The purchase of the whole British mercantile marine by the Government would incidentally have the effect of abolishing the British shipping rings, which, like the British railways, frequently penalise with discriminating rates the British producer and shipper. "Of the real conditions of ocean traffic, at present, the public has no suspicion.

All our lines of communication are controlled by shipping rings which carry preferential rating (an illegal practice in our inland transit) to an extent that would shock Mr. Chamberlain back again to Free Trade if he realised it; for their preferences are by no means patriotic; they have helped Belgium into our Indian market, and Germany and America into South Africa and New Zealand. The cotton conference of Liverpool directly a.s.sisted the American exporters of cotton to China by the heavy charges they made against the Lancashire manufacturer--charges which were modified only after repeated protests. These rings and rates const.i.tute the most dangerous disintegrating force we have to face."[750]

There is much justification in the complaints of the Socialists with regard to British railways and shipping, but their proposals are, as usual, quite Utopian. For all ills of the body politic and economic, the Socialists have only one remedy, and that an infallible one--nationalisation, or rather Socialisation.

The policy of the British railway and shipping rings is no doubt a national scandal, but their defects and delinquencies may no doubt be counteracted by appropriate Government action and legislation. It is probably now too late for the State to acquire the railways. The State cannot afford to risk a large capital loss. Railway purchase would apparently be too speculative an undertaking.

If the State should acquire the railways, they would certainly be run at a profit. The sooner the Socialists abandon their fixed idea that profit on private and national undertakings is immoral, the better will it be for them. So long as they decry profit and propose to work State undertakings without a profit, so long can they not be taken seriously. Profit consists in part of the salary of direction, in part of the earnings set aside for effecting the necessary alterations, improvements, and extensions, and for forming a reserve fund for making losses good, &c. Therefore abandonment of profit would mean the decline and decay of the national capital.

FOOTNOTES:

[729] Davidson, _Free Trade_ v. _Fettered Transport_, p. 9.

[730] _Ibid._ p. 7.

[731] _Reformers' Year Book_, 1907, pp. 119, 120.

[732] Hyndman, _Real Reform_, p. 14.

[733] _Fabianism and the Fiscal Question_, p. 17.

[734] Macdonald, _Labour and the Empire_, p. 96.

[735] _Reformers' Year Book_, 1907, p. 120.

[736] _Independent Labour Party Report, Annual Conference_, 1907, p.

50.

[737] _Socialism and Labour Policy_, p. 14.

[738] Blatchford, _Britain for the British_, p. 86.

[739] Sorge, _Socialism and the Worker_, p. 13.

[740] Davidson, _Free Trade and Fettered Transport_, p. 17.

[741] Davidson, _Free Rails and Trams_, p. 9.

[742] _Ibid._ p. 13.

[743] Davidson, _Free Rails and Free Trams_, p. 7.

[744] _Ibid._ p. 14.

[745] _Public Control of Electric Power and Transit_, p. 10.

[746] Davidson, _Free Rails and Trams_, p. 5.

[747] Davidson, _The Old Order and the New_, p. 158.

[748] _Public Control of Electric Power and Transit_, p. 14.

[749] _Fabianism and the Fiscal Question_, p. 16.

[750] _Fabianism and the Fiscal Question_, p. 16.

CHAPTER XX

SOME SOCIALIST VIEWS ON MONEY, BANKS, AND BANKING

All Socialists wish to abolish private capital. Money embodies private capital in its most portable form. It can easily be hidden, and as the Socialists wish to prevent the re-acc.u.mulation of new private capital, the abolition of money, and especially of gold and silver, has prominently figured in all Socialistic programmes since the time of Protagoras and of Plato. Socialists wish to effect the exchange of commodities, the payment of labour, and the settlement of accounts mainly by book-keeping.

