into some details, also, on the interesting speech of Eden, that you were so kind to append to your letter.
Many English do not consider enough that the dismantling created a mentality in many German minds, so that they say: Russian rule is the lesser evil!
(J.Z.: I deny that. The "Demontagen" by the Soviets, in East Germany, were even more extensive and prolonged. They even removed those machines which had been rebuilt after previous "Demontagen" by the Soviets. In the case of the Zeiss optical works that happened several times in a row, so that finally many of the workers, totally frustrated, left East Germany and set up a new Zeiss plant in West Germany, in Stuttgart. - J.Z., 26.4.03.)
When many young people in the East gladly join the new armies created by the Russians, it is because the Russians do again and again speak of these dismantlings and say: That - - you young Germans - - you must avenge! It's crazy, but it does have the intended effect. (The practice of "the great lie", too often more believed than small lies. - J.Z., 26.4.03.)
Many young Germans say: Fighting under the command of an American general means certain defeat. But fighting under the command of a Nazi general is hardly better. We do not fight at all!!
My impression is: Russian propagandists try to spread such slogans over West Germany.
(J.Z.: I rather encountered another wide-spread belief among other young Germans at that time: If it comes to WW III, then Germany will be the main battleground and it and its population will be largely destroyed. Why, therefore, become actively involved in preparations for this final slaughter? We and Germany can certainly not win thereby. - J.Z., 26.4.03.)
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Very faithfully yours - signed: U. v. Beckerath.
____________________________________________________________________________________________
8 .8. 1952. Your letter of 2. 7. 52.
Dear Mr. Meulen,
Auxiliary language. I rely on your impartiality and capacity in such things and become an adherent of Ido, though I am now too old to learn it.
King-Hall. I insist that he underestimates the importance of economic liberty and - - first of all - - of monetary liberty. A politician of his rank should not underestimate it. Whether the ideal will be realized in one year or in 500 years or later, nobody knows. I do share your standpoint: "… go for the most important reform, no matter how distant the realisation". (Kant also said: "... no matter how distant the realisation!)
Monarchy. Most of what you said I endorse. I cannot admit that " 'Germany' threw up Hitler; but they chose with their eyes open."
Perhaps, in the year 1932, Hitler himself did not yet know, what tyranny his government would become. Nobody could predict that with certainty, though many experts of history feared it. Insofar "Germany's" eyes were not open, and nobody's eyes are quite open vis-à-vis the future.
The fundamental fault was the Parliamentary System, with its "elections", its parties, etc. And this system was modelled - - as all such systems in the whole world - - after the English model. That's no reproach to Englishmen and none to Germans. But this system must become wholly removed.
(J.Z.: For whole territories but not, necessarily, for volunteer communities that are only exterritorially autonomous. - J.Z., 26.4.03.)
I wrote to you that I am adherent of an improved Athenian system, by which the deputies and most authorities are chosen by lot. I hope to be able to write to you, in ono of my following letters, some details on the necessary improvements.
Gold coins. Frenchmen ware intelligent enough to hoard very great quantities. Some say, that the quantity of gold in France is now not inferior to the quantity in the year 1914. I can hardly believe that Englishmen are less intelligent than Frenchmen and, therefore, I think that in England, too, very large quantities of gold coins are hoarded, though there were people enough that brought their gold coins to a jeweller when the paper price of coins rose.
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Many thanks for your kind correction of my "English". If you continue (I do not dare to beg you to take the trouble) my advantage will be very great.
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My letter of 17. 6. Gold conversion at the bullion market does not restrict economic liberty. An obligation of the issuer to convert his notes on the base of any system restricts liberty, also if the issuer undertakes the obligation voluntarily. Trade should be quite independent from the quantity of precious metal in the country. If conversion takes place at the bullion market only, then the price level is practically independent from the quantity of gold available in the country and the quantity of sold goods, as well, is then independent from the quantity of precious metal. You and I, we will attain that independence. But our means are different.
Free gold market in Germany. Let me remind you that papers of the rank of "Economist", "City Press", "Economic Digest" and "International Financial News Survey", do use the expression "free gold market" exactly so as they use, in Germany, the expression "Freier Goldmarkt". The Kitsonian terminology, obviously, prevails no more so than it may have used in Kitson's time. To avoid misunderstandings, I will, in future, use exclusively the expression "Free Bullion Market".
What concerns the methods of getting gold for export purposes, in England as well as in Germany and other countries, it may be that the opinions of experts differs. In every case: The obligation of an
2.
issuer to redeem his notes at par and on demand is one of the worst invention ever made - - here we agree.
Option clause notes. Well, well - - but it is certain, that the amount of option clause notes, too, was restricted by the amount of precious metal in possession of Scotch bankers, though the relation
Amount of issued notes
Amount of precious metal in possession of the bank
was probably another one in the case of option notes.
There should be only one restriction (here Andrews and Warren are much superior to the Scotch):
It should be the quantity of goods and services ready for sale in the country, and not the quantity of precious metal, that restrict note issue and, consequently, trade.
The tradesmen's tokens were redeemable - - as I read and as you confirm - - only in goods of the issuer. But if that was the case, then the notes were not based on trust, but on the quantity of saleable goods - - visible to everybody - - on the shelves of the issuer. The trust was eliminated so as it is eliminated in the case of an
opera ticket.
It would be of great interest to know, whether tradesmen's tokens were issued in Scotland. Scotch are a very intelligent people. The number of eminent Scotch, in relation to the number of inhabitants of Scotland, is - - as a statistics before 1914 showed - - greater than in other countries. (Next in rank were Jews and Swabians.) (In newer surveys of this kind the Japanese rank very highly. - J.Z.) And such a people should not have issued tradesmen's tokens?????
(J.Z.: I have in my possession, among others: Seaby's Standard Catalogue of British Cons, Part 4: Coins and Tokens of Scotland, first edition, 1972, 160 pages. What is needed now are surveys of these monetary freedom experiments considered economically, not merely from the point of view of coin collectors. They should also indicate to what extent such issues were hindered or suppressed or prevented from developing into full monetary freedom, just like truck payment systems were. - J.Z., 26.4.03.)
Low and high rates of interest. Suppose, the profit of wheat importers is 1 % of the value of the imported wheat. (In the average it was so before the war.) Suppose, further, interest for commercial loans is 5 % per annum. Then it is 3 5/12 per month. That admitted, it is profitable for a wheat importer to borrow a sum to buy wheat, pay for it in cash, sell it before a month is up and then repay the loan. His profit is still 7/12 %. Why not suppose, that the importer makes such deals five times or more a year???? Mills often buy wheat while it is still on ships in the sea.
Russian revolutionaries. You, too, will have read that the last congress they held was opened by a divine service, held by a Greek Orthodox priest; it was closed in the same manner. When I read this, I lost all hope for them. These people are not dangerous. (Meulen mis-read this as if the Soviet revolutionaries held a divine service! - J.Z.)
Clavell Blount's proposals. I will try to get the copy of the Spiegel.
Gobineau. Read all of Gobineau you can. In the last sleepless nights I read some of his "Asiatic novels". Gobineau is an astonishing man!!!
My letter to Bernhard. You are quite right: I am a metaphysician! I do not fear attacks from any side. (You, too, are a metaphysicican! The beliefs, that things in themselves are pressure, elasticity, electricity, acid, alkali and such "entities" - - as old scholastics called them - - is a metaphysics, too, and by far not the best. )
Normal times. You remember the commercial crisis of 1921, whose cost for England Keynes compared to that of the war, pro rata temporis. At that time the politicians held peace.
Free Banking, pages 290/291. There is a very great and essential difference between the nominal value of a note, the discounted amount of the note and the value produced by the fluctuations of the bullion market.
The commercial discount may have been, in some cases, 1/2 % per month. The fluctuations of the bullion market go from zero to - - but you know the numbers better than I do. The fluctuations cannot be foreseen. The commercial discount practically can be.
Weather. Still a few weeks like the last and I am restored.
Very faithfully Yours - signed: U. v. Beckerath.
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9. 8. 1952.
Dear Mr. Meulen,
some weeks ago you sent me the copy of 21. III. 1952 of Truth. On page 308 F. A.Voigt wrote an article "Liberty or Equality" and there he says:
"The German people lived under the previous 'democracy' for nearly 15 years. In March, 1933, they had their last opportunity for using their 'democratic' right to vote freely and secretly, for whatever form of government they wanted. Nearly two-thirds (in a poll of just under 40 000 000) voted for the two worst forms of tyranny ever known to mankind - - National Socialism and Communism."
You remark: "Is this true? I thought Hitler came to power on a minority vote".
The history of the "Machtergreifung" (literally: "grasp for power". - J.Z.) by Hitler is now more than 19 years old and by most already forgotten. Obviously, also Voigt forgot essential points. Let me copy here some details which I take from "The World Almanac, 1934 - - New York", an excellent and surprisingly cheap (50 cents) book of 944 pages. If you will secure copies of some years you will not regret the money.
Page 650: "The election of the Seventh Reichstag on Nov. 6. 1932, resulted in a Nazi loss of 34 seats and two millions in popular votes. The Nationalists regained 14 seats and the Communists 11. Von Papen's Cabinet resigned Nov. 17. President Hindenburg summoned Hitler and laid down certain conditions for the formation of a Ministry. Hitler again insisted on "full power or nothing". General Kurt von Schleicher, who had been Minister of Defence, was made Chancellor and formed a Cabinet. The Reichstag met Dec. 6 to 9 and showed itself hostile. Gen. von Schleicher and his Cabinet, after 57 days in office, resigned on Jan. 28, 1933, when the President refused to give him power to dissolve the Reichstag. Adolf Hitler was then summoned and made Chancellor. On Jan. 30 he took office with his Cabinet as named at the head of the article. On Feb. 1 he announced the dissolution of Parliament, and the Hitler-Papen government faced the March elections with practically all the armed forces and the police of the Reich under its control. Etc.
. . . . . . . . . . . . . . . . .
Election Returns.
The result of the election of March 5, 1933, as compared with that of Nov. 6, 1932, is shown in the following table:
March 1933. November 1932.
Parties of the Right: Vote. Seats. Vote. Seats.
National Socialists 17 269 629. 288. 11 737 185. 196.
Nationalists 3 133 938 52. 3 235 896 51.
People's Party 432 234 2. 66o 672 11.
Agrarians 47 723 0. 64 004 1.
Totals 20 883 524 342. 15 697 757 262.
Republican Parties
German Social Democrats 7 177 294 120. 7 251 410 121.
Catholic Centre 4 423 319 74. 4 169 603 70.
Bavarian People's 1 073 815 18. 1 156 841. 20.
Christ. Soc's People's 384 146 4. 433 542 5.
State Party 333 619 5. 338 542 2.
Economic Party …….. . 110 343 1.
Peasant's Party 114 237 2 149 005 3.
Wuertt. Farmers 83 828 1 96 859 2.
Totals 13 590 258 224. 13 685 747 224.
2.
Extreme Left:
Communists 4 845 651 81 5 980 240 100.
Grand Total 39 319 433 647 35 363 744 583.
The Nazi vote, on March 5. increased by 5 532 544, & came to 44 % of the total, and the 288 seats which they won, in combination with the 52 seats of the Nationalists gave them an absolute majority in the Reichstag.
Etc. (I may not have read all of B.'s typo corrections without making mistakes. - J.Z., 26.4.03.)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
I am convinced, that the increase of Nazi votes from Nov. 1932 to March 1933 was the effect of forgery and terror. The whole apparatus of the elections was - - practically - - in the hands of Hitler, at that time already Chancellor. (Even in post-WW II USA elections lots of shenanigans happened to change outcomes. - J.Z., 26.4.03.)
Perhaps the history of Germany and, consequently, the world's history would have been another one, if the old traitor Hindenburg would not have appointed Hitler Chancellor but, instead, an honest man. Or if the army would have been led by a second York von Wartenberg (Convention of Tauroggen, 1812!) and would simply have imposed upon Hindenburg an able General. The elections were the result of Hitler's nomination, not the reverse.
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Let me remind you of the words of Tacitus concerning Corbulo, Nero's general, who commanded the army of the East.
It's an old experience that tyrants try to kill a victorious general. Corbulo was a very able general, and Nero was a tyrant. But Corbulo was also a faithful subject and was proud to be so. Of course, he was killed. Tacitus says:
If a general is in the situation of Corbulo, he must distinguish the duties of a subject and those of a patriot. If the ruler of the state is a tyrant, the duty of a patriot is the greater. To say it in one word: The general must revolt and try to kill the tyrant. That is his duty!
The revolt of 20 VII. 1944 of the German generals should have taken place on the 30. I. 1932 against Hindenburg.
Hindenburg was not a tyrant of the kind of Nero. He was worse, he was a tyrant of the Galba type. Galba governed by his favourites. (Suetonius gives details.) His government was so bad, that the people's opinion was: Nero governed better.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
You were so kind as to add to the copy of Truth a clipping (from the Times?) with the caption: "The spirit of Berlin". The article is well written and the author sees things as they are, though not all things.
I learnt from the article that the Americans limited the use of machines for the work of clearing the rubble, so "that the task should provide work for men before machines", as the correspondent says.
Always the old error - - since centuries - - "the machine takes the work which could be done by workers", machines create unemployment! Even Marx, no blockhead, believed that.
Machines increase the degree of employment, and the reasons are clear to economists. But the error is so common among non-economists, that even the eminent Montesquieu (Esprit des lois) protested against water-mills, which created - - he said - - unemployment among millers.
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Very faithfully Yours - signed: U. v. Beckerath.
(J.Z.: Nevertheless, such popular errors, myths and prejudices are not yet systematically collected and optimally refuted in a special encyclopaedia of the best refutations of all the notions that constitute obstacles to progress. How differently could history have run if that had been done at least 100 years ago? - J.Z., 26. 4. 03.
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10. 8. 1952.
Dear Mr. Meulen,
yesterday I received the Individualist of August 1952. Many thanks!
The day before yesterday, I received a letter from a friend in Melbourne. This letter confirms what you say on Australia's muddle, pages 37/38. My friend (Goldberg is his name) expects an unemployment of the greatest dimensions. I agree completely with you, that the Australian government's "care" for the currency is the main cause.
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Your article: "Another Russian problem". The role of the ruling party in Russia is better understood if it is compared to the old (but it seems: still existing) Camorra in Naples. The Camorra was not - - what many do not know - - without an "idea". The "idea" was - - pretended - - political reaction in every sphere. The Camorra destroyed the first socialist printing presses, provided the entrepreneurs with strike-breakers, all for cash.
That the "idea" was not taken very serious, is clear. Likewise - - I think - - the Russian Camorra does not care much for its "idea". If the members get good jobs, then they are satisfied. But not satisfied are the many, who also desire good jobs. So the real principle of life of the upper classes in Russia is: Daily defend the job, but with a great probability for losing it one day and becoming replaced by a greater rascal, through the same method that one used oneself to replace one's predecessor.
If it would be possible to provide every refugee with employment, without delay, then all people, who really understand their business, would flee to the West, and a few months later the Eastern politicians would be "entre eux", incapable to govern their country.
The economical possibility to provide employment without delay exists, and it would be easy to organise the things so, that every refugee, able to work, would be welcome as a helper in reconstruction.
The real and until now not to be solved problem is: to publish the method!
(J.Z.: Then the problem remains: a.) To get enough people to read the details and b.) to get enough people to comprehend the details and then, c) to get enough people to act upon their newly acquired knowledge, even if they would have to break a few oppressive law in the process. If it were skilfully, timely and quite publicly done, they could not be suppressed and penalised but, instead, their actions would become post-facto legalised and widely imitated and praised. Response from libertarians and anarchists to the details of such proposals, published by me first primitively duplicated, then on microfiche and then digitised and made available free of charge by e-mail, was so far close to zero! - J.Z., 26.4.03.)
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The miracle of radio. Very good! Excellent!!
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The language problem in UNO. I agree and trusting that you studied the systems better than I did, I say nothing against Ido.
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Tight money. I regret that you forgot the name of the nincompoop. It deserved not to be forgotten. Probably he was an "expert".
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Social Credit in Canada. That after an experience of 17 years this party still occupies 53 seats out of 57 in Alberta, and now has captured British Columbia, places the political capacities of the Canadians in no favourable light.
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In your article "Echoes from Nuremberg" you say:
I.) Nulla poene sine lege. You think - - as do all others - - that the many cruelties of Nazis and others were, on principle, not forbidden by the German laws and that in every case the responsibility was laid exclusively on the persons that ordered them.
But article 4 of the constitution of 1919 states:
"Die allgemein anerkannten Regeln des Voelkerrechts gelten als bindende Bestandteile des deutschen
Reichsrechts."
(The generally recognized rules of international law are binding parts of the German laws. - J.Z.)
I regret that a volume of military instructions was burnt with my library. The copy was published before 1914. There it was pointed out, that when an officer demanded from his subordinates things,
2.
obviously against the honour of a (Prussian) man and (Prussian) warrior, it was the duty of the subordinate to arrest the officer and deliver him to a Court Martial. Examples were given, in the first line - - naturally - - cases of high treason attempted by officers and prevented by subordinates.
(The West German army's rules on this are much more positively developed in this respect and go already far in the direction of those for an ideal militia force for the protection of individual right, although, naturally, not yet far enough, in such a governmental force. - J.Z., 26.4.03.)
In my school-reader there was reported - - as an example to be imitated - - a story which happened in the year 1809. Napoleon I. had ordered to plunder the town of Hersfeld and a battalion of chasseurs from Baden's army was to execute the order. I forget the reason for which Hersfeld was to be plundered. (Napoleon also ordered to
burn 4 houses.) Baden was, at that time, a member of the "Rheinbund" and allied with France.
At the day for the execution, the major harangued the soldiers and told them, that in his opinion Baden's soldiers were no plunderers but honest men; he reminded them that they had often had shared their last loaf of bread with the families in occupied countries and again would proceed in the same way, at every occasion, instead of plundering. But, he continued if there is a man among you, who is willing to plunder, he may come forward. Nobody applied for plundering.
Then the major ordered to burn 4 worthless old barns and reported to Napoleon, that his orders were communicated to the troops and the 4 houses burnt.
Gross violations of the rights of nations were not permitted in the German army and if they occurred, they were punished.
(J.Z.: Nevertheless, such cases happened and they were not always published. I microfiched a book of an infamous case of that kind that happened in the beginning of WW I in Belgium, be cannot, presently remember author and title or lay my hands on this book. - J.Z., 26.4.03.)
But it was a mistake to constitute the court of Nuremberg not with German judges. I think it would have been possible to find impartial German judges.
On the other hand, a political mistake is still far from being an injustice. If the judges of Nuremberg were really impartial men and knew the law (I am afraid, they did not know the art. 4 of the German Constitution) then they were not less entitled to judge than Germans would have been.
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You write: "How Germany treats her nationals is a matter for Germans to decide."
Let me remark that the "nationals" were not treated by Germany; they ware treated by rascals, followers of Hitler. Germany did not know all of their crimes before 1945 and many still believe that they did not happen. (But I know they happened and even more terrible ones than the journals reported.)
In every case a country as a whole is unable to treat its nationals or other persons, to treat them well or badly. Actions like those of the commanders of the concentration camps, concern every man in the whole world. No Hitler, no Stalin, no Parliament and board whatever has the right to say:
In this territory I can do whatever I like to do! I declare that other peoples' notions of justice are not valid in the
territory which I declare to be mine! ("Internal affairs" - "Non-intervention" - J.Z.
I say: Such a haughty standpoint is morally worth less than the croaking of a frog. Every Eskimo has the right to kill the rascal and those who help him.
Also I must protest against your sentence: "Russia today accuses, etc." Russia is not able to accuse or to do the contrary. Most Russians do not know what is the matter here. And if they would know it - - then, possibly, there would be more accusers of the Russian government than there are in England.
(J.Z.: Alas, B. himself used the term "Russian" often rather carelessly and did so even in the last line. The Soviet government was not, representatively, a "Russian" government and even if it had been, as a "Russian" government, it would not have represented the over 100 non-Russian ethnic minorities, nor the various dissenting groups among the Russian people. Most Russian people under it were victims rather than victimisers. They, too, constituted a "captive nations", one of many, under the Soviet regime, which murdered about 70 to 100 million of its own subjects. - J.Z., 26.4.03.)
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Very faithfully Yours - signed: U. v. Beckerath.
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U. v. Beckerath, … 11. 8. 1952.
Dear Mr. Meulen,
I append a clipping from the Berlin paper "Der Kurier", containing a report of the share company "Daimler-Benz Aktiengesellschaft", Stuttgart, for the year 1951. The society is one of the greatest machine-producers. Its speciality are motors for aeroplanes.
The expenses for wages are (were) DM 147 086 344.
For social insurance and similar expenses were spent about 24 million DM.
The Dividend for shareholders has been 6% of DM 72 000 000 common shares = DM 4 320 000.
3 1/3 % of DM 155 520 preferred shares = DM 5 184.
The share of "capital" has been a trifling part of that what has been the share of labour. If the dividend would have been given to the workers, the wages would have hardly been increased.
Very high has been the share of the government. Taxes amounted to DM 63 820 443.
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I do not know the old balance sheets of the society. But I do know, that 50 years ago dividends of great societies were, in the average, about equal to the sum of wages. Taxes were trifling then.
The role of "capital" is wholly changed. If the workers were better led, then they would offer to the share-holders to buy the whole society and make a cooperative of it. The expenses would not be great.
But the almighty unions want something against which they can fight or seem to fight, so that the workers are not tempted to discuss the necessity of the unions. Unions, therefore, pretend to fight against shareholders. Therefore the unions do the devil and try (would rather do anything else than to try … - J.Z.) to organise the great societies as cooperatives.
This balance sheet is insofar not quite typical for German companies, as in the average - - I think - - the share of capital in the society's product is greater, 1/10 of the wages, I estimate.
If you get similar numbers for English societies (joint stock companies) the readers of the "Individualist" will be much interested - - I think.
(J.Z.: Would they have been? Such company reports filled many pages in German newspapers - and were, habitually, ignored by most employees. If they had closely studied them, instead, they would have soon realised how easy it would be for them to make successful take-over bids for most German share companies. Alas, they could not be bothered. Nor did the companies made them such sales offers. Corresponding amounts of cash would not have been necessary for such take-over bids. Industrial bonds, properly timed, would have been sufficient. And their repayment, with interest, could have been made out of a fraction of the additional profits that could have been achieved by this conversion into self-managed enterprises, that could have, internally, multiplied personal and financial incentives and innovations. Alas, this has still not happened. German workers could even have bought all the shares with cash: with a fraction of the sums in their bank accounts! Instead of using the capital market to their advantage, they still consider it to be their enemy and they still curse what they never properly defined and understood: "capitalism", rather than legalized monopolies and privileges. - J.Z., 26.4.03.)
