MeulenBth section one corrected 06 06 03

208 pages

INSTEAD OF A MAGAZINE

Correspondence, what is left of it and has been found, between

ULRICH von BECKERATH, 1882-1969 &

HENRY MEULEN, 1882-1978,

It deals mainly with monetary freedom and ideas on free banking, but also with free trade, a free economy, criticism of overpopulation notions, anarchism, war and peace, revolution, liberation, totalitarianism, right and left type, racism, nationalism, tyrannicide, individual vs. collective responsibility, cooperative production, rights and liberties, philosophy, Kantian ethics, egoism, utilitarianism, atheism, Christianity, Buddhism, international languages etc.

Both were fans of Benjamin R. Tucker.

It spanned from about 1932 to 1959 (1969?) but only one 1935 letter is represented here. The rest is from 1946 to 1959.

Compiled, edited and commented upon by John Zube, jzube@acenet.com.au (02) 48 771 436,

35 Oxley St. or P.O. Box 52, Berrima, NSW 2577, Australia.

U. v. Beckerath was a man who came once very close to shooting Hitler. But then most of these and numerous other important letters and papers of his would never have been written. He was also associated with the resistance which culminated in the well-known tyrannicide attempt against Hitler on July 20^th, 1944. He survived the subsequent and often atrocious mass murder, by the Nazi regime, of about 5,000 people, who were somehow associated with that resistance attempt, only because a friend of his close friend Heinrich Rittershausen managed to get access to their files at the Nazi's "Peoples' Court" and to destroy them. (See page 59. His letter of 4. II. 1949.)

At one stage, as one of the main contributors to the "Four Law Drafts", he might have come to help prevent the rise of the Nazi regime and WW II: Dr. Munzer, also a contributor, was a close advisor to Dr. Bruening then Chancellor and these drafts were waiting for Dr. Bruening's signature as emergency legislation to overcome the Great Depression - and as such they would have worked! - when the Bruening government was overthrown through the influence of some, who feared that Bruening, in desperation, might realize some popular "land reform" plan which would have expropriated some large proprietors of land.

His main and life-long labour was the development of sound monetary freedom ideas and techniques.

This correspondence is something of a treasure chest of ideas and references of interest to many freedom and peace lovers, from two thoughtful lives.

Both were fans of Benjamin R. Tucker. Meulen knew him personally.

The friendship between B. & M. persisted in spite of their strong disagreements on many subjects.

While B. had also many strong opinions and engaged in "prophecies" or forecasts which did not always come true and made at least two proposals which would have been better left unrealized (does anybody score perfectly?), Meulen was much more opinionated and prejudiced, especially when it came to the technical details of free banking, free trade and a free society. Beckerath, on the other hand, had frequently checked his own opinion again the facts, the own experiences and those of others, historical precedents, old and new literature references and looked at his ideas from almost all possible angles, or so it seemed to me. When he had to make guesses, they were at least well educated ones. Generally speaking, he stood up more consistently for individual freedom than did Meulen. In a few cases I rather side with Meulen but mostly I am on Beckerath's side.

The subjects are here dealt with mostly only in short segments, which gives the exchange almost the appearance of a periodial. One might call it a writen dialogue, but since so many references of others are included, it is more a "multi-logue", a survey of many different opinions. Because of this and because both appreciated Tucker's main book: "Instead of a Book" and his magazine "Liberty" this title was chosen here for this correspondence. (The same title has also been used and may still be used by a US anarchist magazine.)

U. v. Beckerath is insufficiently known as the author of 3 books on monetary freedom (soon to be placed on a website) and of numerous papers and letters on this subject. H. Meulen was somewhat better known, a,) as the author of "Free Banking, an outline of a policy of individualism", 1934, which is the second edition of his 1917 book: "Industrial Justice through Banking Reform" b.) as editor of "The Individualist".

The second edition of Meulen's book, 429 pages, was microfiched by me with some index notes by me and also a warning about this book by Ulrich von Beckerath, 7, April 1968, in PEACE PLANS 796.

All issues of Meulen's little Journal, "The Individualist", that I could get hold of and also my correspondence with him and some other material by and on Meulen were also microfiched by me in my PEACE PLANS series.

I have also microfiche-published thousands of pages of Beckerath's writings and many more of them are to come. Alas, most are only in German, with only few of them having been translated into English so far. But at least his three monetary freedom books were translated into English, however imperfectly. (Their French translation is much better.) In my edition of them in PEACE PLANS 9-11, I tried to eliminate most of these mistakes, as far as I could and also provided a common index to these three books. These 3 books are now available from me by e-mail, until they will appear on a website or on a CD-ROM.

The other writings by Beckerath, in my series, has not yet been indexed by me.

But an indication of his kind of monetary freedom thinking can be found in the preliminary but already long compilation of monetary freedom thoughts which is accessible on www.butterbach.net/freebank.htm A short representation of his monetary freedom ideas, largely in my own words, can also be found in my first peace book, now accessible on www.panarchism.info/

Numerous other monetary freedom titles were microfiched in my PEACE PLANS series and as many of them as possible could and should also be offered on CD-ROM and online.

I produced in 1990 a long monetary freedom bibliography, of about 124 pages, but have not yet got around to update it. It is also available from me by e-mail until it appears on a website or CD-ROM.

My main literature list and two supplementary lists are on www.butterbach.net/project.htm

The main literature list is also on my website www.acenet.com.au/~jzube together with some supplementary material.

