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,

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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.)

-----------------------

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 18^th 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.

---------------------------

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.

-------------------------

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?

----------------------------------

(Concerning England you should - - I think - - form a bill, by which the present legal obstacles to your system are removed, if Parliament accepts it.)

----------------------------------

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).

-------------------------------

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.

----------------------------------

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.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

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!!!!!!!!!!

-----------------------------

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.

-----------------------------

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!!

-------------------------------

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 1/10^th 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.)

---------------------------

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.)

--------------------------

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?????

---------------------------

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!

----------------------------

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".

---------------------------

"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.)

---------------------------

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.

---------------------------

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.)

-------------------------

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.

-------------------------

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.

-----------------------

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 19^th 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.

____________________________________________________________________________________________

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.

-------------------------

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.

____________________________________________________________________________________________

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.

-----------------------

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.

____________________________________________________________________________________________

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.

---------------------------

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 18^th or the 19^th 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.)

---------------------------

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.

----------------------------

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.

---------------------

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.

----------------------

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.)

------------------------

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.)

------------------------

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.

-------------------------

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.)

---------------------------

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.)

-----------------------------

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.

----------------------

4.

Going to bed is important insofar as it secures fresh energy for our economic fight. The latter remains the most important. (Yes.)

----------------------

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.

----------------------

Your letter of 14. I. 52 is not yet quite answered. I hope to answer fully in July.

----------------------

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.

----------------------

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.

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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