"As there are no wares in the new community neither will there be any money."[751] "In the Social-Democratic State the citizen will be granted an income, which will be indicated by labour checks or credit cards, as advocated by Gronlund, Bellamy, and John Carruthers."[752]

"Under ideal Socialism there would be no money at all and no wages.

The industry of the country would be organised and managed by the State, much as the Post Office now is; goods of all kinds would be produced and distributed for use and not for sale, in such quant.i.ties as were needed. Hours of labour would be fixed, and every citizen would take what he or she liked from the common stock. Food, clothing, lodging, fuel, transit, amus.e.m.e.nt, and all other things would be absolutely free, and the only difference between a Prime Minister and a collier would be the difference of rank and occupation."[753]

"How will exchange then be carried on? By account facilitated by some such contrivance as labour checks. When in the Co-operative Commonwealth money becomes superannuated we shall have nothing but checks, notes, tickets--whatever you will call them--issued by authority."[754] And how will international exchange be carried on?

Very simply and easily. By barter. "So much tea is wanted from China.

The Chinese Government is advised of the quant.i.ty and asked what British goods will be acceptable by the Celestials in exchange. There will be international barter on a grand and equitable scale."[755] It is quite logical that the Socialists who wish to introduce the primitive Communism of the prehistoric ages (see Chapter XXIX.), wish also to reintroduce the aboriginal system of barter.

However, the contemplated form of "international barter on a grand and equitable scale" will have its difficulties. China, for instance, may sell much silk and tea to England and take in exchange mostly foreign manufactured goods from America, Germany, Belgium, and j.a.pan, as she does at present. It is to be feared that the "grand and equitable system of international barter" will prove impracticable even if, as most Socialists somewhat rashly a.s.sume, all States should become Socialistic commonwealths, or if the grand Socialist Republic of the world should actually be created. We have at present an international currency, Gold. The contemplated creation of unlimited paper issues in lieu of gold, the fulfilment of the ideal of many Socialists, would have a very simple, a very certain, and a very unpleasant consequence.

Foreign merchants, doubting the value of the new paper currency and the stability of the new Socialist Government, would of course refuse to part with their goods. Not a pound of cotton, not a bushel of wheat would reach England from abroad. The nation would be starving, and Socialist deputations would hasten to search out Lord Rothschild in the workhouse, where no doubt he would reside, and implore him to reintroduce capitalism and food into Great Britain.

Some Socialists of the saner kind fear that it will not be possible to abolish money. Kautsky, for instance, writes: "To abolish money I consider impossible. Money is the simplest means as yet known which renders it possible in a mechanism so complicated as the modern system of production, with its enormously minute subdivision of labour, to arrange for the smooth circulation of products and their distribution among the individual members of society; it is the means which enables everyone to satisfy his needs according to his individual taste (naturally within the limits of his economic power). As a medium of circulation, money will remain indispensable so long as nothing better is found."[756]

Socialists declaim against the immorality of charging interest--"usury" as they call it (see Chapters IV., IX., and XVII.), and they are indignant that the banks are unwilling to advance gratis unlimited funds to Socialist town councils to be wasted as fancy may direct (see page 258). Therefore they wish to abolish "that most costly of all modern parasites, the banker."[757] Some very irreligious, if not atheistic, Anarchist-Socialists, such as Mr.

Morrison Davidson, pretend to object to interest on religious grounds because, "the Way, the Truth, and the Life said, 'Lend hoping for nothing again.'"[758] Other Socialists wish to abolish the banks and the charging of interest for the benefit of the people and of the Socialist munic.i.p.al and other councils. "Usury--in that offensive pregnant little word is contained the secret of Society's worries and Man's woes. Abolish usury: that is the true Fiscal Reform Policy."[759]

"Usury can be arrested at present by nationalisation of exchange. The nationalisation of exchange must be undertaken. Metal must be demonetised and reduced to the ranks. Banking must be undertaken by the munic.i.p.alities and county councils, and by these elective bodies only, while a durable paper currency issued on the basis of the ascertained wealth of the nation, and maintained in true relation to it, shall supersede gold. Then we arrive at a scientific solution of the question of exchange and put in operation the currency and credit system of Socialism."[760]