All too little of the exchanges between B. & M. has found is way into M.'s small journal: "The Individualist", although M. believed that everything essential in his correspondence and reading had been abstracted or reviewed in it. Especially I missed, in those issues of THE INDIVIDUALIST that were accessible to me, B.'s criticism of M.'s free banking ideas. Maybe some of this is to be found in issues I have not yet seen. However, with only about 60 small pages published annually, M. could not include many contributions and filled his pages mostly without B.'s input.

B. alas, had never for long access to any periodical (the Annals, for his 3 books, excepted) and never got around to establishing one himself, although he had wished to do so from the time shortly before the Nazi regime began, in 1933. The Nazi period and the post-war years did not enable him to carry out this project. He remained largely confined to correspondence, of which probably more about 10 - 15 thousand pages remain to be digitized and microfilmed. Most of his correspondence up to 22 November 1943 was destroyed in an air raid on Berlin, with his extensive library.

The correspondence between B. & M. was, naturally, interrupted from at least 1939 to 1945.

B.'s letters sometimes amount almost to short "lectures", the only lectures he could provide as a rule, by writing letters, including his book reviews and comments on articles and clippings, with sometimes so many inserts included, that his envelopes burst.

He was usually very polite and even complimentary to the persons involved - but sharp, like Tucker, in attacks against ideas and opinions that he thought to be flawed. Usually they were. It is a pity that he had never a magazine like Tucker's and a readership like that of Tucker's "Liberty" at his disposal.

I knew B personally from 1952 to my emigration in 1959. Afterwards there was some correspondence between us, previously microfilmed by me. I may be biased in his favour, but I believe there are less flaws in his own ideas and those he preserved and transmitted, than in the ideas of most other writers of the past and present, who covered such a wide field. Most of the good ideas I know of I learned through him. Once I counted more than 200 of them.

The ideas and thinking of Meulen was, I believe, still rather flawed. But, judge for yourself the exchanges between these two long-term libertarian friends and fans of Tucker and of many of the other individualist anarchist classical writers.

B. always drew a strong distinction between letter writing and article writing and did not want segments of his letters to be published as articles but to remain characterised as mere letters. With articles he took even more care than with his very thoughtful and stimulating letters. In letters he sometimes resorted to all too general and collectivist terms like "Russia", when really meaning the Soviet regime. Here one should consider that most of these letters were written when he was old, under-nourished, sick, weak, tired or all too cold, in unheated or insufficiently heated room. Often B. could not write at all, when he was wide-awake at night, but had to stay in bed, sleepless, in an unheated room, the typewriter being too noisy for his neighbours at that time.

Taperecorders were only just becoming available in households. I once let him experiment with one heavy and large "Grundig" one that I had bought. He was not satisfied with the transcription of the record and did not continue experimenting with it. If small handy dictatating cassette recorders had been available to him -- or better, very quiet computer keyboards and computers - e-mail, websites, CD-ROMs, he would have been in his element, provided heat, food, health, old age and sleep would no longer have been problems for him.

Meulen could mostly write in relative comfort and with all his reference on hand and also many reference libraries not far away. For me he is a good example of the power which false and popular ideas and unchecked premises still have even over many libertarian minds and supposedly consistent adherents of free trade, free markets, free banking and free competition for institutions, which turn them into enemies rather than supporters of the best libertarian ideas and proposals.

That an old individualist anarchist like Meulen, a student of economics, persistent reader, publisher and editor of an individualist journal, could misunderstand free banking, gold standard and monetary freedom options, population questions as well as aspects of free trade, individual secessionism and exterritorially autonomous volunteer communitities, even rights and duties, as much as he did, as a long-term member of the Personal Rights Association, even after many years of correspondence with a man like Beckerath, shows well what an uphill battle lies still ahead for us, unless we do sufficiently mobilise all our resources, including especially the affordable, powerful and lasting alternative media and also realise the experimental freedom options in all spheres.

If I had done nothing else in my life than bring this correspondence within reach of everybody interested in it, then I could already consider my life as having been well spent.

Naturally, I could not sufficiently restrain myself from adding some comments. These are in brackets and marked with J.Z. and often the date. Those not interested in my opinion can thus easily go on ignoring them.

I believe that B.'s writings deal with many fundamental ideas, facts, proposals and possibilites that are all too much neglected by most other writers. Alas, he did not live to experience most of the large revival of libertarian thinking and writing, nor the rediscovery of monetary freedom ideas among academics and laymen since about 1974. But even in these new circles B.'s own writings on the subject, which I am inclined to call "classical" ones, remain largely unknown.

I have not yet got around to provide an index to this letter exchange. But it being digitized, such an index is less necessary that for ordinary print. One can always use the "find" command for certain terms that one is interested in. So, I may only get around to compile a list of words that I would recommend looking up in this exchange. But then I have already provided an index to many of the issues of Meulen's "The Individualist" and to the 3 monetary freedom books by Beckerath and these, as well as my first long and alphabetized compilation of monetary freedom ideas, definitions and opinions, can already serve as search aids for information in this letter exchange.

The single 1935 letter by B. and its following summary can well serve as an introduction to the monetary freedom parts of this correspondence.

The fact that these friends did not achieve agreement between them should make us ponder the conditions, under which such past, present and future exchanges could be more fruitful.

Both did obviously believe to have refuted the other, but could not prove this to each other. In this I belive that B. was much more right than M. - but then I am biased in favour of B., having known him much more and having been largely influenced by him from the time I was 19.