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Today a friend visited me and I had a long discussion with him on Central Banks and the gold standard.
I showed him the Communist Manifesto. German editions published a few weeks before the revolution in March 1848. Nr. 10 of the program for Germany runs thus:
Nr. 10. "An die Stelle aller Privatbanken tritt eine Staatsbank, deren Papier gesetzlichen Kurs hat." (In the year 1848 the main business of a German bank was to issue notes.)
"Diese Massregel macht es moeglich, das Kreditwesen im Interesse des ganzen Volkes zu regeln, und untergraebt damit die Herrschaft der grossen Geldmaenner. Indem sie nach und nach Papiergeld an die Stelle von Gold und Silber setzt, verwohlfeilert sie das unentbehrliche Instrument des buergerlichen Verkehrs, das allgemeine Tauschmittel, und erlaubt das Gold und Silber nach aussen wirken zu lassen. Diese Massregel ist schliesslich notwendig, um die Interessen der konservativen Bourgeois an die Regierung festzuschmieden.."
(No. 10. A State Bank, whose paper money has legal tender, takes the place of all private banks. This measure makes it possible to regulate all credits in the interests of the whole people and it undermines, thereby, the rule of the great financiers. By gradually putting paper money in place of gold and silver, it cheapens the essential instrument of civil transactions, the general means of exchange and allows gold and silver to be used externally. This measure is finally necessary to tie the interests of the conservative Bourgeois to the government. - J.Z.)
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Today all governments of the world realised the Communistic monetary program. My friend was very astonished, that the old Reichsbank and the "Bank deutscher Laender" au fond were communist institutions or - - more exactly spoken - - concessions to the Communist idea.
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Very faithfully Yours - signed: U. v. Beckerath.
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U. v. Beckerath, … 12. 8. 1952. Your letter of 11.7.52.
Dear Mr. Meulen,
I do acknowledge the general principle you state in the 4 first lines of your chapter: "German treatment of her nationals."
But: Are nations individuals? Are governments individuals??
They are not and all, what is just and right for individuals need not be right and just for nations, governments and such "nominals" as the old Scholastics called mere notions that seemed to have a proper existence outside the brain which believed in them.
Russia (do you mean the people who govern Russia, or the Russian people of 200 millions?) (J.Z.: Did ethnic Russians even constitute an absolute majority in this empire? - J.Z., 26.4.03.) is not so blocked to really believe that Churchill and Truman are dangers to peace. But if there would exist such blockheads, they would be morally obliged to act logically and to try to kill both.
What the real belief of people in the East is, may be seen in Berlin better than in any other place in the world. Day by day, in the last weeks, arrived about 1000 refugees in West-Berlin. If they believed, what the unhappy Russian editors must daily print, then the fugitives would have tried to travel to Siberia and not to West-Germany.
What you say on religion I endorse, insofar as I admit: It's based on ignorance and prejudice. (Religion taken as Catholicism, Protestantism. etc.)
Is today the readiness to die for a religion so great???? History teaches that at all times the greatest part of the people preferred to be converted by force from their religion to the religion of the conquerors, instead of dying for their old religion. Man is not so base-minded as to take Church-Religion very serious.
"My" principle (J. G. Fichte proclaimed it long before me; I cited you the passage from his works.) really opens the door to all sorts of interference by individuals into the affairs, today being considered as affairs of nations. But a nation cannot have affairs. (Panarchism, individual secessionism, individual sovereignty. - J.Z.)
The path of progress lies not only - - as you express it well, in splitting up the nations into smaller and smaller communities, it exists also in admitting what Fichte called "Austritt aus dem Staat" (Individual secession from the State - J.Z.) and what Herbert Spencer demanded in Chapter XIX of the first editions of "Social Statics". (The lasts editions do not longer contain this brilliant chapter. Spencer had got what in German is called: "Angst vor der eignen Kurage".) (Fear of the own courage. - J.Z.)
I recommend reading the chapter of "Austritt aus dem Staat" in Fichte's book "Considerations on the French Revolution". (1794) (The German edition appeared or was written in 1793. - J.Z.)
I found this week the German edition by Dr. Strecker, Verlag Meiner, in Leipzig, 1922. The full title is: "Johann Gottlieb Fichte, Beitrag zur Berichtigung der Urteile des Publikums ueber die Franzoesiche Revolution." The chapter on the "Austritt" begins on page 112 with the words:
"Jeder hat das vollkommene Recht aus dem Staate zu treten, sobald er will, etc."
(Each has the perfect right to secede from the State, as soon as he wants to …" - J.Z.)
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Very faithfully Yours - signed: U. von Beckerath.
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13. 8. 1952. Your letter of 11. 7. 52.
Dear Mr. Meulen,
Payments to USA. What you say of Martians is right. But the position of the USA is very different. It may be that the USA (the USA? - J.Z.) do not want one English product. But, certainly, other people want these products. Therefore, Verrechnungswechsel and similar instruments cannot be worthless for the USA, as long as Exchanges exist in the world or similar institutions where Verrechnungswechsel can be sold.
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With much pleasure I read Zander's letter. (For a long time I owe Zander a letter; as soon as I am restored he gets one.)
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Inflation and rising prices. The expression "relation to gold", in commercial language (English, German, French and, certainly other languages, probably in all languages) does not simply mean that some quantity of a currency may be sufficient to buy a gram of gold. If that would be the meaning, then the German Mark, during the last days of inflation, when trillion Marks became a unit of calculation, still retained a "relation to gold". He, who possessed enough paper marks, say 100 000 000 000 000, could for that money buy a golden ring for wedding purposes. But would anybody derive from that fact that the German paper money still retained a relation to gold??????????
Your notes will always buy a certain quantity of gold at the bullion market and may that quantity be ever so small. But an average English merchant will then say: "How small is that quantity! These notes lost their original relation to gold."
My notes possess such a relation. On the notes is printed:
"This note is accepted at all shops marked by its posters, at its nominal value of (say 5 grams) fine gold."
These shops deliver the same quantity of goods, of the same quality
a.) to the man who pays with an ingot (say, in the shape of a medal - a coin - -) of 5 grams gold,
b.) to the man who pays with this note.
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I do not say that gold is a very good measure of value. It is the relatively best, or expressed in other words, it is the least monetary evil. Until now nobody found a better measure of value.
I hope that one day a better one will be found and, therefore, I demand liberty in choosing the measure of value. If a better measure of value is found, liberty of choosing the best measure will at once bring the new measure of value to general acknowledgement.
I never demanded that people should be entitled to exchange notes for gold at a fixed price.
(Or at a "price" in gold, under gold-value reckoning. Prices, wages, etc. are merely to be expressed but not payable in gold-weight-units but in self-issued, or, e.g., shop-association-issued notes, also denominated in these gold-weight-units. And on a free gold market these notes were to be measured in gold weight units, not in paper units. Meulen never seemed to have comprehended the difference, since he stuck with his misled and misleading terminology. - J.Z., 27.5.03.)
Balance of trade, hoarding, etc. cannot influence the value relation of gold to my notes, as long as shops accept gold and paper in the relation pointed out above.
Acceptance at a fixed relation and exchange at a fixed relation is a great, fundamental, theoretical and practical difference. If at the shops the notes are accepted as above, the consequence (commercial consequence) will be, that the exchange relation at the bullion market does not differ widely from the acceptance relation. But the acceptance relation is always the primary one.
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Very faithfully Yours - signed: U. v. Beckerath.
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14. 8. 1952. Your letter of 10. cr.
Dear Mr. Meulen,
7 hours after having posted my last letters to you (at 1 o'clock this morning) I received your letter of 10.8.
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Your manuscript "Wages and Profit" I enclose here with some remarks.
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Dismantling. Certainly, the dismantling had its cause, as all things in the world have it. But remember:
1.) When in the year 1865 the American Civil War was finished nobody in the USA demanded a dismantling of the factories etc. in the South. On the contrary: financial aid was granted to the South on a large scale. And yet the hate between North and South was so great as ever between Nations. But reason at that time was strong enough to allow a victory for the ideas of a real and sincere peace.
2.) The war of 1847 between the 7 Swiss cantons Luzern, Schwyz, Ur, Unterwalden, Zug, Freiburg, and Wallis, with the rest of Switzerland, ended simply by a restoration of the status quo. And yet it was a religious war; the mutual hatred was great. But reason, at last, won.
3.)When in the year 1871 the Germans (the Germans? - J.Z.) occupied Alsace-Lorraine and the French regained it in the year 1918, nobody - - neither in Germany nor in France - - conceived the idea to destroy the factories of Alsace-Lorraine, though both feared much the new competition by these factories. Reason won.
I do not contend that the Nazis, if they would have won the war, would have proceeded more reasonably than their enemies. (Let me repeat: I am an old Internationalist - - and a member of the République Supranationale. The last war was for me a civil war.)
But, certainly, reason in the 20th century does not longer possess the same power that it possessed in the 19th century.
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I wrote to you several times, that the Allies (governments and subjects) underestimate the "human factor" given at the present political situation. The hate, aroused by the dismantlings, is such a human factor.
Imagine a Duke of Wellington would have had the same influence in the year 1945 that he had in the year 1815. Would there have been any dismantling in Germany, Austria, etc.? Certainly not! The Duke would have said: These German ammunition factories and similar factories will now work for us. Probably they will hardly work, but now they are our factories.
(Remember the proceeding of Wellington in Spain, in Portugal, in Flanders. All factories of these countries had to work for him. He also paid prices never paid before and got the money to pay these prices by imposing war taxes upon the occupied countries. He paid also very high prices to peasants that brought victuals to his camps. He never prescribed prices. Peasants and workers of the occupied countries were always on the side of Wellington, many manufacturers, too.)
If the German workers in the year 1945 would have got high pay and sufficiently victuals (both of which England could have provided),
(J.Z.: Could England really have afforded to keep the German armament industry in full swing and could the German economy have afforded keeping as many workers our of peaceful production for even more years? - J.Z., 26.4.03.)
the German workers would not have cared much for whom they worked. The Allies would now be in the possession of the most powerful plant to produce war material, simply by applying to their own reason. Any Negro King would have possessed the here wanted quantity of reason. The dismantlings - - by creating so much unemployment - - created consequently a mentality which very probably will produce unexpected situations in the next war. The degree of hate, prevailing at that time in England, America, France etc. explains the dismantlings, but it does not excuse them from standpoint of a politician not quite ignorant in political matters.
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2.
Andrews. I am very glad that we agree in so many points in judging the theoretical, the practical and the political value of Andrews' ideas. I consider him and Warren - - I regret that I had no opportunity to read Warren - - I rely on Andrews - - as the pioneer of the "shop foundation idea", that is: replacing the old and pernicious idea of "covering" paper money by a gold treasure of the issuer, by the only tight idea: covering paper money by the goods
ready for sale in the shops - - or the services ready for sale at the railways and by similar possibilities.
If a revolution breaks out, then this method is the only possible one to provide at once - - within an hour - - wage payments without the danger of inflation. (While avoiding the dangers of a deflation! - J.Z., 26.4.03.)
One day revolutionaries will acknowledge this advantage of the redemption system of Andrews.
(Until now they do not. Since in the year 1904 - - or so - - Jouhaux asked: how will wages etc. be paid the day after the social revolution? - nobody (except Ulrich von Beckerath, 1882-1969) was really interested in answering this question, certainly one of the most important ever put.)
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Robert Owen's writings are not obtainable in Berlin. Perhaps he proposed the "shop foundation" before Andrews did. You know that Robert Owen created an exchange bank whose notes were not redeemed in precious metal but in commodities of a shop. Robert Owen, too, tried to use labour as a measure of value.
(Jevons - - and before him Adam Smith - - explained the reason why spent labour can never constitute value. Cfr. Adam Smith, chapter V, first two breaks.)
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I agree with you when you say: "… the dependence of the producer on the lender must become progressively less, provided that freedom is allowed in creating the instrument of lending."
I beg to add:
The producer should have freedom to issue himself these instruments, if he finds no lender; he should also have the liberty to associate with others - - e.g. other producers - - to organise a lending institution - - bank or how it may be called. But the producer must always take into consideration, that the public is free, too, in accepting (or refusing! - J.Z.) these instruments.
Labour notes. Andrews provided only for buyers. He did not provide for debtors. If a man owes 100 quintals of corn in value, it seems hardly sufficient for this man to sign 100 labour notes and give them to his creditor.
(Andrews, No. 71: He has only to take his pen from his pocket and make it at will! The matter is not as simple, especially if the debtor's profession is - - say - - the gilding of church steeples.)
Your objection (morality!) seems well founded.
My proposition would be: The debtor sells his own notes to a banker or a shopkeeper or an association of shopkeepers and gets, as means of payment, the notes of the bank or of the shop or of the shop-association. The discount he pays is the premium for the danger of immorality and the other commercial risks involved here, which I need not explain in detail. In practice the banker would also be running a labour exchange.
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Self-indulgence. Do not be unjust against yourself. I think the real cause was the heat. (For me that warm weather is what I wanted for months.)
-------------------------- Very faithfully Yours - signed: U. v. Beckerath.
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15. 8. 1952
"Wages and Profit". An article written by Mr. Meulen. (Not in my possession. - J.Z., 17.4.03.)
1.) Prices in England - - counted in gold - - are about the same as in the year 1913.
2.) Economic conditions in the USA prove since decades (many decades) that an increase of wages need not necessarily increase the price level.
3.) "exceeded the demand". Very simple: Offer was free, demand was not free. Demand was permitted only insofar as the man who demanded was able to offer "exclusive currency" (Greene's expression.) That kind of currency was often was not obtainable.
4.) No - - he likes a price as high as possible.
5.) Some say: The well known experiences in insurance business may be generalised. If competition surpasses a certain degree, competition increases the price level.
6.) Very true!
7.) There are now cases where the employer's profit is about 1/20 of the wages he pays. In such cases the employer is not free to cede all demands of the workers to increase the wages. My Impression from reports of German joint stock companies is, that in the average the employer's profit as about 1/10 of the wages he pays. That's a situation
quite different from the situation, say, in 1900. And yet wages are from time to time increased. I think the money is not got from the employer's profit. But, then, from what?? I don't know.
8.) That's against all views of experts, but experts here are wrong and Mr. Meulen is right.
9.) of greatest practical and theoretical importance.
10.) here some words are missing (or a whole page??).
11.) In most countries the frequent devaluations bring quickly down the purchasing power of wage increases won by strikes. The devaluation and, sometimes, the inflation, is the new weapon of employers. The workers stand via-à-vis this new weapon as the Indians, when discovered by the Europeans, stood before their canons. The poor Indians did not conceive them.
12.) If the workers would hire the factories and organise themselves as cooperatives, the situation would be fundamentally changed.
13.) Only cooperatives on the old Italian model (I wrote sometimes about this matter) can solve the question.
14.) The modern form would be the cooperative.
15.) Very good! Remember how Bata - - the Czech Shoe-King - - dissolved his factories into cooperatives. That opened quite new possibilities for able workers.
16.) These times are over, for ever.
17.) The modern form is: The machine factory grants the credit and refinances itself with the help of banks created in most cases by the factories themselves. The development of this form seems to be the best form, because it avoids note issuing. If note issuing surpasses an amount of about one month's production of the country, the notes decrease in value. If there is no forced currency, the notes get a discount and a general distrust against note issuing banks arises, even if they are holy men, as far as their honesty is concerned.
18.) Very good!
19.) Important, right and worthwhile to be investigated.
20.) Here lies one of the rubs. Bth.
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25. 8. 1952. Your letter of 19. 8. 52, received 23. 8. 52.
Dear Mr. Meulen,
though some of your former letters are not yet answered, I will answer now your letter of 25. 8. 52. If I do not perform it today it must, probably be long delayed.
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You know that I am a member of the "Verband der Erwerbslosen". (Association of Unemployed. - J.Z.) I am not an "active" member and the reason is this:
One day the Verband invited me to deliver a lecture on my views of providing the 300 000 unemployed in West-Berlin with employment. I did and pointed out:
One of the most important possibilities to create fresh employment would be the reconstruction of Berlin. It would give employment to all 300 000 for at least 15 years and probably more. But building is (practically) impossible without credit. Credit is impossible without a standard of value which creditors believe to be stable. Today creditors trust only in gold, whether this view is right or wrong. Therefore, Berlin must create loans and other possibilities of credit based on gold.
Remember - - I said - - that inmidst (in the middle - J.Z.) of the inflation, in July 1923, in Germany was passed a law: "Gesetz ueber wertbestaendige Hypotheken" (Law on value-preserved mortgages - J.Z.), by which gold-credits were permitted. The exchange values of gold at London and at Berlin served at a basis. All payments of creditors and, later, of debtors were in paper. A similar system must now be introduced. But this is not yet sufficient. Gold coins must circulate, not half legally as now In Paris, but fully legally. It must be permitted for private medal manufactures to manufacture gold coins, of course, stamped with the address the manufacturer on the coin, as on old English tradesmen's tokens.
The new law, which permits private coinage in Berlin, should be created by a referendum. (Article 49 of the Berlin constitution provides for this possibility.) (J.Z.: Alas, it made this dependent upon a law on this subject, to be passed first and the politicians managed to delay the passage of this law for many years, perhaps have done so even until today. - J.Z., 27.4.03.)
If that is realized then all the world would know, that gold credits are not only based on laws but also on Berlin's public opinion. The foreigners, who now bring their capital for its safety to Switzerland, Canada, Uruguay and Tangier, will then bring it to Berlin.
Moreover, all capital providing employment should be free of taxes in Berlin, also the dividends and interest of such capital.
Remember - - I said - - that a considerable part of Berlin was built in the years from 1923 to 1930 with the help of the said law of July 1923 on "wertbestaendige Hypotheken".
Some listeners agreed completely with me and demanded a resolution by which the Verband der Erwerslosen accepted this program and advocated it in public meetings. But others - - among them the founder of the Verband - - protested and declined gold in every form, as a measure of value and a forteriori as a means of payment, even though (as I had proposed) creditors should not be entitled to demand gold coins. The former remained in the minority. They came to me and invited me to form new association which included the heard gold program into its rules. I think I will do it and hope to report to you that I did, before 1953.
The others, meanwhile, held many public meetings, without any economic program and only demanding an organisation of all unemployed of Berlin. There are now more than 3,000 subscribed members.
The Senator for labour, Fleischmann, was much terrified by the new movement. A week or he provided work for all members of the managing committee, one an invalid, who got his hand mutilated in the war, was invited to work in the ruins "Enttruemmerung" (cleaning rubble from the ruins), and such things. It was an artful move, for now this association, in practice, no longer had a managing committee.
On the other hand, the Senator had directed the attention of the unemployed to this association. The Senator did more. He warned the public against cooperating with the association. (Tagesspiegel of 24. 8. 52.) The effect will be
2.
that all the unemployed, who did not yet know of the existence of this association, now know it. The leader, Mr. David, is an old political fighting cock and I think he will make best of it. I only wished that he had a good program. He has not.
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Professor Whitehead. I share your standpoint. Letters of such a prominent and sincerely truth-seeking man as Bertrand Russell should be answered. Also you are very right: personal discussion invariably takes more time than written discussion.
(J.Z.: Always? If e.g. B. & M. could have personally met, every day, for a few weeks or even months, would their correspondence then have extended, largely fruitlessly, as far as convincing the other, over so many years? Or would they have achieved a larger degree of agreement much sooner? - J.Z., 27.4.03.)
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Choosing representatives by lot. (Athenian system.) For two reasons I am glad that you were not born at Athens 2300 years ago:
A.) I would not have the pleasure to discuss this matter with you and - - that I hope firmly - - to convince you that the Athenian system (with some slight alterations) is perfectly applicable to Berlin, and
B.) You would have been killed at Athens for political heresy.
Modern critics are convinced that the true reason for which Socrates had to drink the poison was a political one. Socrates - - as may be concluded from Plato's writings - - advocated a rather aristocratic organisation of Athens. You, certainly, would have been accused together with Socrates, though not for aristocratic propaganda, but for favouring the party system, which was abolished, by the lot-system, to the greatest satisfaction of those, who had before them the example of party systems in other Greek States.
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Gold coins. Thank you very much for the most interesting table you copied for me. The economic and political wisdom of the French, stressed by a better connoisseur than I am, that is, by Jevons, is clearly to be seen from the table.
That gold coins are always are quoted, at Paris, over the market price for bars, I find also the reports of the "Neue Zuericher Zeitung" - (an excellent paper) which I buy from time to times, and which reports many details from the Paris Exchange. But the difference does not reach 50% of the bar price, except in the case of "Napoléons", before the subscription of the new Pinay loan was closed. You know that the "Napoléon" is the value basis of this loan. (Interest is not protected by the gold clause. In the first year about 7/8 of the money provided for the service of the loan is for interest, as found out very easily by my interest tables. But the public does not reckon.) (Or calculate in this way. - J.Z.)
You are quite right in underlining the possibility of a change in the market price of gold in France by political causes. But in general political causes in our time will raise the price of gold - - to the great pleasure of the hoarders. Experience in our life-time proved that the purchasing power of gold is much less altered by political causes than is that of paper money. We both know that this experience has been made as long as paper money existed.
You say, that the quantity of gold used in an exchange system is a measure of the mutual trust existing between the traders in that system.
I say: the quantity depends essentially on the right of creditors to demand gold coins and this factor dominates much more than the trust factor. I remember the cases where in England, for the time of a crisis, the Bank of England was freed from the obligation to redeem its notes. Certainly, this measure - - though wise and necessary - - did not increase the mutual trust (the word taken in the sense of your letter) but it diminished at once the demand for gold.
3.
You say, that I would make the value of my notes depend on the price of gold. You do not consider that if prices in shops are expressed in gold (as I propose) all is quite changed. Then it may happen, that the price of gold, expressed in paper money, is increased tenfold within one day. What does that interest the man, who possesses
one of my (excellent - - yes!!) notes, say: nominal value 5 grams fine gold, if the goods in his shop also are priced in grams of fine gold????
I reported you, in former letters, that we had such things in Berlin in the years 1922 and 1923.
The forerunner of this system was the concern Meinl in the Leipziger Strasse. (I gave details in former letters.) All commodities, coffee, tea, etc. were priced in gold-marks. He - - who possessed Meinl Certificates, whose nominal value was also expressed in gold-marks, did not care for the paper-money price of gold-marks. Only those, who paid in Reichsbanknotes, had to pay more, if the pride of gold, expressed in paper, rose.
I am certain that in the years 1922 and 1923 a possessor of Meinl Certificates for 20 Meinl-Gold-marks could buy 8 grams of gold, that is, an old gold coin of 20 mark. (Perhaps with a very slight discount.)