When the banks and the gold currency have been abolished and when "exchange has been nationalised" the Socialist local authorities will no longer have any difficulty in procuring the unlimited funds they need for the execution of their boundless plans. They will raise the money by the printing of practically unlimited quant.i.ties of paper money issued against the security of "the ascertained wealth of the nation." If they wish to spend money, they simply "make it" by means of an ordinary printing press. Could a simpler and more ingenious system for making money be devised?

"Recently notice has been given by leading bankers of their intention to discriminate against munic.i.p.al loans. And as things now stand, it is certain that, if an organised effort is made generally by the bankers throughout the country by advising clients against such investments and by refusing to accept munic.i.p.al bonds as collateral security for overdrafts, &c.--a serious check will be put upon public enterprise. Those who imagine bankers either impotent or incapable of such treason against the public interest should remember what took place in the United States in 1893.

"The natural suggestion to be offered as a counter-move to the threat of the bankers and their Industrial Freedom League is to add to those enterprises now under munic.i.p.al control that of banking. And surely there is nothing which lends itself more easily to munic.i.p.alisation!

If the credit of a banking house can be employed for promoting enterprise and earning dividends, why cannot munic.i.p.alities employ their own credit directly? In others words, why cannot the credit of a city be utilised to carry on its munic.i.p.al works instead of it having to borrow the credit of a bank and pay interest charges? Consider how public works are now financed. The London County Council decides to build decent and respectable houses in some locality for the working cla.s.ses. It requires, we will say, _500,000l._ with which to build dwellings for 2,000 families. Bankers are invited to tender for the loan, and finally the Council gets this advance on a guarantee of 3 per cent. per annum, the princ.i.p.al being repayable at the end of thirty-three and a third years. At the end of this period the Council will have paid the bank _500,000l._ in interest as well as the _500,000l._ original loan. The charge for the loan is equal to the entire cost of the whole undertaking; the result is that each family must pay about twice the amount of rent that it would otherwise have to pay if the Council had not incurred interest charges through borrowing other people's credit. Was there ever greater lunacy in public affairs?

"Suppose that instead of issuing credit in the shape of bonds of large denomination, the Council issued it in notes of small denominations of pounds and shillings. Does anyone mean to a.s.sert that that credit which is eagerly purchased by a banker would be refused by a bricklayer or stonemason? Supposing the London County Council was empowered to issue its credit in one-pound notes, as well as large amounts, and supposing it was compulsory that these notes were good in payment of rates. Is there any question as to their being acceptable? The plan is so simple and so safe that at first it seems amazing it should have been so long out of employment."[761]

"Of course gold will drain off abroad--if the foreigners don't follow in our footsteps at once. If the demonetised gold is withdrawn--well, we can have a new currency by nationalising the railways and paying the shareholders 'in current coin'" (which means in unconvertible notes), "not in redeemable, interest-bearing bonds. So long as solid wealth rests behind our issue, our financial policy is sound. Of course, the railway and other shareholders will want fresh investments; they won't find them, because no man will pay interest to usurers when he can monetise his credit at the mere cost of banking and exchange. They must therefore spend it, and the currency will never be restricted henceforward. And this national ownership of exchange can be operated to compel every monopolist to sell his monopoly to the nation."[762]

This insane project is called by the writer, "A scientific way to Socialism."[763]

Surely science is the most abused word in modern language. The creation of money by unlimited issues of paper secured by the national possessions was tried on the grandest scale at the French Revolution.

The "a.s.signats" were secured on the national domains, and their security seemed absolute to the revolutionaries. The great Mirabeau had stated on September 27, 1790: "Our a.s.signats are not ordinary paper money. They are a new creation for which there is no precedent.