Among the improved conditions should be the permanent and affordable publishing of all monetary freedom writings, well indexed, abstracted and reviewed, also in bibliographical surveys and tabulations of their proposals, e.g. on the characteristics of their proposed exchange media and value standards.

All the uncontested views, insights and ideas should be combined, together with their proofs and references.

All the contested ideas should be published together with their best refutations and references.

An association of tolerant monetary freedom advocates should be formed, pushing towards full experimental freedom in this sphere and until then trying to achieve maximum and permanent publishing for their ideas, proposals and arguments, all properly confronted and interconnected.

Naturally, there should also be established a permanent and large magazine, at least on microfiche and floppy disk but also online and on CD-ROM for further detailed discussions on all aspects of full monetary freedom, with practically unlimited pages for this discussion and an easily accessible and comprehensive library on monetary freedom, for which as few as a dozen CD-ROMs may well suffice.

A suggest a voluntary but as "total mobilization" as possible of all monetary freedom writings, ideas, references and talents, to provide monetary freedom solutions to all the major problems of our times that can largely be solved by monetary freedom.

We have suffered under monetary despotism and its many and distrously large consequences long enough to finally come to the resolution to try to end all aspects of it.

But we should also establish, tolerate or even help preserve panarchies or private payment communities for advocates of central, monopolistic and coercive banking, to do their things to themselves, so that they could continue to serve as deterrent examples for all others. For man is always inclined to repeat old mistakes as if they were bright new discoveries: "Each new generation is a new invasion by barbarians!" somebody once said. Beckerath several times remarked, that communist ideas represent the "original sin" of man, I suppose he meant: against man's own rights, liberties and interests.

Realistic advocates of monetary freedom would recognize that they are outnumbered by money reformers that still try to advance one or the other form of monetary despotism. Only full experimental freedom can serve the rights and interests of all of them sufficiently. Let all of them "fight" - with arguments and experiments, not with laws, court and police actions. Only thus can progress be assured between them.

I am prepared to e-mail this correspondence in one or several files to anyone interested, upon request, free of charge, until it becomes available either online or on a CD-ROM.

I tried in vain to handle it as a single file, just over 6 Mbs, continuously numered, coming to 1197 pages. I was stopped again and again because of shortage of memory and all my file clearing did not clear enough. The computer played up, even to the extent of offering me help - but only in Greek! And several times I lost the file of my last correction effort. So finally I split the file into 6 sections, each about 1 Mb. in RTF.

The letters of B. are in his flawed English, somewhat, hopefully, improved rather than worsened by myself. Ideally, one day, they will be turned into good English by someone.

I possess the copyrights on B.'s writings but throw them into the public domain, inviting accurate publishing of all his ideas and opinions by anyone in any medium, just like B. himself would have done.

M. never objected to reproducing his writings but rather welcomed it. His book publisher was not enough interested in his book to promote it, so in the 1990's at least there were still a few hundred copies left. But when I asked, in a large London Economics bookshop, how much they would offer for the remainder, they offered only, if I remember right, 5 % of what they would charge for the book in their bookshop!

With publishers and bookshops in that kind of condition, we can only be grateful that floppy disks, e-mail, websites and CD-ROMs exist by now, so that one can completely by-pass conventional publishers and bookshops for some of the most important books and even for whole small and special libraries of them.

Beckerath himself had kept his own letters to Meulen separate from the letters of Meulen to him. He may have had his own reasons for this. Anyhow, I followed his practice.

Anyone wanting to place all the letters chronologically or to put relevant letters together may do so easily enough on his own computer.

My main catalogue is a guide to many other writings by Ulrich von Beckerath and Henry Meulen, so far mostly only available on microfiche from me.

PIOT, John Zube

(Panarchy In Our Time or: To each the government or non-governmental society of his or her dreams!)

____________________________________________________________________________________________

John Zube, LIBERTARIAN MICROFICHE PUBLISHING, P.O. Box 52 or 35 Oxley St., Berrima, NSW 2577, Australia, e-mail: jzube@acenet.com.au Tel. (02) 48 771 436. No FAX! Website: www.acenet.com.au/~jzube

LMP's website offers a 2,000 pages (almost 5 Mbs) guide to the first 1545 of the PEACE PLANS issues that LMP has produced since 1977, containing, on about 500,000 pages, libertarian and anarchist books, pamphlets, magazines, newsletters, dissertations, bibliographies, directories, indexes, essays & articles, letter, review & leaflet collections, etc., with an average of over 300 pages per microfiche: $ 1 cash each, post-free for orders of at least 10, or 2 International Reply Coupons or $ 2 other non-cash, with small cheques not accepted. Has any other individual published more freedom texts, more cheaply, in any medium? A supplementary LMP list for Peace Plans 1546-1779 can be found on: http://www.butterbach.net/lmp/

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WILL 300 LIBERTARIAN CD-ROMS BE ENOUGH?

HOW MANY LIBERTARIANS DOES IT TAKE TO FILL A CD-ROM?

How many libertarian Mbs can and will you contribute towards a complete libertarian publishing, library & information service on ca. 300 CD-ROMs, with all the desirable reference works, linked, like the Encyclopaedia Britannica on CD-ROM, to Internet sites? Get entered in the still small but growing list of interested people for the cooperative filling of CD-ROMs, all produced only upon demand. They are, currently, still the cheapest, easiest, most powerful, wide-spread & durable enough alternative medium for all freedom books etc. For further details see: www.geocities.com/libertarian_library/ or write to me. - PIOT, John Zube, Libertarian Microfiche Publishing: www.acenet.com.au/~jzube & http://butterbach.net/lmp/lmp_sup.htm - jzube@acenet.com.au - or: P.O. Box 52 (35 Oxley St.) Berrima, NSW 2577, Australia, Tel.: (02) 48771436. No fax!