I never protested against the possibility of the paper price of gold varying at pleasure. But if the old German right of the people to refuse paper money will be restored (Bismarck's Banking Act of 1875 expressly stated the old right in article two), then the people will accept only one kind of paper means of payments: that is those means of payments which are constructed on the basis of "my" principle, which for Germany is an old matter.
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Free gold market. I will in one of my following letters state examples where, say, the Journal of the International Monetary fund, used the expression "free gold market" exactly in the sense of "free bullion Market".
Tradesman's tokens. Certainly, the tradesman was not forbidden to redeem the tokens in cash if he liked to do so. But I read that there was no obligation to do so for him.
(J.Z.: In the text of many of the coins was expressed: XYZ will pay 1 penny (etc.). Many of the coins were issued, though, precisely because small change was in short supply and thus this redemption promise was contradictory to this experience. The public probably accepted them as small "option notes", to be replaced in ordinary coins of the realm once they became available in sufficient quantities. In the meantime, they had "shop-foundation" with their issuers and others who had dealings with him. - J.Z., 27.4.03.)
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Metaphysics. Kant's definition differs widely from yours. I return to the matter in one of my following letters.
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Hitler's election. Before the "Machtergreifung" in January 1933 only National Socialists voted for Hitler. The other parties voted for their own candidates. All the greater was the treachery of Hindenburg, who appointed Hitler als Reichskanzler though the majority of voters was against Hitler.
(J.Z.: Are there not similar "democratic" practices in other countries, granting power to the largest party? - Often they have only to form a nominal new coalition, giving them a nominal majority, but with the small coalition members having little say in most matters and being fed or rewarded by being given some positions. - I do regret that no systematic research was done to find out to what extent the Nazis forged the last "free" election result. There was anecdotal evidence of them changing whole election urns with their own ones, prepared for this purpose. By now most of the witnesses are dead. - J.Z., 27. 4. 03.)
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Spirit of Berlin. By the use of machines for clearing the ruined blocks, the quantity of employment would not have been diminished. But the time of reconstruction, now to be estimated at 50 years, would be reduced to 15 years by the application of suitable machines.
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Spencer's "Social Statics". Your communication confirms that Spencer, when he was old, had repealed his splendid chapter XIX in earlier editions. I possessed (burnt) one of the latest editions, printed in the USA, where the chapter "The Right to Ignore the State" was suppressed, and an earlier edition (I thought it was the first) where this splendid and long chapter was contained.
"The Right to Ignore the State" was a caption. What concerns Spencer's sentence: "In a thoroughly vicious community (did such communities ever exist??????????), its admission would be productive of anarchy", old Tucker would have said: "Then let us have that anarchy!!"
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4.
Wages and Profits. I will answer in a following letter. This letter I hope to post still today and at 1 1/4 o'clock at night the letter box will be cleared.(Now it is 30 minutes past 24 o'clock.)
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Dismantling. Certainly, the proceedings of the Allies may be explained by psychologists and even by economists of average type, but reason was not contained in these measures.
You are right, that a ruinous money indemnity would have been possible. But a ruinous money indemnity (probably imposed on antifascists, too!!!) has also nothing to do with reason.
In all I agree, that measures of still greater folly would have been possible, but I do not see inhowfar (to what extent - J.Z.) that is an excuse.
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National News-Letter. My next latter shall contain an answer.
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I congratulate you for your stomach. Obviously it cannot stand excessive heat. Now you know it and will, in the next 30 summers, accommodate yourself to this pardonable peculiarity of your stomach.
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Very faithfully yours - signed: U. v. Beckerath.
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26. 8. 1952. Your letter of 19. cr.
Dear Mr. Meulen,
Metaphysics. In general Kant agrees with David Hume, who in his "Enquiry concerning Human Understanding explains what metaphysics is, where its natural limits are, etc. In my edition (in English, but printed in Germany, published by Felix Meiner, Leipzig, 1913) the relevant considerations are to be found on Page 5, beginning with the words "We may begin with observing ...", at page 62, beginning with the words "One may safely, however, affirm …", and page 176 (the last of the book ). Hume says, that an investigation into the connection between cause and effect is an investigation in the field of metaphysics, and a very necessary investigation. Kant confesses, in his "Prolegomena zu einer jeden kuenftigen Metaphysik, die als Wissenschaft wird auftreten koennen" (Introduction to any Future Metaphisics which Can Appear as a Science - J.Z.), that Hume, by his investigations, opened a new era of philosophy, and that he (Kant) was induced by Hume's investigations to create his "Kritische Philosophie". Kant enlarged Hume's original plans. Example: We are all convinced, that the Pythagorean theorem is valid on the most distant star; we are also convinced, that the laws of gravity are valid there. Experience cannot be the basis for our certainty, for experience is here impossible and we know well that it will be forever impossible. What does now entitles us to be so sure???? This question is of a metaphysical nature. Schopenhauer tried to get further conclusions from Kant's and Hume's results, and did so, I think, with greatest success.
I do hope to be a "metaphysician" in the sense of Hume, Kant and Schopenhauer.
Gold coins. I forgot to add, that - - as I remarked in previous letters - - for short intervals paper money may possess a more stable purchasing power than gold coins, but that for long intervals, certainly, the contrary is the case. You will not contest that here experience of 2 1/2 centuries is on my side.
Wages and Profits.
(5) Competition in the insurance business. There are two methods of competition in the insurance business, in England as well as in Germany:
a.) offering the public a premium and conditions as favourable as possible,
b.) offering the agents a commission as high as possible.
The latter method is used if there are numerous competitors. If it is used, then agents induce many people to take insurance contracts with high premiums, though they could insure more advantageously. But what does the public know about insurance premiums? The market in insurance premiums must be considered as imperfect, the word taken in the sense of modern economists.
(J.Z.: As long as the general public, seeking some security through insurance, remains as uninformed on insurance options on offer. Now, on the Internet and by some consumer information services, fair comparisons between various insurance contracts offered, may already be available, so that consumers can arrive at sufficiently informed decisions in this sphere and would be much less likely talked into one contract that does offer better terms to the salesman than to them. Insurance salesmen and investment advisors, under present conditions, are also unlikely to consider the inflation risk in their proposals. - J.Z., 28.4.03.)
Exceptions are premiums for transport insurance, especially marine insurance. Here is a real market, held usually at the Exchange, so at Hamburg.
When industrial insurance was still in the initial stages, sometimes the following happened: A new society was founded whose tariffs were the highest and the most unfavourable for the public, among all the existing societies. But the commission to its agents was also the highest. Such a society had good chances.
What is observed in the insurance business, happened and still happens in the usual commodity business. In every branch, where agents are between the producer and the store or the consumer, that commodity has the best chance which bears the highest commissions.
(J.Z.: When consumers are insufficiently informed on what the general market has to offer, then shops, proclaimed as "Duty-free Shop", give consumers the impression that they would charge less than other shops. Thus they do often get away with actually charging more for some of their luxury goods or novelty items than do other shops, although the other shops had to pay custom duties. Skilful but misleading advertising can, to some extent, achieve the same. Many things and services are sold, to insufficiently informed people, on image rather than reality. To that extent a sufficiently informed or publicised market is there still excluded or not sufficiently realized. Comparison shopping services on the Internet may, gradually, improve that situation. When the struggle to achieve sales and jobs, both payable in "exclusive currency", has been abolished by full monetary freedom, and thus the sale of goods, services and labour has become much easier, then the all-over sales costs, including much advertising costs, will tend to become greatly reduced. Presently, for instance, "paid leave" and various social insurance services and fringe benefits, including contributions, seemingly shared or exclusively born by employers, are still "sold" to the employees as if they were additional grants on top of their wages or salaries and not, economically, parts of them, which, otherwise, would be paid to them in correspondingly higher wages and salaries. To that extent they can be politically and ideologically "sold" overly expensive services or even disservices of governments, as they are e.g. with social insurance contributions and with general taxes by "Welfare-States". Full competition for all governmental or regulated services will only begin with panarchies. As long as people remain sheep, they will be shorn. - J.Z., 28.4.03.)
2.
Here are great possibilities for diminishing the general price level, some say: for about 50%, without reducing wages, incomes of entrepreneurs and other costs of production.
Public insurance (not social insurance but insurance against the dangers of fire, burglary, etc.), in Germany
an old institution, is generally much cheaper than private insurance. In some districts the insurance of buildings against fire damages is the monopoly of public institutions. These institutions are without competition in their economic sector.
(Some districts of Berlin still are subject to such a monopoly, founded at the time when Berlin was a town of 100 000 inhabitants or so. The house owners are glad to be insured by this institution. It is well managed and its premiums are, perhaps, the cheapest in the world for similar objects. It would not be impossible for private insurance to get the same results, but its system must then be wholly changed.)
(15) Bata and his shoe factories. When Bata created nearly independent cooperatives of his workers, his intention was to use the superiority of the cooperative principle and yet retain to the superior of the private entrepreneur principle in the field of selling and providing raw material.
From Zola'' s novel "Germinal" I learnt, when I was a young man, that the system, later accepted by Bata, was in full use at the French mines in the Pas de Calais (and, very probable, in other mines.). I think it is still being used, though unknown by university economists.
May be that Bata did not introduce his old system at Tilburn. He is now very old - - I think - - and one must be young to possess the courage for such reforms as those created at Zlin.
(J.Z.: I believe that at Tilburn he may have run into trade union interference. - J.Z., 28..4.03.)
I did not-hear that fear of communism was Bata's motive. But - - though Bata always contended that his motives were only those of a businessman - - the many welfare institutions he created prove that here, again, Vauvenargue's word is true: "Les grandes pensées viennent du coeur." (The great ideas come through the heart. - J.Z.)
(16) I have not before me the text of your manuscript: I took no copy.
We agree that bank competition should be great and not restrained by laws. If I remember well enough, the question raised by you had been:
Why not issue banknotes to borrowers to enable them to buy machines and accept as security a promise (secured, perhaps, by the bought machines), to pay the loan back, say, in 60 monthly instalments?
(J.Z.: I think one can think reasonable about such loans only if one lends one's own capital, e.g., accumulated in gold or silver coins, or that of others, clearly entrusted for this purpose, under sound timing conditions. The capital savings so used might also be accumulated in bank notes that were issued for other purposes and get their value maintained by other transactions. To thoughtlessly assume that one could do the same with freshly issued notes, intended as currency and used for such capital credit purposes, is a very big mistake, only exceeded by the one Lysander Spooner committed when he imagined that every capital value could be safely circulated in form of currency notes. Obviously, they would not have enough "shop-foundation.- J.Z., 28.4.03.)
I say: Banknotes and similar notes must at every hour be convertible into goods of daily use or such services. That is not possible when the issued banknotes are issued in the way of long term loans (loans for more than about 3 months). But our correspondence concerning this matter has been going on for more than 20 years.
(J.Z.: Perhaps Meulen had here conditions in mind where the economy is so starved for currency, that it is prepared to accept almost any currency for its daily needed transactions, no matter how badly this currency is itself founded and whether it is entirely unrelated to the daily transactions, i.e., when the existing shop-foundation etc. is not competitively utilised and thus such ill founded currency is not sufficiently exposed to competition, publicity, discounting and refusals. That may be one of the reasons why e.g. "land-banks" and other "asset-currency" attempts got away with their mistakes for a while. When all monetary freedom opportunities are known and utilised, then the good monies produced under it, will drive out such bad moneys, since then the latter have no legal tender and are no longer the only customary currency or the only known and used alternative to it. - J.Z., 28.4.03.)
17.) I reread page 234 of "Free Banking". You described the evil well. We just differ in our opinions on how to cure it.
Do you not over-estimate the economic role of interest?
(J.Z.: While over-estimating its presumed burden, most do at the same time underestimate the sound economic role that interest does play, when it is not monopoly-interest, regulated or imposed. - J.Z., 28.4.03.)
If the prices of a product ready for sale is split up into its element: wages, income of the entrepreneur, commissions to sales agents, interest, etc., then interest is (usually - J.Z.) a quite trifling percentage. Please analyse the last published records of joint stock companies. In Germany this percent, during the last year, was, in the average, certainly less than 2 %, though the rate of interest, charged by banks, was 10 % p. a. or so. Cause: The role of banks is by far no longer what it has been. The total amount of their credit is relatively small.
3.
(1) You are right: the published or estimated figures of a country's total production are very rough. In general - - that my opinion - - it is considerably underestimated.
(J.Z.: The official robbers are not always told the truth. Few records are kept and reported on black market or underground economy actions. - J.Z., 28.4.03.)
If you make extensive alterations in your factory layout, you can certainly increase the production. But by means of modern statistics, very probably, only a part or a small part of this kind of production will be detected.
(2) I agree with you, that a modern banker of the usual type regulates his advances by his deposits and his cash. I also agree with you that he never considers the country's total production. But I say: It would be best - - if possible - - that the needed credit would be granted by that man, who is in possession of the goods needed by consumers.
(Example: A machine store should grant the credit to the employer, who wants the machine.) The means of payment of the employer, who bought a machine of the value of 10 000 L, could be 60 Verrechnungswechsel, the first applicable one month after taking over the machine, the second two months, the third three months afterwards,
etc. Every Verrechnungswechsel would be of the nominal value of 193 L. That would provide an interest of 1/2 %
monthly to the machine store, for the amount of credit not yet repaid. The amount of 193 L might be split up into 19 Verrechnungewechsel of 10 L each and one of 3 L.
If then and there (to promote this kind of business) an opportunity for banks would still exist, then it would consist in discounting the Verrechnungswechsel of the store. That's a procedure differing from yours. Modern development seems to be in the direction of my plan. (It's not wholly mine.)
To you the quantity of saved capital is of very great importance.
I say: The quantity of goods, ready for sale, but not for cash sale, is the real source of credit.
(J.Z.: That was unclear to upon first reading. He did mean, I believe, the quantity of goods and services that their providers are prepared to offer on medium and long terms, for their full payment. For their other goods and services they want cash or currency or immediately transferable accounts. - J.Z., 28.4.03.)
You might reply: The quantity of such goods is a part of the saved capital. My opinion is: you would be in the right.
Law that in the average the quantity of circulating money does not much differ from a month's production.
It's a statistical rule, an average, but no economical law. But that here no chance is at work and that the fraction 1/12th of a year's production is pretty well founded, may be seen if the country's need for cash is estimated by the method of Petty.
Free Gold market. You were so kind to send to me the "Economic Digest: of June 1952. On page 247 you marked a very interesting article: "Free Market in Gold"! The article begins with the words:
"The price of gold in 1951 on the free market in Paris was around the 550 francs to the gramme mark over most of the year."
Obviously, here is meant the free bullion market, and the words "Free market in gold" are not used in the sense of Kitson.
You sent also the "Economic Digest" of December 1950. On page 547 you marked an article: "How gold reaches the black market". There is said, inter alia: "In this way it (the gold) ultimately finds its way on the various free markets and thence into private gold hoards."
Here, too Kitson's terminology is not used.
Naomi Mitchison. In one of my following letters write on her and on Stephen King-Hall's article.
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Very faithfully Yours signed: U. v. Beckerath.
____________________________________________________________________________________________
2. 9. 1952. Your letter of 30. 8. 52., received today.
Dear Mr. Meulen,
price of gold. I beg to start from a fact, and that fact is that in 1922 and 1923 the concern Meinl in Berlin issued notes (tickets, certificates, the name is here not so important, the German "Gutschein" {goods warrant - J.Z.] seems to be the best) whose nominal value was expressed in Gold Marks. It was agreed that 1 Gold Mark was 1/4,2 of one Gold Dollar. Really, in all the years between 1919 - 1932 that relation held good at the Exchange. It was primarily derived from the old law on coining, which prescribed that the mint should coin 2790 mark from 1 kilogram of fine gold.
The weight of a gold coin of 20 Marks (1/10 copper) was 7.965 grams, and the weight of a gold coin of 20 dollars (1/10 copper) was 33.436 g. The relation 1: 4.20 is not mathematically = 33.436 : 7.965 (4.1978656)
but exactly enough for commercial purposes.
A note of a National Bank of the USA of $ 20 was considered as equivalent with to a coin of US $ 20.
Now Meinl said: I accept one of my own notes, nominal value 1 Gold Mark, so as if I would accept a genuine gold mark. If one asked for further explanation at the shop in the Leipziger Strasse, the chief said: Bring us an American note of the nominal value of $ 20 and the other day bring us 84 of our own notes of 1 Gold Mark
each, and you will see, that in both cases you will get the same quantity of goods, say coffee, tea, etc. The quality will also be the same. Further: look at our shelves! Every commodity is priced quite distinctly by its gold price, say, a pound of coffee = 4 Gold Mark.
Intentionally, I do not mention here the case when a customer did not pay in Meinl-Goldmark-notes but paid in Reichsbank-notes. But I explained this case in several letters. If I do leave any detail in the dark, please tell me, and I hope to give you fuller information.
Now consider the bullion market. The aspect of the bullion market is quite different, if gold bullion is bought
1.) by Reichsbank-notes, or
2.) by Dollar-notes, or
3.) by Meinl-notes.
Expressed in Dollar notes the price of gold bullion at Berlin was practically the same in all the years from 1919 to 1931 or 1932 - - that means, the year when Dollar notes were devalued.
I confess that I do not know what the price has been if the gold bullion was paid for in Meinl notes. But I am convinced that at the bullion market Meinl notes were always taken at their nominal value, and that there has always been a stable relation between Meinl notes and Dollar notes.
Now you put the question: "What is the use of marking a note 'Nominal value 5 grammes', if 5 grammes of gold cannot be bought with it?
Certainly, it is of a restricted use. But if the difference is 1/1000, as it has been 1913, it is not worth while to consider the difference. But if the difference is 50 %, it is worth while.
Such a difference of 50 % must have a cause. What can the cause be? Practically, there can exist only one cause, that is: Meinl issued more notes than it can accept as means of payment. When the public, with Meinl notes in its hands, stands before empty shelves and cannot use the notes, then, certainly, the notes will get a great discount. In this case the notes would certainly not be accepted at the bullion market, as before, at their nominal value. Perhaps the Meinl notes would then not be accepted at all at the bullion market. But such a case of Meinl making any difficulty in accepting (and fully covering with their goods - J.Z.)
2.
its own notes as a means of payment did not arrive. (In the year 1924 Meinl stopped the issue of Meinl notes, perhaps even earlier - - I forget when, exactly.)
If Meinl would not price its commodities in gold, all would be changed; but as long as Meinl prices its commodities in gold and the shelves in its shop (I assume that there was not just one Meinl shop but a whole chain of them. - J.Z., 28.4.03.) are well provided with commodities, the purchasing power of Meinl notes in Berlin must remain stable, also at the bullion market, with differences admitted, such as observed in 1913 at the bullion market of Berlin.
Now' you may say: Well - - but if Meinl doubles all its prices within 24 hours, so that e.g. a pound of coffee would no longer cost 4 gold marks but 8 gold marks and other commodities correspondingly?
I answer: If Meinl would do that in times of peace and undisturbed trade, the public would destroy the shop. The chief himself would be badly beaten. But at times of a siege, blockade and such things, the public, very probably, would accept it.
You see that "my" system (it was used long before I was born) in quite different from yours. An element is introduced, that is not entering at all in your system: that is, the purchasing power of the notes in those shops where the notes must be accepted.
The purchasing power of other means of payment, say, in the case of the inflation years 1922 and 1923 in Berlin, when the Meinl notes were issued, did by no means disturb the Meinl-system.
But my impression is: You think in the first line of the case when the price of gold bullion rises, when expressed in legal tender notes.
I repeat: My system holds good in every case for Meinl notes and - - of course - - for all notes issued upon a similar base. It supposes freedom of issue (and refusal - J.Z.). By legal tender notes and suppression of freedom of issue the system may become impossible. But the legal tender-system itself may become impossible if it is misused as it was in Germany in 1923. (Or at the Assignats time, on which Hawtry, in his excellent "Currency and Credit", gives interesting details.)
I beg you now to enter into the most important detail of my system, that is the relation of gold notes to goods, priced in gold and obtainable in certain shops by using the notes as a means of payment and that all under conditions, as I pointed out in this letter and in previous letters.
You will observe, that my system has nothing to do with trust, the latter word used in the sense in which bankers used it at the time of about 1844. The system does function also when the issuer is considered as a bad debtor. As long as his shelves contain sufficient commodities and his prices are determined by competition (not a fantastic supposition), the public will accept the notes, that means here: the employee accept them, the landlord accepts them, and, very probably, shops in the neighbourhood also accept them.
Whether the issuer paid his wholesale dealer, or is considered was what the Germans call "Fauler Kopp", or bad risk (bad debtor - J.Z.), the possessor of his notes does not care about. Are his shops sufficiently provided and are his prices not dearer than those of his competitors? That's all what interests the public. Here, too, is a wide difference from your system, which demands trust first of all.
The bullion market functions here as a barometer. As long the note issuer's shops are well provided and the prices are determined by competition, the purchasing power of the notes at the bullion market will remain stable. By what cause could this stability be shaken?
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Soviet congress and divine service. No - - the congress of the (anti-Soviet - J.Z.) Russian revolutionaries in Ger-many, old adherents of Kerenski and such people, opened with divine service (the papers reported).
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3.
In Russia Soviets are no revolutionaries but the ruling class.
Social Statics. I regret that Tucker, obviously, did not know the ideas of "Austritt aus dem Staat" (voluntarily giving up citzenship [& subordination to the State! - J.Z., 29.4.03.] though not leaving the country), as pointed out by Fichte, Spencer and a Belgian authors whose name I forgot (P. E. dePuydt - J.Z.), who published in the "Revue Trimestrielle" of Brussels, in July 1860, an article "Panarchie". He was a high official. This article was much praised by Max Nettlau in the monthly "Der Socialist", of Landauer, in 1909. Max Nettlau thought the article to be the beginning of a new science of society. (May be that in a London library the Revue Trimestrielle is still to be found.)
(Shortly before migrating to Australia, in 1959, I visited Brussels, ordered a copy and sent a copy of this to B. - It is now in French, English, German and Italian on www.panarchy.org and in English on my main website. - J.Z., 29.4.03.)
A law concerning voluntarily giving up State citizenship (renouncing State citizenship - J.Z.) may at once be introduced in every legislation. (Better: Into every constitutions. - J.Z.) It requires no change in morality. etc. The system is far superior to that of Tucker, though at last - - by dissolution of the present society (the territorial, centralised, coercive and monopolistic State - J.Z., 29.4.03.) into a system of cooperatives (voluntary communities, or societies or competing or voluntary governments, polyarchies etc., that are only exterritorially autonomous - J.Z., 29.4.03.) the same status of society would be attained.
(See my "On Panarchy" subseries, of which so far 24 volumes are out, on 24 microfiche. See also my two peace books, accessible under www.panarchism.info/ Max Nettlau's article, in English, can be found in the appendix to my main website. The German edition can be found in PEACE PLANS 617, 671 & 736. - J.Z.
