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Socialized Money-Introduction

Monday, October 10, 2005

While at a local used-bookstore, I found in their economics section a book that was written and published locally (Seattle) in 1933. The title of the book is Socialized Money. Immediately, I started flipping through the pages because I had an idea of what this book would be about. I bought it, brought it home and devoured it. My wife asked me why I read the book with such enthusiasm. I told her it was like finding all the evidence of a crime, displayed neatly for everyone to see. This book was written in 1933, right after one of the worst depressions our country had ever seen. The author plots a course for our monetary system to take to become a socialized monetary system. In his writing, he never once paid any attention to what our constitution says about monetary policy, weights and measures, or taxation. What is even more interesting is to compare what he wrote over 70 years ago to what we now have. If you ever wanted an inside look as to why things are the way they are, read on.
I'm posting this on my blog because I want feedback on each chapter. I will try to post a chapter a day until I reach the end of the book. But, enough of this... let's get to the book:

Socialized Money
By Homer Orpheus Campbell

Published by Homer Orpheus Campbell
1525 Forty-Fifth Avenue S.W., Seattle, U.S.A.

Copyright 1933
Homer Orpheus Campbell
Seattle, U.S.A.


Imagine yourself one of a hundred and twenty-five million passengers aboard the good ship United States, adrift in the Siren Sea of Credit, and finally piled up on A-hundred-and-forty-billion-dollars-indebtedness Reef....She lifts on favoring tide and comes free, but with rent bow and buckled keel.

If you were captain of this ship, what would you do? Wisely, you would do everything possible to keep her afloat. That is exactly what Captain Roosevelt is doing right now in a comparable situation. He is meeting an emergency resourcefully, courageously—employing means at hand as no captain ever before has done, except in war, to save ship and human cargo.

You may be berthed in the steerage, or you may have dined at the captain's table; but, steerage or first class, it becomes everyone on board to help the captain make port. . . . Then it will be time to rechart rocks that peril the ship of state.

Pertinently, this book deals with fundamentals of our national difficulty, available for use when expedients are no longer necessary.

The reader will find that its analyses reflect new light, and illuminate, where before there was economic darkness.

But, most significant, the reader will find also that one of society's fondest hopes—the socialization of the medium of the exchange—is now realizable, and may be employed to overcome the nation's greatest economic handicap.

Homer Orpheus Campbell.


INDEBTEDNESS and unemployment are twin giant phenomena of the last five years of world depression. All other mass manifestations of the period are pigmies by comparison. In the United States the unemployed have averaged one to ten, and the ratio of dollars owed to population, per capita, exceeds a thousand to one.

It would be strange, indeed if these two astounding facts, standing out like mountain peaks towering over foothills, were not related in cause and effect; if indebtedness in going up had not, like a counterbalance, pulled employment down.

While other comparatively minor factors, such as the mechanization of industry, have bearing upon unemployment, the irresistible power of indebtedness at interest to diminish consumption is the controlling factor.

The magnitude of unemployment is directly traceable to the magnitude of indebtedness at interest.

Again, unequal distribution of wealth bears upon unemployment, but this, rightly understood, will be seen to be the foundation upon which indebtedness rises and projects itself over society. Therefore, unequal distribution of wealth—or, the process by which great reservoirs of surplus wealth come into existence and are conserved and self-expanded through earning power—must be considered auxiliary to and a part of indebtedness itself.

Two other factors having part in widespread, towering indebtedness are (a) inflationary credit processes which eventually become monetized, and (b) the monetary and financial mechanism in which these spurious economic values are processed for social assimilation.

THE PHENOMENA of unprecedented indebtedness and unemployment, if they had occurred in the United States alone, might be explained as casual and without related significance. But when every nation in the world, with the exception of Russia, is stumped with the dual problem of how to pay its debts and how to put its idle citizens to work, the proof is strong that a universal law is operating between these two overpowering manifestations.

The reader will have noted the exception of Russia to the universality of indebtedness and unemployment. This is to be explained not in the difference between capitalism and communism, but in compulsory labor and rationed consumption, supplemented by government control of prices for commodities and wages for labor. But in the measure that indebtedness is not held to a minimum, even these extraordinary measures will prove abortive.

By these methods the Russians have diverted, by force, the incidence of interest and taxes. In the United States and the other so-called capitalistic nations, on the other hand, there is free operation of the economic law which shifts interest and taxes to the consumer. Consequently, diminishing production, unemployment and socially-imposed underconsumption result in the measure that indebtedness takes its toll from wealth subjected to interest.

The Russian political formula and economic management thereunder are not for the liberty-loving people of the United States. A way of our own must be found, however, to lower the Bow of indebtedness and to raise the stream of employment.

But how can this be accomplished while there is in operation a monetary system whose very germ is self-contained in the principle of indebtedness?

There are two really different monetary systems, and two only—the non-social and the socialized. The former has outlived is usefulness; the latter has just been discovered.

THERE IS DEVELOPED in this study, for the first time so far as this writer is aware, the theory of a divided field of wealth—approximately half of it, as at present, under interest, and the other half at interest.

With the incidence of taxes and interest upon indebtedness falling upon wealth under interest, out of which the masses get their living, it requires no stretch of imagination to grasp what is now taking place and what may be expected so long as the existing monetary and credit systems are perpetuated.

Of assistance in making clear these underlying facts bearing upon indebtedness and unemployment, the reader's attention is directed to graphs shown on the following three pages.


Figure 1

Wealth at interest receives, but pays no part of, the interest upon the nation's mountain of indebtedness. Nor does it pay taxes. So favored, it attracts additional surplus. . . . Wealth under interest, however, pays interest upon indebtedness and cost of government besides. Furthermore, 95 per cent of the people must live out of wealth under interest.


Figure 2

Here interest upon national indebtedness is seen to have been shunted into the Production segment. Production, in turn, shifts interest and also taxes to Consumption. Consequently, the masses who are dependent upon this segment of the economic circle for their livelihood must first consume for interest upon indebtedness before they can consume for employment.


Figure 3

As consumptive capacity is forced out by interest upon indebtedness and by taxes, Production shrinks in the same measure that, in shifting interest and taxes, it further reduces ability of the masses to consume. In the same ratio Unemployment overflows into the dead areas of both Consumption and Production.


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Blogger Timothy Birdnow said...

Great piece! Thanks for posting the excerps!

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