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CDROM628words See also: www.butterbach.net/project.htm

LIBERTARIAN CD-ROM PUBLISHING & LIBERTARIAN LIBRARY

WHAT?

Complete libertarian publishing library & information services for all freedom texts not yet cheaply, permanently & easily accessible in any medium, supplementing & listing all of freedom texts etc. offered in all media, or cheaply combining them, with permission, if required.

BY WHAT MEANS?

CD-ROMs, zipped, later DVDs, then still better disks, until all freedom texts can be found on the Internet & large & multiple websites are easy, fast & cheap enough to set up, maintain & download

A public & growing list indicating all interested & inviting independent collaboration or competition.

CD-ROM disks, drives & burners are already wide-spread & cheap. CD-ROMs are commercially pressed for as little as 50 cents. Each can contain, zipped, 200 to 2,000 book titles. A lifetime's freedom reading on a mere 10 CD-ROMs! A complete freedom library on perhaps no more than 300 CD-ROMs!

Filling them will not only require extensive downloading & e-mailing of already digitised texts but also extensive digitising, mainly as a labour of love. Luckily, scanners have become cheap & efficient & division of labour for large jobs is an ancient invention.

WHO?

Anyone interested in contributing libertarian Mbs, keyboarding, scanning, proof-reading, editing & computer skills & copyrights permissions. CD-ROMs, like microfiche & floppies, are essentially self-help media but do mostly need collaborators to fill them. With cheap, lasting, powerful & efficient alternative media anyone can be a publisher, editor & compiler.

HOW?

By keyboarding, scanning, downloading, alone or in association with others. Sending Kbs & Mbs on floppies, partly filled CD-ROMs or via e-mail - to the compilers of CD-ROMs.

By dividing the chores of e.g. digitising whole books into manageable portions between those who like a particular book.

By collaborating with & publicising all who have already taken steps in this direction. See the slowly growing list of interested people.

WHY?

Because it is possible now, affordable, & achievable by enough interested people.

We could use all our resources at our fingertips. We have never had them yet. On CD-ROMs they could be made cheaply & conveniently accessible & linked to current websites. In combination they could be rather useful. Sufficient knowledge could give us considerable influence.

Climbing the mountains of liberty knowledge would not only provide us with a great view but also realistic blueprints, the best programs, strategies, tactics, advice, refutations & references. Remaining disagreements would come closer to being settled. All valuable ideas, discoveries, talents & opportunities could be brought to light & made widely accessible. The Internet can do much but not yet everything or optimally.

WHEN?

As soon as the growing list of interested people contains enough libertarian Mbs to fill the first libertarian & cooperatively compiled CD-ROM.

PRECEDENTS, DEMONSTRATIONS, EXAMPLES:

Few will be as productive with this medium as Dr. David Hart has already been, who produced 4 CD-ROMs on his own, mainly on classical French Liberalism.

Compare Encyclopaedia Britannica & The Library of the Future, each on one CD-ROM. The latter contains over 5,000 titles, not all book-sized, but includes some freedom texts.

There are thousands of music, games & software CD-ROMs.

It's high time for more libertarians to use of this freedom of expression & information opportunity, at least for freedom texts not yet otherwise available.

PIOT, John Zube, 3rd of October 2001.

(PIOT: Panarchy In Our Time or: To each the government or non-governmental society of his or her dreams! See also: www.panarchy.org )

CONTACTS:

John Zube, LIBERTARIAN MICROFICHE PUBLISHING, since 1977, Libertarian PEACE PLANS series since 1964:

www.acenet.com.au/~jzube

Supplementary LMP list: http://www.butterbach.net/lmp/

jzube@acenet.com.au

Also: Research Centre for Monetary Freedom, On Panarchy, Slogans for Liberty. 1779 PEACE PLANS issues so far, ca. 500,000 pages.

John Humphreys, LIBERTARIAN LIBRARY: www.geocities.com/libertarian_library/

AUSTRALIAN LIBERTARIAN SOCIETY: www.geocities.com/libertarian_society

libertarian_aust1@yahoo.com Also: ALS e-Newsletter & ALS Forum

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There arises from a bad and inapt formation of words, a wonderful obstruction to the mind.

Francis Bacon

I would rather call it a self-imposed and terrible obstruction of the mind. Henry Meulen, alas, offered all too many examples for this and he could not be persuaded to drop these wordings but, rather, built his whole monetary system upon them. - But he does not stand alone. This is also characteristic for many other money reformers, even those who generally are rather in favour of liberty. - J.Z., 30.5.03.

I have partly scanned these texts and had partly to keyboard them in. The scanned texts contained numerous flaws, omitted words, sentences, paragraphs or whole pages on which only a few letters or words were recognized. I eliminated the mistakes as far as I could, tried to improve B.'s English - with my still flawed English - but did not try to eliminate or indicate all of M.'s spelling, grammar or punctuation mistakes. You can do that in your copy, if you like.

Nor did I always indicate their paginations or stuck to their paragraph arrangements.