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Insurance-competition. I do not contend that free competition is bad because under freedom fools suffer.
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The role of interest. If banks grant loans (in their own notes, issued for that purpose - J.Z.) on long terms, that is a dangerous thing, for reasons that Adam Smith pointed out impressively. (Unless, naturally, they grant them only in 100 % gold covered gold certificates or with correspondingly timed fixed deposits. - J.Z., 29.4.03.)
It is not my, opinion that every manufacturer should be compelled to judge the creditworthiness of prospective purchasers. Remember, that in the whole world car-manufacturers created special banks (credit institutes - J.Z.) that pay the bill of the purchaser and hand over to the manufacturer the discounted amount. (The usual instalment credit or purchase of cars on terms, granted by special finance companies. - J.Z.) The banks also judge the creditworthiness of the car-purchasers. I think that this system can be enlarged and wrote about it in several letters.
There is a difference between these banks and your banks. Your banks hand over notes to the purchaser, even if there exists a time difference between the time for which the bank takes in the credit and the time for which the bank grants the credit. Example: The bank takes in the credit (deposit) and agrees to a notice period of 6 months. That means: The depositor is entitled to get his money back, if he gives notice, in 6 months. That's a bad thing in the case of a money crisis. The bank's debtors are only obliged to pay on long terms. To the bank's creditors is promised that, in the case of notice being given, they shall get back their money within 6 months, or so.
What concerns the interest, I insist that until now economists much overrated its importance.
You write of an economical law, that the quantity of currency is about 1/12th of a year's production. I expressly said that the fraction 1/12 is a statistical rule and a rough rule. I said, too, that a reason for the rule may be derived from Petty's method of estimating a country's need for of currency.
It's an old difference of opinion between us: I say - - there is an upper limit for standardised means of payment in the country. You say: there is no such limit. But philosophy teaches that all things in the world are limited.
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Gold Coast politics. Thank you very much for the clipping from the Telegraph. We agree: "Nobody can learn democratic government except by practising it." But is the government, which the poor Negroes are to practise a democratic one under the given circumstances????? It is very far from that. The same is true for Persia, India and similar countries. Despotism is at least as great as it was under the former rulers. Democracy at the Gold Coast, in Persia, etc. must still be invented. If invented, it would present itself as a system wholly different from systems in England, etc.
4.
But: Is it worthwhile to work out the system? Nobody would print the manuscript. ("Too long - - much too long!!! "That's what editors say, it an author tries to write about themes not yet treated.)
(Unless he publishes on microfiche, on floppy disk, via e-mail or on CD-ROMs! - But these media options could be utilised by they author himself or his friends. - We do no longer have to stick to print on paper or to websites. - On a CD-ROM we could, cooperatively, supply a whole special freedom library. For one person this job would, usually, be too large. Mostly an individual could fill only a fraction of a 650 Mbs CD-ROM with his own writings or his favourite texts by others. - J.Z., 29.4.03.)
The beginning (possible beginning) of a democracy among "savages" was pointed out by Ellis, Polynesian Researches, II, page 457. The here mentioned passage was transformed into a very nice poem by Chamisso, the celebrated German Poet (born French) and from this poem I know the history. The caption of the poem is:
"Ein Gerichtstag auf Huahine". (A Day in Court on Huahine - J.Z.)
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Many thanks for the clippings concerning the legal tender property of the sovereign. A German court would have decided like the Swiss court did. In a sentence of 1923, the Reichsgericht pointed out:
The property of being legal tender cannot be derived only from existing legislation. The economic role must be considered. If a government (said the High Court), misuses the power entrusted to it, to create legal tender money, it is the duty of courts to state such a misuse and to protect the people. You see, that the notion of a monetary revolution must somehow be hidden in the German mind. Some weeks before this Court legalised the monetary revolution, the people executed it.
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The two men, who wrote the articles, take it as self-evident, that legislation must be respected under all circumstances, in whatever it prescribes on the legal tender property of money. They err and the Swiss court was fully in the right.
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I hope to continue this month.
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Very faithfully Yours - signed: U. v. Beckerath.
Rittershausen writes me today, that the University of Cologne offered him a professorship under very honourable terms. (Please do not publish it before he has formally accepted the offer.)
Bth.
Right of creditors to demand gold coins. Yes, I would abolish completely:
1.) the right of every creditor (worker, landlord, etc.) to demand gold coins from a debtor, though the debt is
counted in gold,
2.) the right of note holders to demand gold coins from an issuer.
But I do not consider the note possessor as the creditor of the note issuer, though all economists did. (Abaelard: Si omnes patres sic at ego non sic.)
The relation between note issuer and note bearer is sui generis (of a special kind - J.Z.) and should not be subsumed under other categories.
Bth.
____________________________________________________________________________________________
9. 9. 1952. Your letter of 5. 9. 52., received today.
Dear Mr. Meulen,
gold hoarded in France. If there occur political causes (the word taken in the sense in which we used it in our former letters), all is disturbed, markets, personal relations and sometimes even the climate, which now seems to be the case in Middle Europe and in vast parts of Asia, as a consequence of the devastation from the last war. You seem to suppose (please correct me if I am wrong) that the paper money, which governments prescribe as a measure of value and as legal tender, is the only thing not disturbed and that it has remained as stable as the pound avoir dupois, the second and the yard. I derive that from your expression "the free gold market can be disturbed".
What is disturbed when political causes occur, such as the Korea Panic in the year 1951? Is it the price of gold bullion? No - - the paper money has got a kick!! Why is there increased demand for gold in panics? Did people suddenly become crazy?? On the very contrary: In such panics they remember that gold bullion (especially in form of coins), will remain, in relation to all other goods, except paper money, more stable than any other particular good in relation to the whole of commodities. Everybody knows: If I do now exchange my paper money for gold bullion, I may suffer a loss but if I do not exchange my paper money then my loss will be greater. Gold bullion is the least monetary evil (at present), certainly, paper money is a much greater evil.
I do admit all you may say of the disadvantages of a "flight into gold", but - - and here we differ - - I ascribe the disadvantages to the properties of the present forced currency, and you describe them to the properties of gold bullion.
To express it in other words: I admit the possibility and the disadvantage of that what you call a disturbance of the bullion market, but - - and here we differ - - I contend that at the end of the disturbance the man who has changed his forced currency into gold bullion (especially in the form of coins) is better off.
You say: "I have little doubt that the free market price must have varied considerably in the last 50 years."
I am convinced it varied considerably. But, do you know a commodity whose price varied less? (stamps - - yes.) The word "price" here means the price expressed in paper money with legal tender (forced currency).
Which detail of my opinion (right or wrong) remained unclear?????
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Meinl notes. "My" system (it was in full use before I was born) has nothing to do with any system of any American government, since the USA was established. It is a mere private standard. Let us set aside for a moment the use of Dollar notes in the Meinl shops in the years 1922 & 1923 at Berlin. Consider only the fact that Meinl sold commodities of the same quantity and the same quality
I.) if one paid with 20 Meinl notes of 1 gold mark each or
II.) if one paid with a gold coin of 20 gold marks, 7.965 grams, 9/10 gold, 1/10 copper.
The cover of the Meinl notes were the commodities on the shelves of the shops, visible to every buyer.
Also, it was not so, as you suppose, that on the Meinl notes was printed worth 1 gold mark. Printed on the notes was: Accepted for one gold mark. What the notes then were worth, Meinl left to the discussion by philosophers, economists of modern style and others. The people end merchants simply said: As long as the notes are accepted like gold coins and the shelves are well stacked, so long these gold notes are worth, for us one gold mark and twenty of them are worth a gold coin of 20 gold marks. When we do, nevertheless, prefer Meinl notes as a means
2.
of payment in Meinl shops, it is for this reason The shop may be closed to-morrow, because it offers better money than the government does; then it may happen, that we, with Meinl notes in our pocket, come to its closed doors.
(I know of a few cases where people intentionally paid with gold coins at the Meinl shops. They said: It may be that tomorrow the possession of gold is prohibited under capital punishment [many statists demanded that]. Therefore, I use the gold coin now at Meinl's shop and get a receipt on which is stated: Mr. ABC, whose passport we have seen, today used a 20-mark-coin as means of payment in our shop. In the restaurant of Aschinger, opposite the Friedrichstrasse railway station, a waiter - - in my presence - - refused to accept a gold coin of 20 gold marks and said: I do not know whether the possession is not prohibited. At last he took it for 16 gold marks!!!! (1922.) That is, for the value of 16 gold marks in paper money. Other waiters at Aschinger took no gold coins under any conditions.
Suppose that the Meinl system would have been generally used in Berlin. How great could then have been the difference between 20 Meinl-notes of 1 gold mark each and a gold coin of 20 gold marks?
You suppose as self-evident that a considerable difference could occur and ask me what I would do in this case.
If I were the owner of a shop like Meinl, I would answer: I would simply continue to accept my own notes as equivalent with gold coins. And if some owner of gold coins would come to me, saying: "Listen, shopkeeper, at the bullion market (I read in the morning's papers) a gold coin of 20 marks buys now 40 Meinl-notes - - or your notes - - each of 1 gold mark." I would only reply: And at my shop nothing has changed. If the holders of my notes do not longer trust them, then they may come to this shop. Here they will get the same quantity of goods as yesterday, when the bullion market was not yet disturbed, and in same quality. May they buy and thereby get rid of the notes together with their distrust.
But now I ask you: If many shopkeepers in Berlin would proceed in this way, how long could there be a sensible difference between the notes of my shop and coins?????
My system has, certainly, nothing to do with the British standard, at any moment of British history.
To my great pleasure I read some time ago that in the USA, at the time of the Civil War and many years afterwards, the USA merchants used my system. They priced their commodities in gold dollars.
In times of currency famine, they issued their own notes and then proceeded as I pointed out in the foregoing lines.
The usual considerations on a gold standard do not apply to such a system. The system is not a gold standard in the usual meaning of the word, simply because it is a private system. The word "gold standard", in the usual economics language, means a standard established by the government. The word "gold bullion market payment system" would, perhaps, be a good name.
Your objections against a gold standard are, obviously, directed against a gold standard established by a government. I have nothing to do with such a standard. If the price of gold or of foreign exchange, expressed in domestic forced currency, is kept stable by a crazy law or is changed by the government, that has nothing to do with my system, either. It works, even if all governments in the world become mad, it works also if the governments recover.
You say: "You do not reply to my objection, that if the price of gold doubles, your notes, although marked "Worth 5 grammes of gold", will actually buy only 2 1/2 grammes.
I had hoped, that the explanations in my foregoing letter were an answer. But I repeat:
Not "5 grammes worth of gold" is my mark, but:
"This note is accepted by the shop XYZ (or association of shops) just as if a gold coin (name) would be
accepted."
3.
If in spite of such a text, possessors of cold coins will not exchange their coins for less than (say) 200 nominal gold marks in notes against 100 mark in real coins, they are free to do so. (Or to try to do so. - J.Z.) It may also happen, that this offered ratio, if made widely known, will cause a general distrust in the notes. What can then happen, in the worse case? Nothing else can happen than this: The note holders run hastily to those shops, which are obliged to accept the notes al pari, present them as a means of payment and leave she shops loaded with commodities. They paid for the commodities no more than before. To the shops it's all the same. Their turnover (temporarily - J.Z.) increases, that's all. The distrusted notes disappear, because the shops accepted them as a means of payment. That's the situation caused by the discount of the notes at the money market.
Now the people will, of course, ask: What has been the matter? And then they will answer themselves: It seems, that some speculators tried to get notes cheaply because they hat the intention to buy something in the shops. It seems, too, that their speculation had some success. Those people, who gave two notes of 1 gold mark for only one a real gold mark, may now say: We were real asses! If we hear a second time of a discount of notes at the bullion market we know what that means: Certainly, we will not against give 2 notes of 1 gold mark for a single real gold mark.
-----------------------
You say: "You are actually using a paper standard such as I propose, namely the worth of gold on a particular day in the past."
My system differs wholly from yours.
In your system the banker is obliged to go to the gold market (bullion market) for his customers and sell there the notes given to him by his customers.
In my system everybody, who likes to buy gold bullion, is so kind as to go to the bullion market. Nobody is obliged to do it for him.
What you call "the worth of gold" in your system is not produced by the readiness of shops to accept their own notes (or the notes of their creditors) al pari. It is exclusively produced at the bullion market.
In my system the shops produce the relation of gold coins to shop-issued-notes. The market value may differ for a short time, but after a short time parity must be restored, it the several thousand years old economical laws of the market remain valid. (They will!)
In your objections the market value of the forced currency always plays a role.
In my system it plays no role at all. Adherents of my system will not use the legal tender money, and their refusals will constitute a monetary revolution.
What concerns the gold prices in the past (e.g., the price of corn, expressed in gold coins) these gold prices may vary as they did in the 19th century and earlier. There may occur a very bad harvest, as in 1917 or in 1817. In this case 1 kilo of fine gold will no longer purchase the same quantity of corn as before. That does not prevent gold coins from being the least monetary evil. Certainly, in such a case they will be better than any paper money (forced and exclusive currency type - J.Z.) that was invented until now.
Please consider that my intention is to propose to my fellow citizens a currency which does good service on the very day of a revolution and that may be established within an hour. This system is not my invention. The American "Clearing House Certificates" (you know now the article of John DeWitt Warner in "Sound Currency" of 1895 or 1896, are the model. (You will not consider it as "Groessenwahn" (Napoleon complex - J.Z.) when I say, that I knew the principles of the system before I had heard or read of the "Clearing House Certificates".)
You say: "I am quite aware that your system does not repose on trust but on the presence in the shop of the issuer of goods. But this has nothing to do with the question we are discussing. My point is that you will use the bullion market as a barometer, and when the note price of gold rises, you will take it as an infallible sign of excessive note issue, whereas it may simply be due to increased
4.
foreign demand for gold".
It seems we were at cross purposes. My opinion was that we discussed the details of my system, proving its independence from the gold price expressed in legal tender money and its readiness to function in times of economic and political troubles and its property to require no extortion of the government. (J.Z: … its characteristic to require no governmental coercion, monopoly or assistance. - J.Z., 29.4.03.)
I would not use the bullion market as an infallible sign of excessive note issue. If a considerable discount occurs for 3 months - - expressed in gold coins - - then the issue of those shops, whose notes are at a discount, is certainly very suspect. But if, even in such a case, the shops continue to accept coins and their own notes or those of their creditors at par, and if their shelves are still full of commodities, then there may be other cause for a discount.
(I think that a considerable discount is impossible under such conditions.)
On the other hand: If the shops misuse their right to issue, then, at once and infallibly the bullion market reacts. When then the note holders come to the shops, they will find their shelves empty or half empty. Such a situation s a misuse of the right to issue. I see no other possibility of misuse than to issue notes while not possessing the commodities to be sold for the issued notes. A shop like Meinl would also misuse its right of issue, if it issued notes and left its customers in the belief that they could buy for the notes what they always bought from Meinl, namely coffee, tea, chocolate, etc., and then one day offered for sale only canaries, disks and hymnbooks and nothing else. That would be an obvious fraud and could be punished as such.
(J.Z.: However, a shop or even a big department store or a shop association could not unilaterally and easily over-issue because their money is optional, i.e. refusable and discountable. It is not money that is universally usable in a nation due to legal tender power and thus will not be accepted in quantities beyond the needs of the acceptors to purchase goods and services from these issuers. Mostly it is even likely that far less of this shop currency would be readily accepted than the shops could cover immediately with their goods and services. With few exceptions, they do not expect to turn over all their stock in a single day but only fractions of it and their note circulation total will probably be limited to the turnover of a few days or 1 to 4 weeks at most, perhaps corresponding to the average periods in which wages or salaries are paid and spent. A further factor, which would limit their acceptability would be their limited circulation period. If they are valid only for 3 months, few will accept more of them than they are likely to be able to spend within three months. To take some simple examples: People will accept only so many bread-, milk-, barber and theatre tickets for their own use and most don't want to set themselves up in the business of marketing such tickets to those who can and will use them. - J.Z., 28.5.03.)
Concerning the foreign demand for gold, I ask you, once more: What demand can occur from the side of foreign merchants, or of the country's merchants, if creditors do no longer possess the right to claim gold coins??
----------------
Very faithfully Yours - signed : U. v. Beckerath.
____________________________________________________________________________________________
29. 9. 1952. Your letter of 12. 9. 52, received 15. 9. 52,
Your corr. with Mr. Archibald Robertson, received yesterday.
Dear Mr. Meulen,
today only a provisional confirmation of receipt. (It came to 4 pages! - J.Z.)
You know the reasons which compel me to reduce my correspondence to much less than a tenth of what it was.
--------------------
You say: "Therefore you are using a paper standard to measure both the values of ordinary commodities and gold".
I am very far from that. The true reason for which you think your opinion, expressed in the two foregoing lines, to be right, is that the notion of modern economists of the
Price of gold
is accepted by you, though modern economists take these words: "price of gold" only in one meaning and that meaning is: Price of gold expressed in current money.
Here also must also be distinguished:
A.) Gold in form of good gold coins,
B.) Gold In other forms, bars, cold coins no longer current, etc.
Gold standard, in reality, means a gold coin standard, which is - - I think - - quite generally admitted, in England
no less than elsewhere.
And now a facts acknowledged as a theorem, under the rule, of a gold standard, the gold coins, which are the
base of the gold standard, do not possess a price expressed in gold.
That is a very important theorem. If you will acknowledge the theorem, you acknowledge (indirectly) my system. If this theorem could be demonstrated as being false, then I would be completely in the wrong.
My gold standard (you will excuse the short expression. The standard was in practical use before I was born.) does not provide a price of gold coins, this price expressed in notes, whose face value is expressed in gold coins, fractions of gold coins or multiples of gold coins. (J.Z., on the contrary, these notes possess a price in gold, either one at par with their nominal value or below it, or, in rare cases, one above it. - J.Z., 29.4.03.)
Under the rule of "my" gold standard, a note, with a face value of 2 sovereigns but paid for, at the free bullion market, only by one real sovereign, is depreciated. 'Then the public would not say: "The price of real golden sovereigns rose". Why? For the same reason for which the public, when in the year 1772 the price of wheat doubled, did not say: Gold coins are depreciated, but said: wheat became dearer.
-------------------------
You say: If you were really using gold as a standard, you would reduce the prices of ordinary goods by half when the price of gold doubled.
Please: Do you mean: "The price of gold expressed in State paper doubled" or: " the price of gold doubled, this price expressed in notes of shops, where a paper sovereign and a gold sovereign are of the same purchasing power, that is: value??
The latter is technically possible only for a few hours, if it occurs. (I see no reason for which it could occur.) If the notes would be to such a degree depreciated at the free bullion market, then it would be quite unavoidable, that the bearers of the notes bring them at once to the place where the notes are not depreciated, that is: The bearers bring them to the shop which is obliged to accept the notes as it would accept coins, for the same face value.
(Then, if they had gold coins, it would even be very worthwhile for them to buy such notes, at the bullion market, and thus do their shopping, in effect, at half price, seeing that they bought these notes as half their nominal gold value with gold coins. - J.Z., 29.4.03.)
In this way the notes disappear very quickly from circulation, and the bullion exchange quotes the next day: "Notes of the shops (shop association xyz - J.Z.) ...... (were - J.Z.) not used (offered - J.Z.) as means of payment today."
(J.Z.: ??? If they had totally disappeared, such a notice would be superfluous. If there are still a few around, asking for gold, then they would, most likely, be quoted at par. - J.Z., 29.4.03.)
Certainly: If notes disappear from circulation, then their depreciation disappeared together with them.
For what economic reason should "my" shops double their prices,
2.
if the price of gold, expressed in shop notes, drops to 50 %, or reduce their prices, if the price of gold, expressed in shop notes, doubled?????? The purchasing power of gold coins remains the same in the shops, excepting only such alterations which, in the year 1913, would have been considered as natural and tolerable, say the elevation of the price of rolls in June.
You say: Under the British type of gold standard this is done by restricting credit until prices fall.
Under my system the shop issues its notes if it does not possess other means of payment and finds people to accept the notes. Whether credit pashas like that or not, is here of no importance. That is a great difference from the system you call the British type of gold standard.
You say: "The question of forced currency has nothing to do with the standard."
Here you differ from all economists. All economists say: The unit of a forced currency is also the unit of prices, and if other units of prices are permitted or used without being permitted, then the currency is insofar not forced.
May be, that this general "consensus" is no "consensus sapienti", but - - I think - - he who speaks with old Abaelard: "Si omnes patres sic, at ago non sic", must prove his opinion.
I do share - - on this point - - the opinion of other economists, that the unit of a forced currency also is the unit of prices.
I do admit, that my system, which requires another unit (gold, silver, copper, something else, whatever the shops and their customers like), insofar constitutes a monetary revolution and shall constitute a monetary revolution.
------------------------
You say: 'The offer of Meinl to sell a 20-mark article for either a 20-mark note or a 20-mark gold coin simply creates unnecessary difficulties." (Notes in this case Meinl-notes, not State notes - - agreed???)
What difficulties???? I can only see that this readiness avoids difficulties.
You say: "If gold rises in price, holders of coins will not exchange them for goods at Meinl, but will sell them as bullion, and the gold coins will disappear from circulation."
What means here "gold rises in price"? Price expressed in State-notes? In Meinl-notes?
If gold coins rise in price, the latter expressed in State notes, people become distrustful and hoard the coins. (They do not sell them at once as bullion, but - - I agree - - some do.) In every case the coins disappear from circulation for a time, there you are right. But Meinl does not care about that, nor are its customers and the bearers of Meinl notes interested. They simply use notes instead of coins and buy the same quantity in the same quality as before. But Meinl must be prepared, that at any minute there may appear a customer presenting a coin as a means of payment. What must Meinl do with such a fellow? I think, the case is very simple. Gold rose in price, the latter expressed in State notes. Ergo: the purchasing power of gold increased in all shops which used the unit of state notes as unit of their prices. Provided the note bearers do not expect further rises of prices, they will bring their coins to the said shops, which use the forced currency unit as a price unit.
(J.Z.: Why should they, when they cannot get their goods there, cheaper for gold, except in under the counter-transaction? Precisely because the paper money is forced currency and, officially, they can't charge less for payments in gold coin? It is much more likely that the gold coins then be hoarded, because sooner rather than later more paper money depreciation will be expected. Thus payment in the depreciated money will be preferred by the buyers. Such money might then be cheaply bought with gold - if the government sells gold for its paper money, at the increased gold price for its paper money, or on the black market. - J.Z., 29.4.03.)
Will the possessors of gold coins bring these coins to Mainl? Certainly not. At Meinl the buyer with the gold coins cannot get more commodities than he bought with gold coins before. The price labels of the commodities stocked on the shelves, are not changed. Nobody cares about that. Meinl sells its goods (extremely quickly) for its own notes, presented to it, while at the other shops occurs what very often in these years occurred when the price of gold, expressed in State notes, rose.
