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Socialized Money-Chapter IV

Friday, October 14, 2005

Control of Government by the Money-Credit
Monopoly Gilds Its Security and
Crystallizes Its Power

WHEN Prof. Winthrop More Daniels1 asserts that "the student of constitutional liberty does not need to be told of the dominant role played by financial issues in modern politics," he reservedly calls attention to the coercive power of credit and the demoralizing effects of public indebtedness. A little more boldly he interprets his meaning in the following words:

"The universality of public credit must be reckoned among the noteworthy attributes of the financial constitution of today. . . . When property owners lend to the government they lend to a corporation controlled by themselves. . . . Some substantial security against repudiation is a condition necessarily precedent to the employment of public credit; and this security originated and consists in the political power of the propertied class."

These will be conceded to be the general facts surrounding the economic situation in the United States. The situation is here characterized as economic because it bears directly upon the making and administration of laws unfavorable to the more equal distribution of the nation's wealth, while at the same time facilitating its flow into the pockets of those who control the government as an added "security" for credit extended. This does not imply that all the laws are made and administered for the special benefit of the nation's creditors, but that those powers essential to the preservation of the special privileges they enjoy are safeguarded to the utmost both in law and administration. Among these powers no other is so essential to the perpetuation of this kind of constitutionalism in the United States as that of the existing non-social monetary system.

It is merely consequential that social and economic progress is at the barrier when the master pattern or blueprint of our national development is the handiwork of those whose dominant passion is moneymaking and money-bought power.

Fancy Shylock writing the economic constitution of the nation!

NOR DOES the self-imposed political power of those who supply either public or private credit—shared also by those who are its beneficiaries—end with the federal government. Coming nearer home, the governments of states, counties, and municipalities also generally are controlled by the same interests, but more particularly by those who supply credit for industry and commerce.

The principle of "security" plus collateral to which Prof. Daniels refers applies all down the line. For instance, do you suppose it would be possible for even a daily newspaper, dependent upon advertising patronage from merchants operating with the aid of credits, long to survive the advocacy of policies unfriendly to the money and credit monopoly, or to the "insiders" therewith allied?

Charles A. Dana,2 one of the world's great editors, well knew the menace of the thing here discussed when, in a review of Proudhon's "Solution of the Social Problem" he said: "Of all monopolies that of credit and the circulating medium is the worst."

THE EXTENT to which indebtedness has demoralized people and devitalized wealth in the United States is sufficiently alarming to arouse the public to crusade the evil. Society will be fortunate if the manpower and the horsepower of the next two or three generations are able to dig it from the indebtedness under which it is buried—provided, of course, that the present pace of credit running is in the meantime greatly decelerated.

While it is true that many billions of this indebtedness were contracted in the emergency of war, it is also true that the traditional principles governing the laying of war debts, and the raising of revenue as a consequence of war, afflict society in a manner only slightly less devastating than war itself.

There is a principle or inherent thing, whatever it may be called, in our system which gives to surplus wealth at interest a singular freedom from liability for the cost of government, and imposes upon commodities in process of manufacture and consumption and upon other physical wealth the entire burden of government.

In operation this principle takes from society the capacity to produce for consumption (a necessary function) by adding to its burden to produce for surplus (an unnecessary function). Its economic significance lies in the fact that under a discriminatory policy in the treatment of wealth—with half of it unincumbered and drawing interest and the other half incumbered and paying interest—society is perilously divided against itself.

1 The Elements of Public Finance, by Winthrop More Daniels.
2 Mutual Credit, by Wm. B. Greene.


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