Sometimes I underlined catchwords they had failed to underline. A few times I put words in bold without indicating that they had not stressed them. Mostly I followed their own stresses (extra-spacing by using bold) and underlinings.

I kept Beckerath's separation of his own letters from those of Meulen. Any reader may combine them as he likes.

Not all of the extras, like some letters by others and some clippings were always placed quite correctly with the corresponding letters. Mostly they are ordered by their dates.

I added frank comments, also biased ones, mostly in favour of Beckerath's point of view- and whenever I felt like expressing myself or wanted to clarify a point for myself and perhaps also for others. These remarks are added in brackets and can thus be easily recognized and ignored by those who prefer that.

That was in my first scanning/keyboarding, translation and commenting attempt, which took about 5 months. Afterwards I reread the 20 segments again, eliminating many mistakes that I had previously overlooked. That took about 10 days. I am sure that if I spent another 10 days on a revision, I could still find many further mistakes and would probably still leave many in, unnoticed by me. The Word programme does not always indicate them nor was my concentration and knowledge enough to find all of them at the first try.

But I will not try to spend further weeks on attempts to make these texts as perfect as I could. I rather expect some collaboration from those few to whom I send these texts in the expectation that they would be interested in them.

They should send further corrections to me and I will combine them and pass them on to whoever is prepared to put this exchange on his website or on a CD-ROM.

I would welcome comments by others to these letter exchanges, turning them into a "multilog" and also even more into something that resembles a magazine, with many short contributions from many sources on many subjects, through their "letters to the editor". I could at least offer to microfiche them in my PEACE PLANS series, together with this correspondence, thus helping to keep the discussion on these subjects alive.

PIOT, John Zube, 30.5.03.

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Translation of a letter of Ulrich von Beckerath to Henry Meulen, 1.8.1935, the only one of this correspondence that is in my possession, copied from Rittershausen's collection. Alas, an appendix to page 1: page 1a of this letter is missing still. I will insert it later if I can get hold of it still. I either failed to copy it or mislaid it.

Meulen burnt his correspondence and B.'s files and library were destroyed in an air raid in November 1943.

This letter and the following paper were previously microfiched by me with the 1896 volume of SOUND CURRENCY and some other material, e.g. a special edition by Robert Sagehorn, on Henry Meulen's views, in PEACE PLANS 350 - 354, pages 657-666.

J.Z. 14/6/81, revised: 21.5.03.

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A KIND OF INTRODUCTION

TO THIS LONG CORRESPONDENCE

BY ULRICH VON BECKERATH HIMSELF,

IN FORM OF HIS OLDEST LETTER TO HENRY MEULEN THAT IS IN MY POSSESSION

AND HIS SUMMARY AT THAT TIME, OF THE DIFFERENCES BETWEEN THEM.

____________________________________________________________________________________________

Mr. Henry Meulen, 1.8.1935

London W 12 Your letter of 30/7/35

Boscombe Road No. 19 received today

Dear Mr. Meulen,

our agreement goes still further than you express in the last sentence of your letter. Most of all, we agree upon the principles of the Personal Rights Association, which, in my opinion, will one day play an important role in the fight against communism.

One of the principles of the PRA appears to be that no one should force someone else to do or omit something when these actions or omissions have nothing to do with the security, the property, the job opportunities and the exchange with his friends and customers. To what extent is tolerance economically and socially possible? That is the problem proper.

Let us take an example: You know that the followers of Gandhi refuse to wear clothing that was produced by machines. Both of us hold this to be foolish and believe that Gandhi's followers harm themselves thereby.

But: Both of us would do whatever is in our powers to defend those followers of Gandhi who are to be the victims of an attempt to force them to wear machine-woven cloth.

By now we have both reached a point in our discussion where one can no longer prove or refute anything. In such a case one should examine whether the principles of tolerance could be applied here.

Again an example: The Brahmans cannot … to Englishmen ... (page 1a, is missing here - J.Z.)

Even the most extensive tolerance cannot go so for to permit the promising of services which can be fulfilled only by a happy chance. Example: I go to a lottery agency. "Here are 10 Mark. Give me one that will win." The agent takes lot No. 158 932 and gives it to me. The lot wins indeed!!! And hundred other lots which the agent sold in the same way, do also win! Was the agent a swindler?? I say: Yes! And even if the chance to win were 99%, the agent could not sell them at 100%, in the same way as a merchant may not sell a length of cloth, whose length he does not know exactly, as "10 m. length of cloth!" He may only sell it as a cloth: probably 10 m. long.

These considerations appear to me applicable to the option clause. Some years ago, in a book whose title I have forgotten (I must confess that then I did not recognize the full importance of this subject), that some Scottish banks - or were they English country banks? - had the following option clause on their notes:

Redeemable in silver, upon demand of the bearer, in case the bank is sufficiently supplied with silver.

In case the bank has no silver, it will pay interest on the note until the day of its redemption.

The bearer is also authorised to demand the surrender of a corresponding part of those securities

upon which the bank has issued the notes.

This is a good clause! The bank does not promise any more than she can fulfil. The government should never have prohibited such a clause.

But those option clauses by which the bank obliged itself to pay at a certain date were of quite another kind. The chance (end of page 1b, beginning of 1c) that the bank can keep its promise, may be estimated to be 90%, or 95%, or 99% or even 99.9% (too high!!), but one cannot estimate it to be 100 %!!

Consequently, the bank may not promise to redeem the notes after 6 months.