3.
You say: "If the price of gold falls, people with coins will rush to buy from Meinl, and people with bullion will get it coined and buy from Meinl."
My impression is: You are here speaking of fallen prices, expressed in units of State notes. Let me suppose, that you did. Tacitly you supposed that prices in other shops than Meinl do not follow so quickly as the gold price and, perhaps do not follow the gold price at all. This supposition is justified by experience. I do not reply.
You are quite right: People bring so many cold coins (supposedly cheaply acquired - J.Z.) to Meinl, that its shops very soon will be empty. Then the monetary situation of Meinl is: It possesses so many gold coins that all its outstanding notes are "covered" (to use the commercial language) by gold coins. When then a customer comes, demanding commodities, Meinl must say: We regret - - but gold coins are at the moment the only goods we possess. We are prepared to redeem your note (a Meinl note - - not others) into gold coins.
Here a remark: Meinl - and similar shops - - always possess the right to redeem their own issued notes, whose face value is expressed in gold coins, with gold coins. The shops are obliged to redeem the notes thus, if they really possess coins.
(J.Z.: In case they cannot redeem them with commodities, services or receipts for debts paid to them. - If they are paid with other means of payment than their own notes, then, in order to reduce the outstanding notes accordingly, they ought to buy their own notes up with the other means of payment received, the restore again the balance between their goods ready for sale and their outstanding notes. - J.Z., 29.4.03.) In other cases there is no such obligation. (All quite the same as with the old German paper money excellently described by Zander in his booklets.)
What concerns the situation of the shops in respect of the commodity, they are in the same situation as shops are, whose turnover was excellent and surpassed all expectations. Why should these shop get into more difficulties than others in replenishing their shelves?
(J.Z.: With telephone, e-mail and fax order options and rapid transport facilities, they could, often, become restocked overnight or within a day at most. - Anyhow, if they had not over-issued, there would be no outstanding notes left, confronted by empty shelves. - J.Z.)
Well - - you say: "Meinl will loose on each such transaction, because, when he comes to buy with his gold coins, he will find that he has to give twice as much as formerly".
No - - Meinl will not use his gold coins as a means of payment at the wholesale market. Meinl - - an honest man - - will keep the coins ready for his note bearers, who may come to him and demand a value for the notes. If Meinl cannot make good the notes in commodities, he must make them good in coins - - but he must make them good.
(Trust plays here no role.)
In other respects - - I repeat it - - Meinl is in the same position as other shops.
I regret that you take me as a fanatic of gold. I am very far from that.
If your notes constantly rise in gold value, and it is probably that they will rise, I will be the first, who advises his friends, Meinl included, boys - - all gold away! These notes are now accepted as measure of value and even as a means of hoarding!!!
"Poorvoo que ca doore", as Madame mère Lastitia Bonaparte used to say, if her son spoke to her of long-term dispositions. ("Pourvue que ca dure", but she liked to pronounce the French words in the Italian manner.)
Do you know an example of the last decades, where notes constantly rose in gold value? You may reply: English notes did till 1819, when they were risen to par. Greenbacks did until 1878 (when they had finally risen to 100 % of their face value), Prussian "'Tresorscheine" rose until they reached par value, Danish notes, too - - also till about 1820 - - and so did some minor notes. But: That's a long time ago, and the offspring of the statesmen of that time say: What blockheads were our forefather! (The offspring are wrong, though not quite wrong.)
That may also be an answer to the last objection in your letter:
"If all shopkeepers and manufacturers persist in selling at their former price, when the price of gold has fallen, foreigners will come in crowds to buy in Germany, and Germany will be drained of goods."
If! If!!!
What probability do you ascribe to your supposition that the price of gold drops so considerably and for so long a time???
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4.
Now the reply became longer than I had thought. (St. Matthew 12, 34, "for out of the abundance of the heart the mouth speaketh", also St. Luke 6, 45. - By the way: Luther, in his excellent "Sendbrief vom Dolmetschen", blames much the usual translation of "ex cordis abundantiae" and translated simply and very well: "Wes das Herz voll
ist, des geht der Mund ueber." And this version has become a well known proverb in German.)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Your correspondence with Mr. Robertson requires not only reading but a careful study.
In your little article "Rationalism and Reality" of September 1952 you say:
"If Mr. Archibald Robertson has knowledge of a reality beyond his sensations the Christian world will be glad to know how he receives that knowledge."
If it is true that you said: "… no true Rationalist can have any knowledge of a reality beyond his sensations", then I ask you: Where does it come from, that you are so firmly convinced: "3 stones + 4 stones = 7 stones" - - at the moon's backside not any less than in your chamber???? By your experience??? You do not possess an experience of the moon's backside: and yet you are so firmly convinced! And more - - you are in the right! But your knowledge is, obviously, drawn from something which is not a sensation.
Before Kant, the world did not know from what we draw the firm confidence, that the same physical, arithmetical, etc. laws are ruling on our earth and at the backside of the moon, from which we do not possess an experience.
That has nothing to do with Christendom. Christians admit no other source of knowledge, concerning matters beyond sensations, than their Bible, a standpoint which the whole of Asia laughs at.
(J.Z.: Well, I suppose the Asian Christians must be excepted here. Few people are quite safe from religious spleens. - J.Z., 29.4.03.)
Christians are not able to draw, in a logical way, the right conclusions from what they see, hear and feel. We hardly need examples. To demonstrate the lack of logic in Christian conclusions, Haeckel analysed the Christian notion of God. Haeckel said (not quite in the words I use here - but there are translations of Haeckel's books in England, which you may compare):
The ecclesiastical representation of God is that of a man of the highest quality. Therefore, Christ is considered as God himself. But a man is a mammal, may it be agreeable to Christians or not. Therefore, the Christians - - without becoming aware of it - - subsume their God under the mammals. (The educated Buddhists and even many Brahmans notice that well!!)
But more: The Christians are convinced that their God does not consist of flesh and blood. If one analyses their notions, one finds, that they are not different from the notions connected with the ideas of a very light and transparent gas. A gaseous mammal - - that is the Christian God!!!
(Of the people!! There are Christian philosophers, who tried to get a more dignified representation of God.
Kant, in cautious and even in biblical words, which deceived the censors - - contended that the most dignified representation of God was that of a redeeming principle, a principle of progress and, consequently, of social reform. The reader is invited to continue and to say: Ergo God is the principle of revolution!
Kant's adversaries noticed that well and attained a prohibition of Kant's writings.
There was a dispute of decades between certain adherents of Kant and others: Was Kant a Christian? The adversaries - - of that time - - could pretty easily prove: He was no Christian! And today his adherents can openly confess: He was no Christian!)
Very faithfully Yours - signed: U. v. Beckerath.
____________________________________________________________________________________________
6. X. 1952.
Dear Mr. Meulen,
hearty congratulations to your 70th birthday on 10. X. 52!
It was my intention to write to you a long letter and to point out
1.) that standardised means of payment are the most indispensable of all goods, much more indispensable than bread, and
2.) that you are at present the only man in England, who defends the right of your follow citizens to issue such means of payment, while all others take it as self-evident, that only the government or government-authorised banks should be permitted to issue them.
That is - - au fond - - a strange thing, that Old England, the mother of liberty, till now overlooked such a fundamental right of men and citizens.
If my health becomes better, I write the letter!
---------------------------
Very faithfully Yours - signed: U. v. Beckerath.
___________________________________________________________________________________________
7. X. 52. Your letter of 2. X. 52, received 4. X. 52.
Dear Mr. Meulen,
Winston Churchill is resolved to solve England's economic problems before he gives up politics - - report German
papers. (J.Z.: As if politics would not have caused these problems in the first place! - J.Z., 30.4.03.)
Write him an "open letter", published in the "Individualist", and explain to him, that the right of issuing standardised means of payment should be restored to the citizen and taken from the government as a monopoly, and that all reforms without that economic and monetary "glorious revolution" are useless.
----------------------------
In his speech to Parliament on May 6, 1844, Sir Robert Peel spoke of holders of a promise. Certainly, he included bearers of bank notes. But my impression is (I may err) that Peel meant all creditors entitled to get Pounds. A bearer of a bank note, at that time, was considered as a creditor of the bank. The real sense of Peel's words would, perhaps, become clear from the whole speech, to be taken from Hansard's reports.
You know that I consider the legal claim of creditors to gold coins as the most evil detail of the old gold standard.
---------------------------
English economic language is no longer what it was 100 years ago.
You say:
"When in my examples I state that 'the price of gold doubles' I mean the free market price of gold expressed in all other commodities."
The value of gold expressed by the average price of all other - - the prices of all other commodities also expressed in gold coins - - is called, by authors like Irving Fisher and others, the purchasing power of gold (gold coins).
I did not understand that the words "the price of gold doubles", may refer to the average price of all other commodities. That not all authors use expressions as "rising of the price of gold" in the sense of a price, expressed in all other commodities, I take from the "Economist" and similar sources.
---------------------
Still the old logical rule holds good, that things which have occurred in practice are possible. "My" system (used long before I was born) is possible, simply because it was realised.
---------------------
You say: "… you cannot keep the coin in circulation at a fixed value unless you use the same means that Peel used."
Peel used some very inapt means for his purposes, and the most remarkable of his means was the banknote monopoly. You know how far I am from that.
You speak of a fixed value of a gold coin and, obviously, believe that it is my intention to let gold coins circulate at a fixed value. But such an aim would surpass the power of an almighty being.
What I demand is only: Not to prohibit the free circulation of gold coins. Also: Not to prohibit the pricing of commodities in gold coins.
Your standpoint is: It is nonsense to demand such things.
I speak with Asquith: "Wait and see!"
At least it is not self-evident, that my two demands are nonsense. Harsh punishments are required to prevent the people from using gold coins as a means of circulation (the word taken in its usual commercial sense) and to price goods in gold coins.
----------------------------
2.
It is not so, that all gold coins or the by far greatest part of circulating gold coins, disappears from circulation if the general price level -- expressed in gold coins - - rises. The experience of all peoples of all times would refute such an opinion. But a certain drain of gold coins from the domestic sphere does occur - to other spheres, where the purchasing power of gold coins is considerably greater.
For my considerations such a drain is without importance.
But there is an important other point to be considered.
Let my firstly remark, that in Germany, at the inflation time, the number of German and foreign circulating gold coins was much diminished. Also the quantity of gold sold and bought at the Exchange was much smaller than in - - say - - 1913.
(That is the general opinion; I think, that the general opinion is here right. An exact proof cannot be given.)
(J.Z.: At least there should be official figures on the reduction of trading in gold on the Exchange. - J.Z., 30.4.03.)
And yet is was possible - - and the possibility was widely used - - to price commodities in gold coins, especially in wholesale trade. And how was that done? Exactly by the means which the English now call cross rates, and which in every issue of the Financial Times are calculated for many foreign exchanges.
This means of determining the value of commodities expressed in gold coins, would have been possible in Germany even if not a single gold coin would have circulated there, and I think it was often used. (I know details from the great import firm Schlubach, in Hamburg, the second in importance in Hamburg.)
---------------------------
The price of 1 gram gold at the free market at Frankfurt on the Main is quoted now at 6 DM (pretty exactly). I do not know how this price is obtained. I rely on the papers, especially on "Die Welt", which reports it daily.
In the year 1913 the price of 1-gram fine gold was M 2.79, for the simple reason that the mint coined 2790 marks from 1000 grams fine gold. The division: 2.79 : 6 = 46 1/2 %. If I multiply the present Berlin prices, expressed in DM, by 0.465, then I get, in most cases, pretty exactly the prices of 1925.
If you will investigate in a similar manner the prices of London, you, too, will get - - I think - - pretty exactly the prices of 1925. But you must not use the official price of 248 shillings for 1 ounce troy, but the price at the real
free market. You may get this price by calculating the price of 1 sovereign at the Paris Exchange.
The prices, expressed in gold, are more stable than many people think, though they are far from absolute stability - - the latter being a thing not to be met with "hier unter dem wechselnden Mond". (here under the changing Moon. - J.Z.)
But even if commodity prices, expressed in gold coins, rise for more than 10 years continually, as they did from 1895 to 1914, gold coins are the relative best means to measure commodity prices, as practice taught in these years.
(J.Z.: Did anyone relate the then rising commodity prices, expressed in gold coins, e.g., to the rising protectionism and worsening arms race and to the attempts to establish and maintain colonial empires even by the use of military force? - J.Z., 30.4.03.)
-----------------------
You see difficulties for Meinl in replenishing his stocks in the extreme case that sold all his commodities. There are no real difficulties. Has it ever happened in economic history, that a shop with such a splendid turnover as you supposed, got into difficulties in replenishing its stocks?
You take it as self-evident that Meinl would sell his commodities remarkably cheaper (prices expressed in gold coins) than Meinl's competitors do. Meinl does the devil!
------------------------
You seem to think that it is my intention to keep the value or the purchasing power of my notes or of my gold coins in a stable relation with the dollar. That was never my intention. Also the dollar is no gold standard. That the American government is ready to pay 35 Dollars for 1 ounce of fine gold - - though at the free market the price is higher - - does not make the Dollar a gold standard. It means no more than the "Ankaufspreis" of the Reichsbank did at inflation time. (J.Z.: It means not more than the purchase price, of the German Central Bank did, for gold during the Great Inflation. It was not its sales price for gold. Especially since it did not sell gold to the public at this or any other price. - J.Z., 30.4.03.)
If the government declares: We purchase gold at a fixed price, the latter expressed in paper units, that is a certain sign, that the subjects ("the country") are on a paper standard.
--------------------
3.
You say: "If it falls, and I think it will, the price of gold will fall sharply."
If you here mean the purchasing power it may be that you are right, for nobody can prophesise with certainty. But I see no probability that the purchasing power of gold will fall considerably. It is now at about the level of 1925. Why should it fall sharply? (May be: on some days, but without influence on the country's economy.)
What you say of the possibility to discover greater stores of gold, is certainly given. We both know that the sea contains a multiple of all the gold now in circulation. (I read that at first in a romance by Jules Verne, when I was a boy, I read it again - - as a quite recent discovery - - a few weeks ago.)
I am convinced that gold will not in all eternity be the best standard of value. No thing, no relation in this world is for eternity. But at present and for the next decades, very probably, there is and will be no better standard than gold at a free market.
We must be prepared to change the standard and to replace gold at every day. Maybe silver will regain its old place. And even cowries are better than the present type of paper money.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Backside of the moon. If you think you will escape an old Kantian so easily, then you are not on the right track.
The physical properties (optical, chemical, etc.) are very probably the same on the other side than the one we do see and as on earth.
But mathematical truths are not only probably the same, but they are the same with absolute certainty. If you will enter into the investigation: Why only probability in one case and absolute certainty in the other, you will find out a very deep philosophical truth - - a truth which escaped all men before Kant.
Certainty at looking at a sheet of paper??????? There is only probability. How uncertain are the impressions given to us by our eyes, is shown in many books for family entertainment, where the well-known optical illusions are demonstrated. (Did M. see the molecules that are involved and their atoms and their sub-atomic particles and does he "see" the light reflected from it or merely the interpretation that his brain gives him from the rays reflected by the paper, which provide optical never impulses to his brain? What fraction of the total spectrum do our eyes discover? Is the rest less real? - J.Z., 28.5.03.)
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Very faithfully Yours - signed: U. v. Beckerath.
____________________________________________________________________________________________
Postscriptum to my letter of 7. X. 52.
We founded a few days ago the
Berliner Gesellschaft von 1952 zur Bekaempfung der Ursachen der Arbeitslosigkeit.
Our program is 22 pages long. We hope to get it copied by "Rotaprint" or a similar procedure. One of our members even hopes to get it printed. As soon as a copy is available you will get it.
(J.Z.: It was then only duplicated via carbon copies on typewriters, never duplicated on a duplicating machine, far less printed. None of us could afford photocopy prices, either. I microfilmed it, with an English translation, in PEACE PLANS 41 and also, probably, in the previously microfiched Beckerath papers. It is now also available by e-mail in RTF. - J.Z., 30.4.03.)
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It is always interesting to measure the purchasing power of gold coins by averages, that means: by index numbers.
(The art of constructing index numbers is the art of constructing averages.)
But the tendency, which causes gold coins to wander from one place to another is not the average lower price level of the place to which gold coins are brought. The tendency is determined by single commodities, not by an average.
Suppose, that there were a country, whose price level would be double that of England, and that we were in the year 1913. Suppose, too, that in that country there would exist only one kind of commodities, considerably cheaper than in England, say, that fountain pens of good quality would there be sold for 1 penny and in England for 10 shillings. Suppose, too, the cheap fountain pens were sold only for gold coins. Would then the high price level prevent gold coins from coming into that country? Certainly not. There would be an influx of English gold as long as the cheap fountain pens are sold.
--------------------- Bth.
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16. X. 1952. Your letter of 13. cr., received today.
Dear Mr. Meulen,
today only a short confirmation of receipt. I hope to write an answer next week.
Mathematical truths and facts observed in physics. What you say is right, but: If the little child has learnt from the wooden beads on a wire, that 7 beads plus 5 beads = 12 beads, it is at once firmly convinced, that 7 apples + 5 apples = 12 apples and 7 stars + 5 stars = 12 stars. The child is convinced without an experience that 7 + 5 = 12 applies to all things in the world, past world and future world. Where from does the child (and his teacher, too) take this absolute certainty? This certainty is not any less certain than the knowledge of the teacher: There are sensations, dreamt or "real", right or misleading, but sensations there are.
Obviously, this latter certainty is essentially different from the credit given by the child to its impression: The wooden bead is red.
Before Kant nobody had asked the question which I ask here.
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Our society: Berliner Gesellschaft von 1952 zur Bekaempfung der Ursachen der Arbeitslosigkeit.
A Berlin editor offered us: The first 20 000 copies he will sell for 1.30 one copy. If we order 100 000 copies, he will sell the booklet cheaper. No advance of the society is required.
I was very much surprised that an editor hoped to sell 100 000 copies of our program; it seems the programs is considered as being attractive and interesting by the editor. But, nevertheless, I protested. The price is too high. The unemployed, pensioners, etc. cannot spend 1.30 for a booklet of 25 pages. 1/2 DM is the maximum price in this
case. I myself and the society decline any fee. If the editor will not be ready to give us at least 500 copies to be sold for 50 Pfennig (the copies in bookstores may be dearer) we duplicate the program ourselves by means of wax plates.
(J.Z.: I wish B. had accepted this publisher's proposal. He must have known his potential market better than B. did. Rightful and rational ideas on the subject, well explained, shone then and there by their almost complete absence. I know of an Australian free market economist, Mark Tier, who, just after he finished his economics studies, wrote a brochure on inflation. B., like me, would not have agreed with all of his premises and conclusions on this subject, but he put forward his point of view, at last quite independently of the line of thought of his teachers at the university. Moreover, he was a good enough marketeer to get it published as an attractive little brochure and displayed and sold in Australian news-agencies (stationery and newspaper shops). I presume that it sold 100,000 copies, or even more, at a time when inflation rates were between 15 and 25 % annually in Australia, and that he made a relative "killing" as an author. Not much later he became member of a financial consultancy and publishing service in Hong Kong. If B.'s Berlin programme, economically much more sound, had then and there appeared in a cheap enough edition, at 1.30 DM (after all, several unemployed might have shared the cost - and the copy and talked about it among themselves and with others), then he might have been able to change public opinion in Berlin, thereby Berlin's laws, thus could have got Berlin's mass unemployment abolished and, with the eyes of the world then upon Berlin and its crises, his program would have been widely adopted all over the world. He might have died a very famous man, as a result. Sometimes one can be too critical of an opportunity - and it passes by. On the other hand: When Australia had an unemployment rate of about 1 million people [officially admitted are still over 600,000 even today], I thought: Would it be possible to sell to each of them a good program on cause and cure for unemployment, one that would have induced them to vote only for candidates that would initiate and support the required law repeals? Would they be prepared to pay me $ 2.50 each, for such a booklet? Thus turning me into an instant millionaire? I came to doubt this very much. But then, on second thoughts, I pondered: If one could get, with the aid of Australian mass media, a self-help program published, which would require every one of the 1 million Australian unemployed to contribute $ 10 annually towards a prize competition, one on cause and cure of unemployment, and if half of that A $ 10 m were spent on annual prizes, one of 1 million for the best proposal and lesser amounts for runners-up, thus altogether using up $ 5 millions, then the other 5 millions could be used to collect, publish and discuss all proposals made, by unemployed and others, and to evaluate them systematically, with this being done largely by the unemployed themselves, perhaps by selecting representatives for this purpose and rewarding them for their labours of this kind. To save much money, alternative media like microfiche, floppy disks and CD-ROMs could be used, also e-mail and websites, for those so connected. Thus a comprehensive collection of such ideas could have been achieved, fast, and, sooner or later, the best ideas among all of them would have been brought to the foreground and become sufficiently known. It might have taken less than 10 years or even less than 5 years to achieve that. Pro and con input from every unemployed and every real or imagined expert should have been invited and included and the self-help aspect of this research effort should have been stressed. Combined purchasing power, as Beckerath often remarked, is one of the greatest forces in the world - and, nevertheless, still one of the least utilised forces. However, I saw no possibility for obtaining mass media support for such a proposal. Nor did or do I consider the unemployed and other Australians to be rational enough to spread such a proposals by mouth to mouth propaganda and to do so fast. I certainly could not run a door-knock appeal for this to every Australian household, or afford to mail out 1 million leaflets to each household containing an unemployed. In this self-organized, self-managed and self-rewarding way, the Australian unemployed could have enlightened and convinced themselves by their own thinking, reading, discussions and writing, much better than an outsider could have done, even with the best programme, who would have "laid down the law for them", as a real or imagined authority, and who would more of less have talked or written down to them. Governments have often enough admitted that they do not really know how to abolish mass unemployment from one day or one week to another and voters would no longer believe them - or any expert, if they asserted that they knew how to do this. Let the unemployed discover the truths on this very important subject themselves and let them convince themselves, in a prize competition, one that would welcome, record and utilise input from any of them! Alas, even such a plan is hard to impossible to sell for an obscure and poor person in my position. I mentioned this idea to a few people orally, and in letters and also somewhere in my PEACE PLANS series - and did not even get a single positive response. As large is the disinterest, at least among Australians, in solving one of their major problems themselves, even when their governments proved to be unable to solve it and always only declared that they hoped to reduce unemployment in a few years! - Need I say that inflation victims, practically all people, could and should be mobilised in the same way, to solve that problem, too? Also amenable to such self-help efforts would be the war and peace problem, that of the employer-employee relationship, that of monopolies, those of health, those of sound social insurance systems, those of converting compulsory taxes into voluntary contributions, those of ideal and tolerant societies of volunteers, etc. Imagine also the search for an ideal individual human rights declaration becoming so promoted by all, who now pretend that they are seriously interested in human rights. They could and should thus complete the survey of private human rights codes, that I tried to initiate, quite in vain, by publishing about 100 private human rights proposals in my microfiched PEACE PLANS 589 & 590. - J.Z., 30.4.03. - Until a proper ideas market becomes finally established - dead silence or even ridicule or abuse is the usual response to ideas that are new to people. So far libertarians and anarchists haven't even established a libertarian and anarchist ideas archive, encyclopaedia, library, bibliography, abstracts and review collection, far less a combined alphabetical index to all their writings. Are they waiting for a government to do that job for them? Do they expect the price per page of such a collection to come still further to zero than it could be e.g., on a microfiche - with the cost per duplicated page sometimes down to 0.03 Australian cents, in an e-mail, on a floppy disk containing ca. 6 Mbs. zipped, or on a 650 Mbs CD-ROM? - Can one take pride in having been born among such apathetic human beings??? - Formerly they delegated all their responsibilities to one or the other "god", then to one or the other "government". Now their "god" seems to be the Internet and they haven't noticed as yet that this "god", too, has failed so far, to live up to their hopes, expectations, promises and prophesies. - They rather use e.g. CD-ROMs only for music, software, games and some general encyclopaedias, than for the libraries and encyclopaedias and reference books that would be required to liberate us and bring us peace, justice, security and prosperity. False or imagined "gods" are still preferred to self-responsible self-enlightenment opportunities that are now in reach of practically everybody with the affordable, powerful and lasting alternative media. Not even their relative strengths have been properly compared and tabulated. Not even in the sphere of the new "god", the Internet, as far as I know. If you know better, please supply me with the website name. - J.Z., 28.5.03.)
