1 Attachment(s)
...from BEYOND VICTORY, by Jerry Voorhis, 1944:
from "BEYOND VICTORY" by Jerry Voorhis, 1944:
First, Nationalize Credit, Worldwide
"Congress [should provide for governmental purchase of the capital stock of the 12 central Federal Reserve Banks from the member banks which now own it... This would cost $144,000,000 in round figures and would correct the present anomalous situation of a privately owned bank of issue. The Federal Reserve Banks could then create money in the form of "Federal Reserve Bank credit" entries on their books just as they do now. A "National Credit Account" (in contrast to present national debt) could be established on the Central Banks' books in favor of the United States Treasury. To such an account would be credited each year... amounts of newly created "Reserve Bank credit" [to] provide the increased purchasing power needed to maintain economic balance and a stable price level.
"The Treasury would draw checks against this account and pay them out to those to whom the government owed money, thus getting it into the purchasing power stream. In this way the whole nation would derive the benefit from the creation of the additional supply of money, which its own growth had made necessary. No interest-bearing debt would be incurred... only a bookkeeping transaction between two public agencies. Should inflation threaten [making it necessary] to reduce the volume of money in circulation, the process could be reversed and the Treasury could transfer a portion of its tax revenues to the central banks for cancellation and retirement of the requisite amount of money to restore stability.
Banks Should Not Create Money
"It is ethically wrong for any private person or agency to enjoy the privilege of creating money... for the same reason that it [is] wrong to give one citizen the right to levy a tax upon another one. The power to create money, either in the form of currency or credit, pocketbook money or checkbook money, is the precise equivalent of the power to tax. Anyone exercising the power to create a new dollar can... require a dollar's worth of the labor or the property of a fellow citizen without giving anything of equivalent value in exchange.
"Banks should be paid honestly for their services. By and large we do not now so pay them. We expect them to service our accounts, including government accounts, free of charge, and then we make the very bad... ethically wrong bargain of letting them make their profit by creating and... destroying the very medium of exchange upon which all the business of the nation depends.
Developing Nations Should Create Their Own Credit
"The essential economic basis for world peace is for the nations to so "keep their books" as to enable their people as a whole to pay for and consume goods and services equivalent to what they themselves can produce.
"This one reform in national bookkeeping is... a cornerstone upon which... economic improvement [and] world peace itself can be constructed.... A rise in the standards of living of the people in all types of nations is bound to follow the fearless application of this principle. Once it has been applied, each nation will be in a position to go to work in earnest. And as all peoples devote themselves to the vigorous development of their own natural resources and their industrial possibilities... under this principle, [there will] be... created a home market equivalent to the value of the goods and services produced...
"Problems connected with fair distribution of national income, of equity for agriculture, of improved health and educational standards [would remain]...
"Nothing in the field of world economics which could be done by a peace conference of the nations would create greater confidence between those nations than a mutual pledge that they would each one maintain, within its borders, the purchasing power of its people at a level [equal] with their power to produce...
The Root Of Colonialism
"The main drive that has pushed the highly industrialized nations to...stake out "possessions" for themselves in various parts of the world and to fight wars in defense of their trade, has been the fact that their own people at home have had insufficient purchasing power to increase their standards of living rapidly enough to form an effective market for the goods they themselves were producing. This... has been due to the faulty system of creation and distribution of the medium of exchange... total prices of goods produced always tend to be greater than the amount of money distributed as income to would-be purchasers of goods... Under the system of financial balance here proposed nations would not have vast "unsalable surpluses" of goods... to "dump" abroad.
How The International Clearing-House Would Function
"There will be a place in the making of peace for an international financial agency to facilitate the multi-lateral clearing of export and import balances between the nations, to promote stabilization of international exchange ratios, and... to extend short-term credits to certain nations for the stimulation of their trade and economies.
"Such an international clearing house could... in the first place, maintain and publish accurate running records of the export-import balances of each of the nations... National governments [would] have knowledge of these matters, [and] the facts regarding them would also be available to people generally throughout the world. Nations would be constantly advised of their international trade and financial positions.
"Thus a powerful influence could be exerted to prevent any nation from piling up insupportable debt by importing far beyond its power to increase its exports and services... The people of a nation exporting beyond the point of balance with probable future imports, would continually be warned of the stubborn economic fact that they could only expect payment for their exports if they stepped up the volume of their import trade...
"If all national currencies were valued by the clearing house in terms of their buying power over a selected list of basic commodities, and if exchange ratios were determined upon such calculations, a real parity for exchange purposes could be established. Adjustments could be made as the domestic buying power of currencies changed. Full statistics on these matters should be regularly published by the international clearinghouse. Whatever national currency a man was dealing in, he would ... always know the approximate amount of real wealth he could purchase with it....
"The basic requirement for healthy international trade and financial relationships is that normal and ordinary transactions should balance accounts between the nations...Nations [should not] become so deeply indebted that they are forced virtually to "mortgage" their national economies to foreign countries, or... become creditors to such an extent that they cannot collect what is owing to them without completely destroying their foreign markets...
"Nations [should agree] that if one country exports in excess of its imports it would... acquire claims against the goods of other nations but nothing more. Debtor nations should be able to discharge their debts by giving to creditor nations (or depositing to their credit with the international clearing house) certificates of indebtedness which could be used for but one purpose - payment for goods or services. If the creditor nation... [wanted] to collect, it would have to do so by importing goods.
"Such a scheme would end the present deception of people all around the world who believe that they and their country are somehow getting paid for the real wealth they have shipped abroad if gold comes into their country or if some individual capitalist acquires ownership of a factory in a debtor country. Obviously neither of these types of "payment" can ever do the People of the creditor nation any good. Nor can they promote peace... A country which pays for imports by handing over to foreign ownership its resources must eventually come to the place where it can continue the process no longer...
"The proposals here advanced do not give to the international clearing house any power to dictate or control the domestic monetary policy of any nation..."
The Negative Course of the IMF Foreseen
"It would be highly dangerous and a fruitful cause of future war if an international bank were to be set up and given the power to compel nations to pursue internally the...monetary policy which such a bank might dictate. If... an international bank were to be given control of a considerable portion of the world's gold [as the BIS still holds] and if it were to insist upon the maintenance of the gold standard, or... gold "reserves" in all the nations... it would hold a more powerful control over the internal economic life of many nations than their own governments could exercise. Loans could be granted or denied depending upon whether governments were willing to restrict the supply of money in their countries to a certain multiple of the amount of gold available to them.
"Nations seeking to expand their domestic production could be stopped short in their tracks... Financially powerful nations like the United States and Great Britain, which... would have a great deal to say about the operations of such an international bank... would be able to exert a telling pressure upon [the economic and political policies] of any government. The same situation which obtained between the American Colonies and Great Britain in the 18th century could be projected onto a worldwide scale in the 20th century.
Gold Should Not Be The Basis For Credit
"Money and its even flow are all-important in the life of the average person... It is only through the device of money that they are able to live at all...No nation [can] hope to be free or to live on a plane of equality with other countries if the domestic buying power of its people [is] dependent upon the financial dictatorship of any international bank or upon the possession of large reserves of gold... Nations must be free to promote economic health and activity within their own borders. All that should be asked of them by any international economic body is that they maintain within their domestic economies a stable buying power for their monetary unit whatever it may be."