Perhaps you are of the opinion that such a point of view would be what one calls in German: "Haarspalterei" (hair splitting). That is a matter of opinion!!!

I would like to draw your attention to another important circumstance which so for was not sufficiently noted in the theory of convertibility (redemption, metal cover). At the same time as in Scotland, in England and in America, the option clause was frequently applied, the SILVER CURRENCY and not the gold currency prevailed generally. I still remember the old Prussian "Thalers", which circulated here up to the year 1907. On them was written: "30 equal one pound of fine silver". Thus, whoever received 30 Thalers, had to carry home one Prussian pound (500 grams, while an English pound is only 453,6 grams), and in addition to that he had to carry the copper admixture. A public servant who received his monthly salary in silver coins, risked torn pockets on his way home. The payment of somewhat larger sums of money in silver was considered as an unfriendly act. The public wanted paper!!!! Under such circumstances it was, naturally, quite considerably easier to keep notes in circulation than when the bearer of a note can demand gold. Whoever, in the year 1763 wanted to redeem at any bank notes amounting to 1,000 pounds into silver, would have had to bring a suitcase or a backpack along, perhaps even a wheelbarrow. That was, indeed, a strong obstacle. But, 1,000 English pounds in gold are another matter. In an emergency one can transport them without a suitcase and could fit them even into a briefcase. (End of page 1 c.)

To sum up: I have nothing against option clauses. Only they must not promise more than the bank can fulfil, especially when the redemption is to be mode with gold. Any bank which would promise more could, in my opinion, not be considered as an honest bank, not even within the most tolerant community.

Indeed, in your book you have nowhere expressed yourself against an option clause which confines itself to an obligation which the bank can fulfil.

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

The question is now only which procedure is the most advisable one, provided one

a) wants to take the first step to abolish the crisis - which both of us have recognised as a monetary crisis - and

b) wants to prevents the recurrence of the crisis.

Here something else has to be taken into consideration, something that appears at first to be rather strange. Nevertheless, two very sharp minds, quite independently from each other, perceived it: namely W. B. Greene - who was made known again by your quotations - and Zander. This consideration is the following:

Should one not draw the last conclusions from the reasons which speak against the redemption of banknotes on sight??? Does not the same apply to every debt relationship what is right for the debt relationship between the bank and the note holder? Is it right that an individual promises to pay money, although it may happen that money will have disappeared from the district in which the individual resides??

Furthermore, are laws rightful and to be upheld as part of a legislation based upon honesty, clarity and reason, which attempt to enforce what has been found in the special case of the "redeemable" banknote to be dishonest, unclear and unreasonable?? (End of page 1d).

In other words: Should the system of "exclusive currency" - as Greene calls it - be preserved? On pages 14-17 of issue I/1934 of the "Annals" I have examined this question - or, rather, touched it. You have touched it on the top of page 241 of your "Free Banking". Still very much remains to be said on this. But I will not do so now and, instead, return to our special subject.

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

I proceed from a condition which really exists now, in the largest part of the world, in as differently governed countries as the USA, Russia, China, Japan, etc. Let us take an example:

In Indiana the depression is especially severe. There was a very abundant harvest - and consequently the inhabitants of Indiana starve! What is to be done? Presently, conditions are like in times of war: The government accepts tax payments from the formers in form of produce and distributes these to the unemployed.

Now let us assume that all the laws, which do not allow the inhabitants of Indiana to undertake an effective monetary self-help measure, were repealed. Let us further assume that the inhabitants of the capital Des Moines want to make a beginning and ask you for advice as well as m e.

You would then (if I have understood you right) answer:

Your banks should supply themselves with gold and issue redeemable gold-notes, as I have described in my book and in my letters.

I would answer: Your employers should begin to pay their expenses, especially for your wages, in goods warrants, which would contain the well-known text and, among other things, the following clause:

The issuer makes no difference between his own goods warrants and gold coins when somebody buys something from him. Thus this clause would run somewhat like:

"We, the bread factory Ward at Des Moines, supply for this goods warrant $ 5 worth of bread,

exactly as much bread as we would supply for $ 5 in gold (five times 1,50464 grams of fine gold)."

(End of page 2.)

This the bakery could do within one hour after the prohibitive legislation has been repealed. After another hour the improvement in the economic conditions of Des Moines could already be considerable.

On the next day the most varied issuers of goods warrants will ponder: How can we combine into a community so that not 100 different kinds of goods warrants circulate in Des Moines but less than 100, &, if this is possible, only one kind?

On the second day they will have brought about such an association.

How such a thing functions in p r a c t i c e was described by John DeWitt Warner in his brilliant "The Currency Famine of 1893" in the magazine "Sound Currency", year 1895 or 1896. (It appeared in both years.)

Thus my advice amounts to doing that what our fathers have done in the year 1893 - and, by the way, to a still larger extent in the year 1907.

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

What would the inevitable answer of the inhabitants of Des Moines be to you???

Our banks should get themselves gold? Perhaps that would work very well - but, how could they do this??

We cannot wait until they have, perhaps, succeeded. We want to eat today, we want to pay our rents today. Your proposal is right now, technically unrealisable.

That would be their answer to you.

(J.Z.: I either read it somewhere or my mother reported it to me: Those tenants in Berlin, who, during the Great Depression, could no longer pay the rent and where thus put on the street by their landlords, managed sometimes to live in tents in the parks of Berlin, obviously tolerated there by the police, because of their plight. Not everywhere else was and is the police as tolerant towards the homeless, in such locations. - J.Z., 21.5.03.)