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I must defer my answer to the economics part of your letter. Today only a few words.
Sir Robert Peel certainly would decline the assertion that my system resembles, in the least, the system of the Peel's Act.
Suppose, there comes a South-African to my shop and demands notes for 1000 kilograms of fine gold. He possesses the gold and proves that he owns it. What would I say him? Dear South-African - - go to the gold market (bullion market) and sell your gold as profitably as you may. But if you coin your gold, then you may use the coins in my shop as a means of payment. (A London shop, in the year 1913, would have said the same.)
On the other hand: There comes a man and presents me with 1000 of my own notes, each note of the nominal value of 1 sovereign. My shelves are well supplied and the store is in normal condition. But the shop did not yet receive gold coins as a means of payment.
What would I say to the man? Dear friend - - I do not possess gold coins and I am not obliged to give you gold coins. But here are commodities and plenty of them. Use the notes as means of payment! You do not like that option? Well - - then take the notes home and wait till I get gold coins!
In other words: There is no obligation for gold metal redemption, an obligation so essential for Peel's system.
There is no detail in my system resembling Peel's system.
2.
In my next letter I beg to use the expression
1.) "price of gold" in the sense in which the "Economist" uses it, that is: the price of gold expressed in usual
currency, especially State notes,
2.) "purchasing power of gold" in the sense in which Irving Fisher uses it, that is: the value of a "basket" of
commodities which a sovereign (or 100 gold dollars or 1000 gold marks etc.) would buy,
3.) "free price of gold", not in the sense in which Kitson used it, but in the sense in which now papers and authors
use it, for example:
There is a man, who sells to another man, with help of a broker (this word taken in its usual sense) 100 ounces of fine gold and gets 30 000 paper shillings. Nobody punishes the two, nobody cares about the two, except the broker, before he gets his commission. Once the broker has got his commission, then, he too, does no longer care about these two. The whole transaction is not kept secret and not considered as immoral.
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Payment by my shop and to the wholesaler for commodities.
The wholesaler may grant credit. I think that at least 9/10 of the stock of commodities in German or in English shops is taken on credit from the wholesaler.
(J.Z.: Possibly on terms for 30 days, interest-free. When paid later then an interest or late payment charge becomes due. That used to be quite common once and may be still. - J.Z., 30.4.03.
My shop will offer the wholesaler shop-notes. If the wholesaler accepts (which he probably will do) he is paid. The notes come back to me as means of payment for bought goods. The notes are at once destroyed.
(For other circulation options see the circulation charts in PEACE PLANS 41, now available by e-mail from me. A more common payment method might be: The manufacturer sells goods to the wholesaler. The wholesaler pays for them with a bill of exchange or similar short term debt certificate. The manufacturer discounts this at a shop association bank and gets its shop-foundation money for his wage bill, other expenses and profit. These goods and service warrants are spent in the shops and the shops use them to restock their shelves, paying the wholesaler, who uses them to redeem his short-term debt certificate at the shop association bank. - J.Z., 30.4.03.)
My land-lord, probably, will accept the notes, too. Also these notes, some days later, will come back to me, brought by buyers, and will be destroyed.
My employees, too, will, probably, accept the notes. Soon they will use the notes as means of payment in my shop or in other shops. But whichever way they circulate, soon they will return to me and are destroyed.
(J.Z.: Like used tickets, vouchers, warrants or cheques. That will also facilitate the control of outstanding notes and the prevention of forgeries, through their early discovery, if forgeries of such notes are attempted at all. - J.Z., 30.4.03.)
My best business will be to lend my notes to employers that have difficulties in getting bank credit. Employers will use the notes as means of payment for paying wages. These notes, too, will soon return to me. The employer gives me a bill of exchange. (Or a satisfactory other short term debt certificate or IOU. - J.Z., 30.4.03.) This bill I use as means of payment vis-à-vis one of my wholesalers. (J.Z.: Who will use it to pay the employer for supplies. - J.Z., 30.4.03.)
That would be a quite normal manner of paying also today - - payment by a bill of exchange (or other IOU! - J.Z.), whose debtor is a factory of good reputation.
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Do not suppose that in extraordinary situations, such as immediately before an expected revolution, a siege etc., I would not increase the prices of my shop, these prices expressed in gold coins. Every merchant would do that and even cooperative stores would do it. The rule in such situations is, that commodity prices rise as gold coins rise in price, if "modern" paper-money (Assignats) are the usual currency. It is even my impression, that in such cases
gold coins very often rise less quickly in price than - - say - - bread and sugar. Experience shows that fuel (transport difficulties) always increases most and most rapidly (expressed in Assignats).
The seemingly difficult case, where my commodities are priced in gold coins, but gold coins do not circulate, I hope to deal with in my next letter. In South-America this case occurred often, in the 19th century, in all its countries. Now it seems that in Greece, too, the Sovereign is the normal measure of value for most commodities, though the buyers seldom have or even see a gold coin. That causes no difficulty. The relative small quantity of sovereigns in circulation is sufficient to back the systems. (As a standard of value, not as a means of payment! - J.Z., 30.4.03.)
Very truly Yours - signed: U. v. Beckerath.
____________________________________________________________________________________________
11. 11. 1952. Your letter of 6. 11. 52, received today
Dear Mr. Meulen,
firstly: I have to confirm a lot of interesting and valuable printed matter. Thank you very much. I hope to enter into some details, in a few days, especially on those items marked by you.
The general impression is the usual: The English are excellent critics, know all details (what concerns the Eastern Zone, e.g., as well as the Germans know them and probably better than the Eastern people themselves know them), but they do not possess a program. (Does any other nation? - J.Z., 30.4.03.) They possess ideals (free trade, humane treatment of subjects, etc.), but no program. A program explains, how the ideal will be attained or approached. Never a line of that. Take the articles in the "City Press''. They are excellent, and I wish they could be translated into German. But I never read, that Alexander or one of his friends organised a meeting, prepared a petition, etc. Most great reforms began with meetings or petitions.
(J.Z.: But are they effective and cheap enough means? Are there better ones? Are there many other options, usually neglected? Could the spread of new ideas and the refutation of false ones be better organised and almost automated by special free institutions and processes, outside the limited present channels and opportunities? For me this raises always the question of how to accelerate the process of enlightenment by something that I call a "genuinely cultural revolution". Part of its programme you can find in my first peace book, accessible through www.exterritorial.info/ Compare also my LMP project, trying to popularise microfiche reading and publishing among libertarians and my CD-ROM project. - J.Z., 30.4.03.)
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Value of sovereign in Greece. If the Greek Government contends that it tries to keep the value of sovereigns (this value expressed in drachmas) stable, by open market operations, then it lies (that's my opinion). The facts of the
matter will, rather, be this: The general use of the sovereign as a measure of value and, in many cases as a means of payment, compelled the government, at last, to stop the over-issue of the Greek Assignats. If the Government would continue to misuse its subjects' patience as it did, there would arise a monetary revolution as in Germany in October and November 1923. The subjects would simply refuse the Greek paper money. And now the government is impudent enough to say: We keep the sovereign stable! The sovereign keeps the Government alive!
(Did it really stop inflating its forced currency then and never resorted to the printing press again? - J.Z., 30.4.03.)
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Pricing of goods in gold (gold coins) in South America while the South Americans had no gold coins (or only very few).
The system was the same as in Germany at the inflation time and as in France at the time of the Assignats.
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South African buyer bringing gold coins to my shop. Suppose a case still more extreme: The South African found the coins or stole them, so that he practically got the coins gratis, what does that (the moral point set aside) concern me?? As long as my wholesaler furnishes me goods for an agreed gold price, I can accept gold coins to replenish my shelves. If the wholesaler raises his prices, then I raise mine.
You suppose as granted, that commodity prices, expressed in gold coins, vary usually more than they do if expressed in Government paper money. Experience proves the contrary. Pricing in gold coins is not ideal; but it is the least evil.
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Your letter of 2nd October 1952, par. 5.
I admit that gold coins may disappear from circulation at any moment. They did so, often, before 1913. I do remember the article of John DeWitt Warner "The Currency Famine of 1893" in ,,Sound Currency". But I do not admit that gold coins will always disappear when their price, expressed in fiat money, rises. In Greece, obviously (to give an example) often the contrary was the case. When the Greek Government began a new money swindle, many merchants, who before the swindle were ready to sell for paper money, then said: That was the last time! The next customer coming to me brings gold coins or he gets not even a hobnail! What will the customer do? He needs the goods, procures for himself some gold coins and uses them as a means of payment. Then both do no longer care for the swindle at the bullion market. Both
2.
use gold coins an a measure of value and as a means of payment and become honest.
How honesty must win, at last, in such cases, is excellently described by Hawtrey in the chapter "The Assignats" in: "Currency and Finance". Hawtrey belongs to the very few modern authors that still know what a forced currency is and a currency is that is not forced. (Optional, refusable and discountable and also competitive. But was Hawtrey aware of all monetary freedom options? - J.Z., 30.4.03.)
Therefore, he sees that a refusal of a forced currency is an act of monetary revolution and not only the "effect of insufficient measures".
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You do not sufficiently consider the case where the people and the merchants do not longer observe the bullion market, decline every paper money (in spite of the legal prescriptions) and count and pay only in metal and use bread and other such commodities as petty money.
I do admit that the government's power may be so great (for some time, not indefinitely! - J.Z., 30.4.03.) that it can compel the merchants to accept the paper money. That was the case in Munich in October and November 1923. The effect was, that the wholesalers stopped all supplies to Munich.
(J.Z.: During the French and the Russian Revolution that led then to armed units of city people marching into the countryside, confiscating food. In Russia this period was called "war communism", a practical application of the principle: "From the able to the needy" - if necessary by military means. On a non-violent and private enterprise basis, I remember the years of my youth, when we had to travel into the countryside, in overcrowded trains, in order to barter there, directly, with the peasants, for some food, which we could not buy, for our inflated paper money, in the city markets, at controlled prices. I traded e.g. some home-made fireworks to peasant boys for cherries. On the way back we had to beware of policemen, who often confiscated food so obtained! In addition, we gathered mushrooms and berries in the forests. Few people were familiar with elder berries and their use. So we could collect some of them in local parks. We used even nettles as vegetables. With them we could cook a kind of spinach. And we gleaned harvested fields for left-over grains and small potatoes. The market was no longer allowed to supply us. - J.Z., 30.4.03.)
Every day people died from hunger in the streets, say 5 or 6. I think in old English papers such information may still be found. (E.g., in the Manchester Guardian.)
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The few merchants, who sell at times like October 1923 in Germany, for paper money take such prices, that they make up for the depreciation between the day, when the product is sold and the day when the received paper money is again used as means of payments, so that the depreciation is made tolerable for them.
(J.Z.: However, that meant, that prices raced ahead of the note-printing presses and that a great shortage existed for the continuously inflated paper money. Even when most print shops were busy printing notes, they could not keep up with this increasing demand, even with notes in ever ridiculously high denominations. Deflation in the middle of an inflation, showing that these phenomena are not opposites. Messengers of banks queuing up in long lines before banks, to get their daily allotment of notes for daily wage payments. The printing costs came finally to about 48 % of the purchasing power of the newly printed notes. Only in Hungary did its inflation go even further - but so far I found not details on this inflation. - J.Z., 30.4.03.)
The effect are prices which - - converted into gold - - are extremely high.
You will remember the English prices of 1920. At that time England possessed (practically) a paper standard and nobody knew to what degree the inflation would increase. The prices were, in the average, 125 % of the prices of 1913, counted in sovereigns. In the year 1921, when everybody believed the inflation was over, prices dropped below the level of 1913. In Germany the prices, counted in gold, were extremely high in December 1923. These prices dropped gradually, till they attained a level of about 140 % of the level of 1913.
(J.Z.: U. v. Beckerath was then, for a few years, employed by the Deutsche Festmark Bank, as a statistician, concerned with index currency calculations for the bank. - J.Z., 30.4.03.)
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When gold coins disappeared from circulation or from certain spheres of circulation, determining the gold value of any commodities was no great problem in Germany at the inflation time. One observed the value relation of currencies which were, at that time, considered as equivalent to gold coins, in the first line dollar notes, but also English notes, Czech notes, also metals as tin, lead and copper. The art of book keeping in stable value become a quite new science, and many learnt it. At last the German quotations were generally considered as swindle and the price relation of gold to commodities at the market of London (or Zuerich) was preferred.
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My impression is: You see here difficulties, which one, who experienced the German inflation does not see, because he remembers how they were overcome. May be that I am not yet sufficiently informed about the difficulties that you see here. Should that be the case: please write to me.
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More than a year ago an acquaintance of mine, the (former) editor Zube (My father, Kurt H. Zube. - J.Z.),
asked me for my opinion on modern pacifism. I wrote him my opinion, which you know, and even were so kind as to print in the "Individualist". In January of this year Zube copied
3.
my letter (though the letter was not destined for publication) in the little correspondence which he publishes for his friends. I append here a copy. If my health would be better, I would try an English translation.
(J.Z.: I believe that B. refers here to his letter extract, that was translated by me and included in the appendix to my second peace book, published in PEACE PLANS 16-18, later in PEACE PLANS 16-17 ( www.panarchism.info/ ) pages 241-244, entitled: "Military Jiu Jitsu or: How Chinese Soldiers Determined the Limits of Military Obedience." Other letters refer to this proposal at varying length. The history of desertion and induced desertion, as a means of defence and liberation, and experiences with this approach and how it could become optimised, remains to be written up in details, including the history and the potential of governments in exile, including voluntary and exterritorial ones. It is an eminently libertarian approach and yet remains ignored by most libertarians, not to speak of ordinary peace movement people. There is material for several significant dissertations. - J.Z., 30.4.03.)
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Kant. I send you today, as printed matter, a little book: "Literaturkundliche Lesehefte, Heft 18, Romantik". At page 64 is published a letter of the German poet Heinrich von Kleist, dated 22nd of March 1801, to his sweetheart Wilhelmine von Zenge, on his impression of Kant's philosophy. Kleist was quite overwhelmed. That truth is so deeply hidden, he had never believed. But read the letter. From the impression of Kant on Kleist you may conclude what an impression Kant's philosophy made upon all its readers at that time. The effect is not yet quite lost.
(J.Z.: If I remember one essay correctly, then already while Kant was still alive, there were no less than about 5,000 books or essays written on his philosophy. Alas, most still misunderstood him in one or the other respect, according to B., who was a member of the Schopenhauer Society and the Kant Society. The latter, alas, and according to B. had all too little in common with Kant's philosophy except the name of the society. Right or wrong? I don't know. - J.Z., 30.4.03.)
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Today I got the "Jahrbuch der Schopenhauer-Gesellschaft" (Annual of the Schopenhauer Society - J.Z.), of which I am a member, for the years 1951 & 1952. An interesting document, I think. The book contains a list of the society's members. But the addresses of the members in the Eastern Zone is not given, only their names. (Which
displeases me much, for now the red Gestapo may easily find out their addresses, too.)
And why are the addresses are not stated? Because the Schopenhauer-Gesellschaft is an international society, and all what is international but not communist is considered as a conspiracy against the Kremlin. But that is not all.
The communist philosophy (that exists - - it's the well known popular materialism) considers - - more exactly: prescribes a belief in space and time as things in themselves. Kant and Schopenhauer say: Space and time are functions of our brain and do not belong to the essence of things. Some months ago, in the Eastern Zone, there was published a dictionary on natural science ("Schlag nach!" - - Part: Nature). The book is good, but under the heading Zeit (time) is expressly said that time is not merely a form of knowledge, but a real thing, and the reader is admonished to commit no error here.
Communists are quite right insofar as there really exists a secret connection between philosophical materialism and modern Communism. If my health were better and the publishing facilities in Germany were better, I would write an article to demonstrate this "secret" (which means: not easily to be detected) connection.
Many dozens of the members are dead, murdered, starved, etc. Their names are published in a special list.
(J.Z.: How eager some of the political police or informers, mostly those with East German government connections, were in West Berlin, to get addresses of people with unusual views, I experienced myself, in my first public meeting calling for an Open Air Free Speech Centre in a park in West Berlin. I had passed a list for all people to enter their name and address, so that they could be easily invited to the next meeting. This list was nearly full when it simply disappeared. Someone had pocketed it. So we had to circulate the list again. Perhaps some people still knew that most democratic revolutions began in open air free speech centres. Even in the "Free" Western World these centres are either outlawed or severely restricted. - J.Z., 30.4.03.)
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I must stop now. If my health were better, I would write to you still many more pages.
--------------------
Very faithfully Yours - signed: U. v. Beckerath.
____________________________________________________________________________________________
4. 12. 1952. Your letter of 30.11.
Dear Mr. Meulen,
that's bad news! An operation in the hospital!! It's a consolation, that your body is well maintained by a reasonable, frugal and philosophical life (Kant ascribes to philosophy macrobiotic effects.), will easily endure, what an average man, say of 40, would, perhaps, not endure so easily. would endure. (M. lasted to 1978!) Also a duodenal operation is - - I learnt - - not one of great danger, so that I firmly hope, you will write the next issue of your "Individualist" yourself, as you did for the great pleasure of your readers so many decades. An acquaintance of mine, the second
president of the "Berliner Gesellschaft von 1952 zur Bekaempfung der Ursachen der Arbeitslosigkeit", some months ago, had a similar operation to endure. 3 weeks after the operation, he was completely restored and only regretted, that he did not go earlier to the hospital.
I think that you may trust in the physicians. Moreover, I think that in your mind are forces not inferior to the often observed forces by which the pilgrims at Lourdes recover. These forces are based on the recognition, that your life is necessary, and that at the moment and for the next years nobody can replace you, and do your work for you.
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Please reflect on the quite special role you play in England.
While in all other plans of reform or revolution the final aim (rather: the usual method or result - J.Z.) has been to transfer to the State as much power, property and leadership responsibility as possible, you are the only man, who demands, that the role of the State becomes much more restricted than it was in the year 1913. While Liberals, too, take it as self-evident, that the monetary sphere must remain the government's privilege, you demand, on the very
contrary, that the monetary sphere should be restored to the individual.
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In "Reader's Digest" I read, that in Africa the whole native question is really an attempt to provide work for the Whites. Malan said: The Negro does always get work (here Malan errs widely) because he works cheaper than the White. "Apartheid" will provide work to the White. (Terrible error, which perhaps will produce a second
"Haiti" in the whole of Africa.)
(J.Z.: Oh the injustice, stupidity, ignorance and cruelty of many all too widely popular "policies", with disastrous consequences, in almost every sphere, with still no freedom option for more enlightened individuals, also for even less enlightened individuals, to opt out from under them, and not even efficient enough avenues to publicly refute them! - Our great "protectors" do still possess mass murder devices! - J.Z., 1.5.03.)
The only men, who can present a program to provide work to the Whites, without the "Apartheid-Despotism, are we, the money reformers, who say:
The quantity of work and employment should no longer depend upon the quantity of money provided by the ignorance of modern money-"planners". Full employment should thus become the normal condition of society, in Europe and in Africa.
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I hope to hear soon, that the operation had the expected effect.
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Very faithfully Yours - signed: U. v. Beckerath.
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5. 12. 1952. Your letters of: 15.11., received 20. 11. and 30. 11., received 3. 12.
Dear Mr. Meulen,
you know my monetary aim: finance the social revolution, without which life will lose all worth and mankind will be reduced to a state much worse than the state of their predecessors, when they lived - - a 100 000 years or so ago - - on trees.
Probably nobody described the state to be feared better than Orwell did in his "1984". (I hope you know it.)
To prevent that communistic degeneration, a revolution in nearly all spheres of life is necessary, and - - to repeat it - - my aim is to finance it. A revolution not financed must fail, which I need not prove to an economist of your rank.
(J.Z.: B. often added: "Even when it wins militarily". Meaning thereby: It loses its victory to its remaining economic prejudices and their economic consequences, inevitable as long as these prejudices persist. - J.Z., 1.5.03.)
There exist very few persons interested in the details of my financial plan. I received the criticism by some of them with the greatest pleasure and read it with the greatest attention. Every improvement of my plan is - - of course - - welcome to me. I am ready to change the whole plan, it an expert (a real expert) demonstrates me that some of its parts do not agree with the nature of things or the presently existing conditions. Important is not the plan, but the aim. If I find a better plan, I put the former aside, as every one does with a tool, it he finds a better tool or is convinced, that the instrument is not a suitable tool at all for the purpose in question.
Until now I found no good reason to change the plan in the form which it presently has. Difficulties I found and find in making the plan clear to other people.
The plan follows - - in general - - the liberal-principles of the first part of the 19th century, by no one better expressed (so I see it) than by Benjamin R. Tucker. (Of what the "R." is an abbreviation, you were to try to find out.) But Tucker did not visualise the situation now given in Europe: Finance a revolution and finance it so well that lack of means of payment is never an obstacle. (All past revolutions found themselves vis-à-vis that obstacle. Some won by the Assignats-system, as bad as this system is.)
(J.Z.: Rather, they won, temporarily and merely militarily and in spite of the Assignat paper money system, but then they lost it, because of it. See his short historical revisionism chapter on this in his third monetary freedom book reproduced in PEACE PLANS 11. Alas, his finished and explicit book manuscript, on how to properly finance a rightful revolution, was burnt in an air raid on Berlin in November 1943 and was never re-written. A loss that might, objectively, be much worse than the destruction of more than half of Berlin's houses. So was his manuscript that refuted many errors in Einstein's theory of relativity. These two, if they had been preserved and had been published, might have made him famous. Sometimes I wish that he had concentrated on this job rather than on his extensive correspondence. But then his conditions and state of health did no longer permit him to engage in such prolonged intellectual efforts. Consequently, we get only hints, here and there, spread over his numerous letters. - Someone might pull these together, one day. That would become easy - once all of them are digitised and translated, at least into English. I can't do all that by myself, unaided. - J.Z., 1.5.03.)
So Tucker's plan must be completed in important details, e.g. by replacing the "member-foundation" of Tucker-notes by the "debtor-foundation" of which I wrote much to you, but which you still reject.
The liberal principles of 100 years ago are now - - who would have ever believed it - - so completely forgotten, that in the whole world only very few persons remember them and understand them. That in a very essential difficulty, which my plan must meet.
How? Sometimes I am inclined to despair. Kant consoles me when he says: If a reformer despairs, then he ascribes to himself a knowledge of things and man, which mortal men cannot possess, by thinking, that there
exists no way out, while the real situation is: At the moment, he does not see the way out. Do your duty (that word taken in a quite new sense, hardly understood by the professors) till the last moment and do not forget that nature also acts in you - - the same power, that created sun, moon and some other details, you included.
(J.Z.: His natural and Kantian determinism again. If one could believe in such purpose of nature, as others believe in the divine destiny of man, that belief could provide courage, determination and persistence even in seemingly quite desperate and hopeless situations. Even if such a belief were, objectively, quite false, its effects could be very valuable. - J.Z., 1.5.03. - But even people with such faith do still required the institutions and processes of a genuinely cultural revolution to give them the greatest possible chance to be successful with their positive reform attempts. - J.Z., 28.5.03.)
If you want to get an impartial judgement concerning my plan, then there is - - so it seems to me - - only one possibility: Try yourself to draw up such a plan. Imagine, that some men had come to you, from the suppressed countries (so as they came to Locke from Virginia and to Rousseau from Corsica) (J.Z.: To Rousseau also, possibly, from Poland. Compare his plan for Poland. - J.Z., 1.5.03.) and begged you for your advice.
Or imagine you were in the situation of Steuart, whom the Scotch, in the year 1745, made their minister of finance. His task was to provide means of payment for the revolution.
(He did his best, but later he confessed openly, that at that time - - when he was a very young man - - the task was far beyond his capacities and insofar, for him personally, it was quite well, that the revolution failed militarily, before
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his lack of knowledge became manifest. But later, in France, he reflected on the role of the minister of finance of a revolutionary party. The result of his reflections were the 5 books of his "Enquiry", celebrated for many decades, and which give the impression that Steuart would not have failed, if fate would have placed him a second time at the head of a revolution.
Would you say, to the men that came to you:
1.) There are presently better measures of value than freely traded gold,
2.) the surprising success of private gold coining (International Finance News Survey, 12.9.1952) proves neither a
real need of gold coins nor the possibility to reintroduce gold coins as a means of payment,
3.) a distinction of gold coins
a.) as a measure of value,
b.) as a meant of payment, voluntarily given by debtors to creditors, and
c.) as a means of payment, legally demanded by creditors from debtors,
is simply nonsense. Who ever heard of such things?!
4.) Paper money (notes of private bankers) are the best measure of value. Shops should express their prices in such
notes. There will be no trouble arising from the fact that 1000 bankers in the same district issue their notes, with
the face value of the notes expressed in an unspecified unit (L., $., M., etc.) and every banker claiming for his
notes, that they should be taken as a measure of value in the shops.
Here I need not enumerate the other details, for which we try to find an agreement but do find none.
Imagine that you would have to do with intelligent and resolute men, earnestly seeking the truth, knowing business and the character of the public, which means, in this case, men who reject all counsels to base paper money on trust (the word used in the sense as bankers used it in 1844), because they know revolutions by their own experience and know, that at the outbreak of a revolution many things may be got, but, certainly, no trust.
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A deciding point in your objections is the price of gold. My answer always is: If the coming revolution deserves the name of a revolution, it will abolish that necessity to price gold, but will only leave to everybody the liberty to price gold (I mean gold coins, not bars) if he likes to do so.
My aim is to restore, in the sphere here meant, the state of 1913, which, certainly, was no monetary Utopia.
You take it as self-evident, that there will always be a price of gold (expressed in paper money - J.Z.) and demand that we deal with that price of gold.
I leave the "pricing of gold" to "A tout prix adherents of a paper money that replaces gold coins in all transactions".
Merchants will not be among them, certainly not a few hours after the outbreak of the revolution.
When my health will be better, I will try to follow your objections, word by word, as pointed out in your letter of 15. 11. 52.
(The Sioux-language and the language of our analytical chemists contain words composed of so many elements as the (underlined by me - J.Z.) term constructed term above. ("A tout prix adherents of a paper money that replaces gold coins in all transactions". - J.Z.) Perhaps I was, in a former existence a Sioux or - - worse - - an analytical chemist.)
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Kantian philosophy. What you say, e.g. of 7 + 5 = 12 (I took that example from Kant's books) is all right. But be sure that a thinker like Kant - - probably the greatest, who ever lived - - knew that calculators sometimes err, even in quite simple calculations, e.g. in those that you mention. (Even mechanical and electronic ones, sometimes, do. - J.Z.) The possibility of erring in calculations or in algebraic transformations or in geometrical demonstrations, is here not the thing discussed. The object of the discussions is: Why does a boy or a man suppose as a self-evident, that mathematical dogmas, true on earth, are also true on the moon, were true in the past and will be true in the future? Experience cannot lead him to suppose that. What leads him?
A teacher says to his pupils: The diameter of the sun is 864 100 miles. Calculate the volume, with the sun supposed to be a perfect ball. No pupil asks: But, teacher, are the formulas for balls valid on the sun, too? Are they not only valid here in our town, where you proved them to be valid? The teacher himself never asks such questions. Why do all men take this as self-evident??? Here a great mystery is hidden, and Kant discovered and explained it.
Your question: "If mankind were wiped out, who could say that 7 + 5 = 12? Of course, no man! But the question is: Why do all people suppose as self-evident, that mathematical, arithmetical, etc. truths were true even before mankind appeared on earth and will be true, if it should be wiped out?
Names have nothing to do with the question. In the 19th century a scholar lost his memory for names completely, for a while, but he retained his capacity for calculating. He, too - - in his mental sickness - - will hardly have been in doubt, that mathematical, arithmetical, etc. procedures give the same result on every star.
Dase, a celebrated calculator, was - - go it is said - - quite stupid in all matters not concerning numbers. He was used by Gauss and others for astronomical calculations and calculated the number Pi = 3.14159 9 ... to 200 decimals. But he, too, was hardly in doubt, that his 200 decimals were true (supposing that there was error in the calculations) on earth, on the sun and everywhere.
So your sentence: "The difference between my certainty that I see a horse and that 7 + 5 = 12 is only of degree, not of kind."
Admitted, under the suppositions you state. But it is another thing with the certainty:
a.) you see a horse,
b.) the certainty, that the equation 7 + 5 = 12 - - if true - - is true at any time and in the whole universe.
The first may be an error, but nobody will admit an error for the second.
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Kant was always in personal danger under the reign of Friedrich Wilhelm II. of Prussia. He also knew, that Friedrich II., who protected him, could die every day and then the clergy would govern. Therefore, he always wrote with the greatest caution. By now it would be necessary to write a little book to make that clear to people of our time.
Example: In his political writings he strongly underlined, that revolution was a punishable thing. (That, certainly, was no new discovery.) But what Kant really meant, he expressed in a book which he published when he was 74 years old, the "Rechtslehre". There he said, that if a revolution was successful, then it would be wrong to restore the former government by a second revolution. What does that mean, in plain language? It means: Revolutionaries, become successful, then the right (if in such matters one can speak of right) is also on your side!
Many clergymen praised Kant for his use of the word God in his writings. There he spoke of the obedience vis-à-vis God, etc. But Kant was prudent enough not to say what he meant by God, but in
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his "Critic of Pure Reason" he explained that God is only in the mind of man and not a thing. (An entity or a personality? - J.Z.) In his book on Religion he added that the Jewish Jehovah was a demon like Zeus or Jupiter (he did express it somewhat more indirectly than I do it here), and that the old Jewish faith was no religion at all.
Concerning immortality he said that average men, by the construction of their brains, are led to believe in it and that, insofar, immortality cannot be refuted. But in the "Critic of Pure Reason" he explained that such a "thing" as a soul is an unfounded supposition and that all conclusions, drawn from that notion are erroneous.
I know books of professors, writing on Kant, who, obviously, did not remember all sentences of Kant, on different subjects and in different works, when they wrote their books. They were deceived by the seemingly pious form of some chapters in Kant's writings.
Concerning duty he provided a quite new notion, not different - - as, perhaps, may be said - - from Tucker's notion, when he wrote the caption "On Picket duty", though "on picket duty" is - - I learnt - - a common military expression.
(J.Z.: Trade unionists, in their class warfare struggles, have given it a new and wrongful meaning and practice, which meant that they assumed that certain jobs rightfully and exclusively "belonged" to them, and that they were entitled to keep other people from them, although the other people - - the "scabs" or "strike breakers" - - found the particular job conditions acceptable to them, while the strikers "on picket duty", did not and therefore engaged in a "strike", rather than giving notice. Even now trade unionists are unaware that a person, who gives notice to a certain job, and looks for a better one, is thus PERMANENTLY on strike against the previous job, which he left and that this kind of peaceful, individual and tolerant action is much more effective than are strikes, to lift the wage level and working conditions. But one cannot reason any more with trade unionists than one can with dogmatic to fanatic religious people, at least not when one has not on hand an encyclopaedia full of all the spleens they have in their minds on work, wages, profits, interest, capital and work relationships, together with their best refutations so far found. - J.Z., 1.5.03.)
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Mathematical truths, logical truths and truths like the law of gravity, are true in the wide field of possible experience - - says Kant. They lose their sense beyond this field. But most philosophers before Kant - - so Aristotle - - said: these truths are eternal truths, true in every sphere.
(J.Z.: I see a contradiction here: B. argued above that such truths are assumed to be quite true for all times and all places, in the whole universe, even for places and times quite beyond our possible experience. Did Kant really argue against that assumption? Was that assumption only the starting point for his contemplations, an error to be refuted? B.'s following example steps quite out of that natural science, logic and physical sphere and enters the "metaphysical" sphere and thus does not answer my doubt. - J.Z. 1.5.03.)
Aristotle "proved" the soul's immortality by a complicated logical process, which I cannot repeat here, but which you may learn from many books, and which is based on the supposition, that logic is valid beyond the field of possible experience. Plato drew metaphysical conclusions from certain mathematical truths, which you will remember, and which Kant destroyed.
Kant disclosed the logical fault in the process, for more than 2 000 years not discovered and unnoticed by all philosophers before him.
(The "proofs" of Aristotle are still the rock of the Catholic philosophy, especially in the form which Saint Thomas gave them.)
I think, that the "eternal truths" which melted away for Heinrich von Kleist, when he read Kant, were these.
- - - - - - - - - -
You probably have read what happened in the Eastern sector. We think that a second blockade is possible.
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Very faithfully Yours - signed: U. v. Beckerath
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5. I. 1953. Your letter of 1.I. 53, received today, your letter of 21. December 52, & of 16. 12. 52, & former letters.
Dear Mr. Meulen,
heartily I do return your good wishes for the year 1953. I think, that the year did not begin badly for you. So few days after the operation you are able to eat even kippers!!!! My experience during the wars and the rationing time was: A man prevented from eating what he likes, is not able to exercise all his mental capacities, feels that very
well and works with only half of the power which he would otherwise use.
Nevertheless, your "Individualist" was by far the best of all papers of that kind. And now it will become still further improved!!!!! Bonus melior optimus!
(I don't trust my fragmentary Latin or French to offer translations of all such quotes. - J.Z., 1.5.03.)
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Concerns your underweight, I, too, look at the fact optimistically. You remember my neighbour, the excellent and good-hearted Miss Trampe. At the time when her family fled before the Russian Army, her weight was less then 100 German pounds. (1 German pound = 500 grams, 1 pound avoir dupois = 454 grams.) But now her weight will not be much less than 200 pounds. This result was attained within 2 years and she would give something for a reduction to - - say - - 150 pounds.
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The nature of your former trouble - - contraction of the pylorus - - for a trained physician a pretty simple matter - - lets expect that it will not return.
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In your letter of 21 December you wrote of the "grey melancholy" that had befallen you. But your letter confirms the old experience, that melancholy, in many cases, is the mother of invention and other valuable mental work. The historical facts, you report in your letter about Edward VII, were very interesting and I did not know them before. The manner in which you reported the facts proved that you did not lose your good humour in spite of melancholy and hospital milieu, stitches at your chest and feeling the after-effects of the operation.
By the way, my impression is that Edward VII. was calumniated. His life, when he was a young man, was the normal life of rich young men without a profession. But the whole world observed him, and normal young men are not observed - - that was the main difference. When in the years 1870 and 1871 the German artillery bombarded Paris, he become extremely indignant (I read). He uttered that he would avenge this barbarity, when he had ascended the throne. (Moltke, too, was much disgusted by the bombardment, militarily useless and arousing against everything German, in the whole world. That was unjust. The bombardment was the work of King William and Bismarck. The Crown Prince, too, protested in vain.)
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In your letter of 16. 12. 52 you quote some most interesting lines from Buckle on the influence of climate and landscape on the religious feelings of the inhabitants, demonstrated by examples from Scotland (religious fanaticism) and England (much less fanaticism). Buckle represents the connections excellently. Certainly, he is fully in the right. The religious tolerance in countries of the antiquity, at the times of the Antonines, as China and the Buddhist countries, where life is or was, comparatively, easy, underline Buckle's views.
The interruptions of religious tolerance in antiquity, in China and India, fall - - as far as my knowledge reaches - - into periods of war or bad harvests.
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The opinion of Buddha on real religion, which is another thing than the adoration of demons, cows or stars, is - - that it can hardly spread in a country without of full employment (which he mentions expressly!!) and abolition of misery from social causes. I recommend reading the chapter "Cakkavatti-Sihanada-Sutta" in the collection "Digha Nikaya". There are several excellent English translations. Buddha expected a better state of existence than mere life (as did Fourier) and called the transition "Nirvana".
(Monotheism - - well known to Buddha - - though certainly not imported from the Jews - - he considered as a gross heresy.)
In the same chapter Buddha remarked, that some Brahman sects considered a complete annihilation as the aim of salvation and said that he knew of seven such sects.
Buddha explained, that the notion "annihilation" was not the same in his - - Buddha's - - religion and in the religion of these seven sects.
Buddha (like Kant) eliminated the notion of heaven from true religion.
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I learnt from your letter that J. M. Robertson ("History of Freethought") is very critical of Kant. I hope, Robertson understood Kant. If the critic does not start from Kant's thoughts on social reform (pacifism, reform of legislation, etc.), from Kant's quite new notion of duty (fostering of social reform as the first of all duties) and from Kant's notion of social reform as a natural process (like the forming of an atoll by nature), then the critic will, very probably, not have understood Kant.
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I confirm the receipt of much interesting printed matter. I do hope to be able to enter into details still in this month. Thank you very much!
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In your former letters you pointed out that a coming revolutionary government will, very probably, introduce another paper money with cours forcé, as all others did. Such a government does not deserve the name revolutionary. Some decades ago the free quotation of paper money was the existing order and the paper money à cours forcé was then the revolutionary change. But now and in all countries of the world the cours forcé is the existing thing and the free quotation is the revolutionary change. The revolution that I expect and foster (that means: I hope to be able, one day, to do so) is a monetary revolution, such as the German monetary revolution in the year 1923 or the French monetary revolution, which led to the devaluation of the Assignats when Robespierre was executed.
In your letters as well as in your book, you recommend banking (note issuing type) by prominent, honourable, etc. people.
I say: If a man - - prominent, honourable, holy, etc. has publicly confessed absurd ideas on note issuing, then he is not the right man for banking reform. I do in no way trust in his notes, just as I would not trust in a (holy, prominent, righteous, etc.) man, who for years confounded kippers with bananas. I will buy neither kippers from him nor bananas nor anything else and I will never accept his notes.
If you know the address of one prominent, honourable, etc, man in Germany, who did not utter absurd ideas on note issuing (redemption at par, model 1913, etc.), please, give me his address! The next day I shall visit him and declare to him, that he may well become the saviour of Germany, Europe and the whole world.
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It two men, both trained and logical thinkers, sincerely seeking truth, for years and years cannot agree and even do not understand one another, the cause may (inter alia) be:
I.) They use the words in different meanings,
II.) They start from different supposition, without stating exactly from which suppositions they start.
3.
Both happened to us. Example: The expression "price of gold" may mean:
A.) The price of a weight unit at the bullion market fixed in State paper money. The daily reports of the Exchanges are drawn up in this way. There are many such prices, e.g., for bars, for the different gold coins and for gold in a bank safe.
B.) The price of a gold weight unit, expressed in notes of a single note issuer, especially a shop or an association of shops, which print on their notes: We accept this note of 20 gold marks so as we would or will accept a coin of 20 gold marks. Our commodities are priced in gold marks as in 1913.
C.) The average purchasing power of gold, where the word "purchasing power" is to be understood so as Irving Fisher understood it and most modern economists understand it.
It we continue our correspondence on the matter, then we must quite clearly state, what the expression "price of gold" shall mean.
Today I will not enter into details on the suppositions from which we started.
One of my suppositions was: The right of shops to price commodities in gold coins.
Your supposition, in most of your letters, was, obviously, the pricing of commodities in current State paper money.
You considered, primarily, a condition of peace, when things are, essentially, organized, as in the years 1913 or 1843.
I start from a state of affairs, where the State's monetary system is no longer acknowledged and replaced by a private monetary system, though such a system, with all the details, of which I have a notion, was until now never realized. (Fully and anywhere. - J.Z.)
Rittershausen just got published a book: "Internationale Handels- und Devisenpolitik". It's an excellent book, so good, that I earnestly fear: the ignorant German professors will use it "um ihm einen Strick daraus zu drehen" (to turn it into a hanging rope for him - J.Z.), as the German saying is. The book differs in every detail from the present official monetary policy,
Rittershausen distinguishes - - for the first time in German literature - -
A.) Zwangskurs fuer Noten in the sense that notes must be accepted for their nominal value and commodities must
be priced in such notes, and
B.) Zwangskurs fuer Devisen (forced value for foreign exchange - J.Z.) in the sense, that there exists no market for
foreign exchange but, instead, the Central Bank supplies the merchants with foreign exchange (if it does so!)
and does autonomously (B. wrote: autonomically) determine the value relationships to foreign exchange.
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I must stop now. My health is bad - - you knew it - - and before spring it will hardly recover, if it recovers. Letter writing is now a hard thing for me. Two years ago it was an easy thing for me, and, sometimes, on a Sunday, I finished 10 pages or more. Tempi passati.
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Very faithfully Yours - signed: U. v. Beckerath.
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9. II. 1953. Your letter of 4. II. 53, received 7. II. 53.
Dear Mr. Meulen,
with the greatest pleasure I learnt that you are now restored, though still a little feeble, as is natural after such an operation. More important is, obviously, that once against you can eat what you like, sleep well and even regained
your pleasure in gardening work, though we are in the middle of a hard winter. (In Berlin this morning 10 degrees Fahrenheit; in London it will be the about the same.) Individualists in England and abroad will get the greatest advantage from these improvements.
Electric blankets are a nice invention and - - I think - - much more useful than atomic bombs. Till now I did not know, that such blankets exist. Interesting, that they were sold in London three years ago. It seems, that now the importation is prohibited or the manufacturer stopped.
(J.Z.: I noticed differences even in goods supplies even between two Australian States. In N.S.W. I could not get a certain apparatus for breathing hot and humidified air [against colds] and a certain simple and small plastic spiral to keep my spectacle secured. In Queensland I got them easily. - J.Z., 1.5.03.)
"Dirigisme". Electric blankets would be an article for Berlin. Here, where nobody saves, electric blankets would be considered as an excellent investment, useful and pretty stable in value.
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Rittershausen's book will break his neck or make him the Adam Smith of our time. (It did neither. - J.Z.) Its language is the usual of German economists. If he did not use this language, the corrupted brains of the professors, editors etc. would not understand him. But - - it s true - - modern economics German is very far from the classical German written 100 years ago. It is a language per se. I myself never use this language, firstly, because it disgusts me and, secondly, because the people with whom I am in correspondence are no university professors and such men.
You are kind enough to offer me a page in the "Individualist" for a review of the book. I will try to write the review, though - - for a year or more - - writing is a difficult thing for me. Since October 1951, when my anaemia began, I have at least 500 sleepless nights behind me. If you do not get the review by the 15th of March, take it as a sign that I was not able to write it.
(By the way, my health is not worse than one may expect for a man of 71. I feel - - till now - - no aches but I am tired the whole day, except for a few hours.)
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Gold questions more important than Kant's philosophy? I think there is a subterranean connection between the philosophy of an age and its monetary standard. From Kant's philosophy leads an underground way to a monetary
standard which can hardly be improved. On the other hand: The same logic and the same mentality, which leads to a good monetary system, creates in the individual, using this logic and endowed with this mentality, a predilection for Kant's philosophy. (Provided, the individual gets a very good translation of Kant's books, begins with his dissertations on social matters, or - - still much better - - reads Kant's works in German. Modern language is so corrupted, that I met several quite intelligent people, who do not understand one line of Kant, because they do no longer understand Kant's language. My impression is that the German language at the time of Kant was much superior to the modern.)
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Your question in par. 5 of your letter of October 2.
"Wicked man"??????? Please, reread Hamlet. "… there is nothing either goo or bad, but thinking makes it so."
You think (and here lies the rub) that gold must always have a price. Starting from this unfounded supposition, you ask me, what I will do if the price of gold rises!!!!!!
Let me talk firstly of that case, which you obviously had in mind when you wrote your letter of October 2. That was the case, when the commodities in the shops are priced in paper money units, as they are presently. But what you did not consider, that was: this perverse system of pricing is a compulsory one. If the paper money is no longer a forced
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currency, and in consequence, pricing in paper money is not longer prescribed or - - what means practically the same - - gold coins are permitted as a measure of value in shops, are permitted for workers and employers, who
agree on gold wages, if thus the standard of value of 1013 is restored (for everyone will use it within a few days after it is permitted), then gold coins do have the same price as they had in London and Berlin in 1913, that is: they had no price.