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

You might perhaps reply: Immediately unrealisable - that may be! But, in a year or in 10 years my proposal can be realized and then it is the best, which you could accept.

And now we come to the point where proof and disproof is impossible. You say: Runs upon private note issuing banks have no great practical importance today. Today one could consider the danger of a run to be zero.

I say: Runs upon private banks of issue are today as well possible as they were previously.

You say: If it comes to a run then the option clause will suffice.

I say: There are cases in which the option clause suffices in a run and there are cases in which it is not sufficient. One may not apply the option clause before one has distinguished between the two.

You say: When the option clause comes into operation then, what gives value to the note, in spite of the option clause, is the hope of the note-holders for a redemption in the future.

I say: No!!!!!!!!! What gives value to the note, even after the option clause comes into force, that is the possibility to use it, immediately in the stores. If this opportunity does not exist, then the note will fluctuate so much in its value and will, moreover, depreciate that much, that it can no longer be a means of payment.

None of us can prove his opinion.

Nevertheless, your highly readable descriptions in "Free Banking", page 21, beginning with the words:

"The employers" etc., and ending with "... to accept the notes", do not leave me without hope that one day we could, nevertheless, agree upon this point, without proof and without refutation.

You say: Even after the option clause comes into force, the confidence of the note-holder in the banker is essential.

I say: After the option clause is applied, the confidence in the banker becomes the most unimportant thing. Moreover, then it is mostly equal to zero. However bad the banker may be, if only sufficient storekeepers

(end of page 4)

accept these notes like they would accept gold coins, and give for a pound note as many goods as they would give for a sovereign, then the public is quite indifferent towards the banker.

I speak here of shops. An equivalent to the shops is, naturally, the administration of a town which declares:

"We accept the notes in tax payments in the same way as we would accept gold coins."

The same applies to a landlord who would say: I accept these notes like gold coins. I need not multiply these examples.

You might perhaps object: But what if the shopkeepers have no confidence in the banker?

I reply: If the shopkeepers have no confidence then it could happen that they will not accept the notes. But if the shops are indebted to the banker then the confidence of the shops does not matter at all. The debtor need not have confidence in the creditor. The debtor has only to pay. The shopkeeper may consider the banker to be the worst kind of scoundrel. He may believe that his vaults would contain sand instead of gold. Nevertheless, if the storekeeper owes the banker 5 pounds, then he will accept notes of the banker amounting to 5 pounds and pay his debt with them. And if, moreover, the banker says right away in the loan contract that the shopkeeper has to accept the notes at par and has to pay his debt with the notes received by him, then the shopkeeper will accept the notes from any buyer and under all circumstances.

It may happen that not the shop itself but the factory is indebted from which he is supplied with goods. As long as this factory is indebted everything remains as I have explained above.

Thus I say: It is not the gold treasure of the banker or the confidence in the banker that allows notes with the option clause to circulate at par

(end of page 5)

but the debt relationship between the banker and his customers is the cause - and the obligation of the customers to accept the notes at any time at par.

It appears that in old Scotland the acceptance of the notes at par by the debtors of the bankers was not expressly included in the included in the loan contracts. Merely "good trading customs" were applied. It would be very important for the history of banking to clarify this point. But for the public it does, naturally, not matter at all whether the debtor of the banker accepts a note because he has to or because he does so voluntarily. (The Four Law Drafts want to oblige the debtor to accept the notes, like gold, and prohibit a discrimination between them.

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

You continue to maintain: The gold stock of the banker increases the confidence in him.

I state: This increase is so unimportant that the refusal of one newspaper vendor to accept the notes at par could undermine this confidence more severely than 100,000 kg. gold in the vaults can serve to restore it.

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

I hold: As the possibility to use the notes in the shops like pieces of gold is the real basis of the value of the notes, the banker must not grant any long term loans, that is, such loans in which the debtor may rightly say: I, the debtor, will accept the notes at par in my store or in my factory only when I am finally obliged to repay my loan.

If the banker, nevertheless, wants to provide long-term loans, then he must have a guarantor who would place him in the same position as if he had granted a short-term loan, that is, a guarantor, who will accept the notes at any time in his store like gold

(end of page 6)

although the guarantor has not taken up a loan.

Our views diverge especially for apart in this different concept of short-term and long-term loans. You favour especially long-term loans in many passages of your book and you demand no guarantor. I demand him.

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

I still want to clear up one small misunderstanding:

I do not think of any obligation of traders in gold (gold smiths) to accept notes in payment for bullion. I only-hold that once gold traders are no longer prepared to accept the notes of a certain bank at par, then this should be a signal for the bank and that the bank should then ascertain the cause. Probably it will be found that the bank has given the gold merchants just cause to value the notes of the bank less than those of other banks. I go further and say: the refusal of the gold traders should be publicised. Then it will be found whether the gold trader was right.

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

You say: But the old Scottish banks were organized precisely according to the principles whose validity you doubt.

I say: The old Scottish banks only seemed to be organized according to these principles. Several other factors preserved the value of their notes, factors which the history of banking (least of all that of Kerr) have not yet taken into consideration. First of all, one could pay one's taxes with these notes. That was very important. When I know that the tax collector will take my notes, then I do not ask whether the banker has gold or not or whether he grants short term loans or not.

(End of page 7.)