Remember that this condition was not - - as you meant in your letter of 9. XI. 51, page 2, line 17 from the bottom - - a great nuisance. Nobody consulted every day the papers, to find out the current gold price. Why not? Gold coins had no price!!!
But it seems that you are still of the opinion expressed in your letter of 9. XI. 51.
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A second serious point in your thinking is that, what you say in your letter of 27. XII. 51, page 1, line 14 ff from the bottom.
You say, that gold by "my" system (it was used long before I was born) would become a fiat money.
(J.Z.: At most a customary or voluntarily opted for value standard in most cases, not necessarily one prescribed as legal tender by law or jurisdiction. Nor would it necessarily become an exclusive and forced means of payment although this might also happen, while statism prevails. But then, once again, could be applied the remark of Rittershausen, made in the thirties: "Not the gold currency or the gold standard has failed but those to whom it was entrusted." - J.Z., 1.5.03.)
I concede to you and your friends the right to constitute a "payment community" ("Zahlungsgemeinschaft", a term created by Knapp) or a trading body (Expression of Jevons) whose members refuse gold coins and make this publicly known by posters or in some other way they think fit. When you possess that right, then gold coins are no longer a fiat money for you. It is true, your situation will be a very difficult one. You will constitute a very small minority. More than 99 % of the people will accept the standard of 1913, if they are permitted to do so.
(J.Z.: But B. did not want to repeat the wrongs and mistakes of that old 1913 gold standard. He wanted to eliminate compulsory gold redemptionism for issuer, generally abolish the right of creditors to demand gold and merely allow debtors to pay in gold if they wanted to and could and otherwise use it only as a gold clearing standard and value preserving clause, with other means of payment being used to fulfil such obligations, at their gold value in a free gold market. For this he saw as essential: gold weight pricing in shops, a free gold market and convertibility of all notes reckoning in gold weight units, only at a quite free and well publicised gold market. In his later years, he did not even want legal tender for gold coins (always with the option to except oneself from it by special contracts), because gold, certainly, does not need it to be found acceptable in the vast majority of all cases.
Meulen, in his objection, did also completely reverse the usual meaning of "fiat money", namely the attempt to do away with gold as a means of payment and as a value standard by means of a forced and exclusive currency, with compulsory acceptance and compulsory value, one that has a value, according to objectors to it, only through a government fiat, and not a natural, market-based or contracted value at all. In this they do, usually, overlook the enforced demand for government paper money through taxation, i.e., its tax-foundation. The objectors against mere fiat money, do usually imply or state that the government tries to do away with gold currency because it is too good and reliable and stable when compared with the government's paper money. Without its legal privileges the paper money, especially when mismanaged and over-issued, could not stand the competition from a sound gold currency, thus the paper money is turned into fiat money and gold payments and reckoning are more or less outlawed and sometimes even severely penalised. After dealing with such questions for decades, M. still managed to maintain as wrong views. I believe he never fully understood all forms of legal tender or forced currency and all forms of free-market rated and optional currencies and their implications. But then he was very far from being alone in this. - J.Z., 1.5.03.)
Secondly: You - - and all other economists do not distinguish
a.) fiat money insofar as the debtor has the right to force it upon his creditor, the employer upon his employee, the tenant upon his landlord, and
b.) fiat money insofar as the creditor may claim it from his debtor.
What I endorse s a.). What I reject is b.).
I wrote to you several times on this subject.
I wrote to you, too, that all what reformers said against the gold standard was only true concerning the right of creditors to claim gold coins from their debtors.
This has nothing to do with the right of debtors to pay their debts by gold coins.
The great error of the reformers was, that they thought, that measuring values by gold coins or paying, voluntarily, debts in gold coins, would be essentially the same as claiming gold coins from debtors.
One must repeat, again and again, that creditors should not be entitled to claim gold coins
(but only gold-value clearing or payment, using any agreeable clearing method or means of payment - J.Z.), especially in times of a crises, when there really are no gold coins (or not enough - J.Z.) in circulation. I agree with that, but insist, that by this statement neither is the valuing of commodities in gold coins prevented, nor is the right of debtors restricted to pay, voluntarily, in gold coins.
Both are great advances, while the claim of creditors, to get gold coins, is a social danger, theoretically and practically.
How one must organise a situation that prevents creditors from being able to claim gold coins, while no debtor is prevented from paying by gold coins (except to your private payment community) and nobody is prevented from valuing his goods, services or debts in gold weight units, I will not point out here.
Firstly, because it would require much writing and, secondly, because - - I am afraid - - you reject the whole principle, so that pointing out the details would be superfluous.
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There exists - - theoretically - - still another possibility of a value difference of notes and gold coins. This possibility is - - theoretically - - given, if a shop or an association of shops issues notes (whose face value is expressed in gold coins), which the shop or the shop association accepts as if these paper notes were gold coins.
Such notes are, essentially, different from governmental paper money endowed with cours forcé.
We began to discuss this possibility, but my impression was:
Here one should carefully distinguish between shop notes of the described kind and government notes.
(Something that M. seemed always either unable or unwilling to do. - J.Z., 1.5.03.)
I do not enter today into a discussion on notes of your type,
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based, essentially, on trust (the word used as bankers used it 1844) and not on goods or services ready for sale and, visibly (and locally, in most cases! - J.Z., 1.5.03) ready for sale.
When notes are based on goods ready for sale, the note is based on distrust rather than on trust.
If you find people prepared to accept your kind of notes - - well, it's their business, if they were fully informed.
(You will not find many, if any.)
(J.Z.: Contrary to all the talk about trust or confidence in gold certificates, namely, that they would be fully or fractionally sufficiently covered by gold coins, for redemption purposes, the whole system is based on the assumption that no other kind of exchange medium could possibly be trusted to preserve its value without such a guaranty. To that extent the still most trusted form of banknotes is, essentially, based upon distrust, well or unfounded, towards all other monetary freedom alternatives, however soundly they may be constructed and guaranteed. Without that general distrust, it would never have been established. Rothbard even went so far as to declare all other paper money issues outright fraudulent. For many such attempts he was right - but he threw the child out with the bathwater. - He stressed that the merely fractionally covered notes, were based on the unfounded trust that all of them would be always and immediately redeemable. Such a promise, he rightly declared to be fraudulent. However, if the limitations of the redemption option were clearly declared and, for emergencies, various options would be clearly offered, then even such notes would no longer be fraudulent, and these precautions would also provide trust, if trust were necessary for notes. For shop foundation money, except in war, riot and revolution times, one can not only have trust but confidence or the certainty that they are and will be redeemable in the wanted consumer goods or services. - J.Z., 1.5.03.)
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The economical law, that gold coins disappear from circulation when the gold price rises, holds good only in a society of obedient subjects, knowing little of monetary theory and trusting that the government will organise things in the best way. England, Germany, etc, are now peopled by such subjects. But if a group of citizens ceases to obey monetary matters (as the Germans did in November 1923 and the French after 1795) the aforesaid economic law is no longer a law in this group. Gold coins will flow to this group and circulate there, while in other spheres gold coins cease to circulate, if the gold price (defined as before) rises.
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So the real answer to your question is: While the gold price in the sphere of obedient subjects rises, in my sphere it does not rise and I care the devil for what the monetary slaves and their masters do or mean.
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You defend a free gold price.
(Legal tender paper money price for gold, which has nothing to do with a free gold market! Free coinage, free circulation of gold coins, freedom for gold clauses, etc. - J.Z.. 1. 5. 03.)
I demand the abolition of the gold price.
(If it must be: By a monetary revolution in the style of 1923.)
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Benjamin Ricketson Tucker!!! Thank you very much.
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Berlin and refugees. Till now the daily 1000 and more refugees produced no scarcity of food. In the Communist press this matter is represented as a consequence of Western propaganda and it is said, that the refugees - - better informed on the conditions in the West - - would remain in the East. To tell the truth: The manner in which the refugees are treated is a shame.
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You expect a rise of German prices. I, too, but for a different reason. The quantity of paper money rises constantly in the West.
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The tax reduction is accompanied by the repealing of laws by which, till now, certain amounts were not taxed, e.g., certain savings. I will try to get the text of the new laws.
(J.Z.: Keeping up with the tax laws can be a full time occupation. These are among the laws to be ignored first of all. - But one may have to be militarily organised and properly armed and trained to do so successfully. It might also mean that one would have to take over the payment of salaries and soldiers for the State's policemen and soldiers, until they have found better jobs. And a comprehensive tax strike would have to include a general refusal to accept government paper money and its replacement by the monies of monetary freedom. These, too, are topics quite insufficiently discussed, so far, among libertarians. - J.Z., 1.5.03.)
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You are an adversary of "social service". Why? To compel people (like you and me) to pay to the State for services, which they are able to provide themselves, cheaper and better, is unjust. But many more than 50 % of the people are so far unable to provide such services for themselves. They are like children and must be educated. I do not contend that the government is the best educator. The whole matter, till now, is not yet sufficiently discussed from an individualistic standpoint.
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As long as the German currency is a forced currency, the government has to choose between inflation and deflation, the latter practically by credit restriction. But a government has no right to restrict credit. The government has also not right to expand credit. The government has only the duty to abolish the cours forcé. Once that is performed, the right of the people to refuse a currency which it believes inflated and to replace it by means of payment of private origin, will expand the amount of currency exactly to the limit whose transgression would depreciate the currency. The same right creates also the said limit.
The explanation of that simple but forgotten truth is one of the aims of Rittershausen's book.
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4.
The military expenses now necessary could be borne easily, if the German labour were free, if want would be permitted to appear as demand on the market, and if technology would be permitted to do for Germany's economy what it is ready to do every day. The true "age of the machine" will begin after the establishment of the new monetary order. Granted patents will be used at a percentage of at least 90 %. Now (and since decades), the percentage is less than two percent.
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Still some words on our correspondence about gold coins:
There has been such a mass of misunderstanding that it will be very difficult to make clear the subject of the discussion.
Consider this sentence in your letter of 6. XI. 52:
"Gradually you will accumulate a mass of gold, which you have bought dear and can only sell cheap."
I never wrote to you that I will buy gold. I did mention the following case:
Buyers came into my shop and paid with gold coins. They get goods for these gold coins. Possibly (not probably, but possibly) all goods on the shelves are sold before fresh goods could be provided. That happens very seldom in commercial life, but it is not impossible. An honest merchant must be prepared to meet such a case. Then - - I supposed - - come note bearers, presenting notes issued by myself, and want to buy something. But the shelves are empty. In this case honesty requires that I offer at least the gold coins that I had received from my customers. Receiving gold coins in normal business, that is, as a means of payment, is very different from buying the gold coins.
When you argue about difficulties arising by the possibility that a shop buys goods for a certain price (settled in gold coins) and, immediately after the goods are placed on the shelves, the world price of the goods - - expressed in gold coins - - sinks, so that the shop must reduce the price of the goods (say to 18 gold shillings, while he had bought the goods for 20 gold shillings) - - please - - did that not occur 100 times before 1914?????
The question is, rather: Why were such variations borne by the shopkeepers, without much difficulty? The answer found is also the answer to your objection.
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Before we continue to discuss the matter (I am quite ready to do so), we must both know in what sense the expression "price of gold" shall be taken, and I must know, whether you acknowledge the possibility (realised 1913) that gold coins had no price, but were, themselves, the measure of prices in the shops.
Consider too: If gold gets a price, then that can occur only by a prescription, not to use it as a measure of value and as a means of payment, so as it is now in England and in Germany.
(I do not discuss here a second possibility, namely, that silver or copper are the ordinary standard of value, as in Germany before 1871 - - silver standard - - or in old Rome. where copper was the standard, or China, where, among the people, copper cash was widely used as a measure of value and as a means of payment.)
The monetary revolution, which I see coming, will begin by abolishing (or ignoring) the prescription to price all things in paper, gold too.
(J.Z.: There are two types of monetary revolutions likely: The one which starts during a progressive inflation. Then and there the change in value standard will be in the foreground and these revolutionaries will make a start with alternative value standards in their prices, charges and contract. The second type is likely during a severe deflation. Then the provision of sound enough alternative means of exchange will be decisive. Initially, these new means of exchange may still put up with the old value standard of the forced and exclusive currency. That might then be the way of least resistance. But, sooner or later, the new issuers and their potential acceptors will also insist upon alternative and better value standards being used in their currency. - J.Z., 2.5.03.)
If this revolution is victorious, then the gold price, as a forced currency price for gold, is abolished and, on the contrary, the paper money gets a price, expressed in gold coins. If this revolution is not victorious, then my assumed shops will not exist and will thus not be a subject of discussion.
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It's a pity that you did not live, for a time, in the Berlin of the inflation time. Many things that seem to you quite impossible did then occur daily in practice. Take, for instance, your sentence, in your letter of October 2nd, 52:
"If now I ask you what is the present value of
5.
your coins, you can only reply that the value of the coin is its value in ordinary commodities before the coin disappeared."
If there is only one free gold market the world (say, Shanghai) and at this market the local currency of Berlin is quoted, then, by the simple reckoning in cross rates, the value of the local currency of Berlin, expressed in gold coins, is easily determined and it was determined in this way. (Daily.)
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My aim is primarily to finance the (new - J.Z.) Russian revolution, as I wrote to you several times. No real revolution in Russia is possible if the Kremlin remains in possession of its present note-issue monopoly. This monopoly must be broken. How?
Certainly not by those means which you will apply to England, that is: Let honest men, known for their honesty, issue notes based on trust. That's impossible. (At least during a revolution. - J.Z., 2.5.03.) Possible is (then - J.Z.) only a note system founded on visible goods or ready for sale services (railway!) which may be bought with the notes.
This system may then be completed by the admission of gold coins, also silver coins (why not?). (Also any other kind of value standard and exchange media that issuers and acceptors can agree upon. - J.Z., 2.5.03.)
No economist in the world ever spoke of this simple necessity. All speak of things very different from financing a revolution. If I am here in error and you know the address of an economist interested in the financial part of the Russian revolution, please tell me!
(J.Z.: I guess that quite a few free marketeers considered Free Trade arrangements and foreign loans for a liberated Russia, provided all the old restrictions against them would be repealed. Some may also have considered the usual modern "currency reform" of a forced and exclusive currency into a less inflated or deflated one. But very few, if any, considered introducing full monetary freedom there, as an option for those, who would volunteer for it. Free Banking advocates, like Kurt Schuler, to my knowledge, only dared to advocate the creation of a new "currency board", which would, in practice, still continue the central banking system, with its exclusive and forced currency, although, probably, better managed than it was before, under the Soviets. Others insisted on a new gold-redemption currency! None clearly envisioned the monetary situation existing in during a revolution and the need for a rapid and competitive supply of sound enough alternative exchange media and clearing and credit facilities, that would have to bypass all the old financial and monetary laws and regulations - at least among those who wanted to liberate themselves in these spheres. For the remaining faithful the old central banking system or a new one, could be continued, at their own expense and risk. A proper monetary and financial revolution is still to come in the present Russia and in most of its former satellite States. - J.Z., 2.5.03._
My opinion is: Whoever takes the (new - J.Z., 2.5.03) Russian revolution serious, would sufficiently reflect on financing this revolution in a way that is possible - - not possible 10 years after its outbreak, but 5 minutes after the outbreak.
I confess freely - - some years ago I earnestly hoped that you would devote the qualities of your unique intelligence to the liberation of the East and so of the whole world. I hoped, too, that you would see that without establishing monetary and financial liberty in the East - - beginning by producing a program - - Russia will win.
I must abandon this hope. Pity, pity!
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Very faithfully Yours - signed: U. v. Beckerath.
You take as self-evident, that if gold coins disappear from the sphere of forced currency, they will, by that, also disappear from the economic sphere where gold coins are still used as a measure of value and a means of payment. Why do you suppose that????? When gold coins disappear from my sphere, it will be because they are hoarded in fear of a war or because other fears. But in my system creditor are not entitled to claim gold coins. Therefore, this (temporary - J.Z.) disappearance of gold coins will be of very little consequence.
Bth.
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10. II. 1953. Your letter of 4. cr.
Dear Mr. Meulen,
we agree: if the presently governing rulers in the East are removed but a bad monetary system is introduced (or continued - J.Z., 2.5.03.), then from this very system will arise a new tyranny, a new imperialism, and things will only have changed their names. That is the reason, why I take the future monetary organisation of the East so very serious.
We agree, too: the future monetary organisation of the East must be as good as it can be, from the first minute of its existence. A fault can hardly be removed. Any flaw will be used, by the new government, to monopolise the means of exchange once again. And however good the intentions of the new government may be: the monopoly for mean of payment produces firstly economic tyranny and then, inevitably, political tyranny.
(J.Z.: Not true for all democracies. But it gives them all too many tyrannical powers by itself. - J.Z., 2.5.03.)
A tyrannical government is always imperialistic.
The English should consider, that England is now within the range of the Russian V-2- missiles, that Russia possesses many dozens of atomic bombs, and that, on the other side, Russia is (practically) not in the range of Western missiles.
You will have read what Stephen King-Hall explained about the matter.
(J.Z.: That situation has changed, not necessarily for the better. To threaten, on the one side, the masses of victims of despotic communism with mass murder devices, and on the other side, the masses of supposedly exploited proletarians, rather than seriously trying to liberate both, made no sense at all and was quite contrary to the different ideologies promoted by these governments. Both were thus more a threat than a protector for the own citizens and no liberators for the subjects of the other. Neither the real enemy nor rightful targets were properly defined. Collective responsibility of the victims on both sides, for the actions of their governments, was taken for granted and still is. The exterritorial alternative to these wrongs and absurdities of territorialism were not seriously considered then nor are they now, by the vast majority of all people and by all their territorial governments. For more on this see especially PEACE PLANS 16 & 17, now also available by e-mail. - J.Z., 2.5.03.)
If the new Russian revolution does not fundamentally change the Russian system of payments, then it will go the way of the Kerensky-revolution, that is: it will simply continue what the preceding government had begun, but change the names.
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What the change of the Russian means of payment system consist of, we do not agree upon - - pity, pity!!!
You say: Russians (as well as English, Germans and other peoples) will continue to price their commodities, in shops and elsewhere, in paper-money. That they will do so also if they are not compelled to do so by their government. Pricing commodities in paper-money means - - of course - - that gold coins, too, are priced in paper-money. Under the rule of such a pricing system all the inconveniences do occur, which are described by you, when the paper-money price of gold varies.
I say: Private gold coins will be manufactured as soon as this manufacture is permitted. They will be used as measure of value as soon as this is permitted or becomes possible. The presently used paper money will, at first, be at a considerable discount (the word understood as it was understood in the year 1913) and then it will become generally refused. Shops and shop associations will issue new kinds of paper money, which will be accepted so as gold coins are accepted. They will lend notes to employers, cooperatives, etc. (Especially for wage payments. - J.Z.) Many cooperatives, too, will issue notes on the same principles.
I do hopes, that you will point out, in the "Individualist" or elsewhere, the reasons why merchants etc. will continue to price their goods and services in governmental paper money. Till now you did not point it out but simply took it for granted.
I say: The experience of several hundred years proves, that paper money is never used as a measure of value while people are permitted to use real things as a measure of value, primarily precious metals. That tendency belongs to human nature and will belong to it for many of the coming years.
Here is our difference. From your standpoint you ask - - quite logically - - what will be done if the price of gold, expressed in paper-money varies?
I answer, from my standpoint, and also logically, I hope: Why should people price gold and other commodities in paper-money, once they are no longer compelled to do so?
I did not yet confirm the receipt of the numerous and interesting printed matters you were so kind to send to me. I hope to enter into some details on these enclosures in my next letter.
Very faithfully Yours - signed: U. v. Beckerath.
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16. II. 1953. Your letter of 13. II. 53, received today.
Dear Mr. Meulen,
economists of the old style distinguished:
1.) price, (Preis),
2.) value, (Wert),
3.) purchasing power? (Kaufkraft).
These three expressions do not - - in old-fashioned language - - represent synonyms.
A very nice explanation of the difference between price and value was given by Marshall, when he created the now (nearly generally) acknowledged notion of the consumer's rent.
Example: The market price of a pound of coffee may be 4 old gold shillings. (Coined, originally, in silver, I believe, but valued one twentieth of a gold sovereign. - J.Z., 2.5.03.) But assume that there is a consumer who likes coffee so much that he is ready to pay 100 gold shillings, if coffee became scarce - - say, during a blockade. Similar cases occurred frequently at the time of the Berlin blockade, in 1948. The real value of coffee for this consumer is 100 s. The price is 4 s.. So, says Marshall - - by the wonderful and seldom sufficiently appreciated institution of the market, the consumer gets a rent of 96 s. In German the expression rent ("Rente") has been accepted, though - - I think - - the expression "Vorteil" (advantage) would have been more suitable. But that's not so important, because Marshall's explanation of the matter leaves hardly room for a misunderstanding.
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Several objections made in your letter suppose that there exists a price for gold, also in the case that gold coins circulate and are used as measure of value as well as a means of payment.
(I do hope that we agree that gold coins can never be the sole means of payment.)
You say: "I think you are mistaken in your supposition that gold had no price in London 1913".
I spoke of gold coins not of gold ingots. If it is your opinion that sovereigns at London (or Napoléons at Paris, Eagles at New York) etc. had a price, please tell me, what price they had in the year 1913, and in what units it was quoted, and from what sources you took your information. That Napoléons had a price at London, Eagles at Paris, etc., I have - - of course - - never doubted.
You say: "Gold had an international price then as it has today."
It is true, that there exists an international habit of pricing gold today, with gold including gold coins. The reason is simple: The system of forced (and exclusive, or forced value and forced acceptance - J.Z.) paper currency is international. Therefore (and for no other reason), the habit of pricing gold coins is international.
But there exists no international price for gold coins. What would be the unit of this international price?
In the year 1913 there existed no international price for gold coins, either, and not even a national price, wherever the gold standard was introduced. What could have been the unit of that price? Where could it have been quoted?
You say - - page 1, line 8 from the bottom - - "… the State restricted credit here ...".
Certainly, in all countries of the world the Central Banks, from time to time, do restrict their credit. Their reasons for this they have stated themselves and the economists - - generally - - admitted that these were their true reasons. ("Motives" would here be a more suitable word. - J.Z., 2.5.03.)
But in no case was an international price of gold coins among these reasons. It was also impossible for such a reason to exist, because an international price for gold coins did not exist.
You will already have noticed that (page 2 of your letter, line 2) I did not write: "world price of gold" but "world price of goods." Such little errors may occur to a very busy editor, as
2.
you are. You know in what sense the commercial papers, the economists, etc. use the expression "world price of goods". I used i