Moreover, the assets of the note-issuing banks were much larger, at any time, than their note circulation. What does this mean? It means that there were in reality very many debtors of the bank who gladly accepted the notes at par or even had to accept them, even if some of the debtors had taken out long term loans. I assert (without being able to prove it): If one were to search in the archives of the old Scottish banks, then one would find that the ready-for-sale goods or services of the debtors of the banks at these times were worth more than the note circulation. For this reason the long terms of many of the loans were harmless. (Nevertheless, a better system would have been possible.)

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

We do agree on this that the present crisis is, essentially, brought about by an "insufficiency of money". What I desire, what the Four Law Drafts aim at, etc., that is not simply an "increase of the volume of money", but, instead, independence for all those who desire it from a situation of much or little money in a country, from a fast or slow circulation, from hoarded or quickly spent money. Thus our aim goes much further. But perhaps we agree also on this.

The right to make oneself independent, up to the limit of what is technically possible, of all money hoarders and money exporters - was derived by me from the principles of the PRA.

Now only the following questions remain:

a) HOW does one do this and

b)WHICH would be the BEST way to do this?

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

Under our eyes a very important event is in the making: The rise of Russia against the Soviets. Such an insurrection becomes technically possible only when those who rise also provide themselves with a payment system;

(end of page 8)

and it must be one that functions immediately, i.e. within 24 hours.

Does your system offer that??????????

Please consider that the beginnings of this insurrection, namely the numerous issues of cooperative money a few weeks ago, were arranged without gold and have apparently functioned quite well. Otherwise the wrath of the men in power in the Kremlin would not have been as great.

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

The laws of England, and those of all countries in the world, grant creditors even then the right to demand legal tender when all legal tender money is hoarded. In my opinion this is one flaw in these laws. In my essay I attempted to clarify this defect. I am pleased to hear that you have dealt with the legal tender problem in your book.

I would be still more pleased if, in the third edition (which will become necessary), you were to extend your examination to the following two problems:

A) What means legal tender for the debtor in case all legal tender is hoarded? In other words, what could a

debtor "force" upon his creditor in such a situation?

B) What can a creditor rightly demand when means of payment are scarce in a country, when e.g. all legal

tender is hoarded?

These are important questions which no legal man has so for answered.

(End of page 9.)

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

I see that I have already arrived on page 10 of this all too long letter.

Summary:

With the brevity, clarity and distinction that characterises all that you write, you have stated in one sentence the main difference between our opinions:

You say: "Before we accept inconvertible private money, we must have some knowledge of the standing and future prospects of the issuer."

I say: No!!!! and I add: Theory and practice speak against this principle!!!!!!

We must be informed about the situation of that person who accepts the notes, more correctly, of the situation of the one from whom we want to purchase something for the notes.

The situation of the one who issues the notes, does not matter - at least not for "the man in the street", whose readiness to accept the notes we have discussed."

With best greetings, yours sincerely, U. v. Beckerath.

____________________________________________________________________________________________

SOME DIFFERENCES BETWEEN THE MONETARY VIEWS OF

MEULEN AND BECKERATH

Compiled by Ulrich von Beckerath in German, on August 12th., 1935, elaborating on his above letter to Meulen on August 1st., 1935.

Prof. Heinrich Rittershausen marked this translation with "GOOD!". But it is only a rough translation by me, J.Z. It is intended to transcribe the German text as well, legible for a microfiche issue, for German readers and in the hope that some better translators will appreciate these thoughts which are of the greatest importance for all current efforts to denationalise money. J.Z.,15/6/81

=================================================================================

1.

MEULEN: The first requirement to keep the value of paper money constant is the confidence of the public in

the issuer.

BECKERATH: Confidence is a highly unreliable and therefore bad foundation for value.

Good paper money must be issued with methods, which assure that its value remains preserved

even in cases of suddenly occurring and widespread distrust.

2.

MEULEN: Even for the first issue of paper money confidence is necessary, the confidence in the

convertibility into metal (gold or silver).

BECKERATH: Indeed, that one can begin an issue based upon a confidence in the redemption of paper money

into gold or silver, has been proven by experience. However, that one can just as easily - nay even

much more easily - begin with an issue of paper money based upon the readiness of shops and

similar suppliers - to accept the paper money like rare metal coins, that has also been proven by a

long and very extensive experience.

3.

MEULEN: It is (although perhaps not morally but, nevertheless, in practice) permissible to keep the

redemption fund smaller than the sum of the issued paper money.

BECKERATH: Exactly the contrary is right. Morality and religion have declared for over two centuries that a less

than 100 % metal cover is permissible. In practice this system has failed. Moreover, it has even

quite significantly contributed to the crisis.

4.

MEULEN: The fact that banknotes circulated in Scotland at par and without difficulties, even after the option

clause was resorted to, proves that the promise of future redemption suffices to preserve the value

of the notes and their capacity for circulation.

BECKERATH: Post hoc, ergo propter hoc!! Assume that the Scottish church would have blessed the notes before

they were issued: Would this oblige anybody to believe that the ability of the notes to circulate

depended upon this blessing??????? The notes circulated without difficulties at par because the

merchants of Scotland and the farmers accepted the notes a par. And why did they accept them at

par? Because they were indebted to the banks and could and had to pay their debts with these

notes at par! The redemption fund was right from the first day as unnecessary as the blessing by

the church would have been. Moreover, the fund was as harmful in its way as a blessing would

have been in its way - for the notions of the people would have been confused thereby.

5.

MEULEN: The risk of the bearer of the note consists in the fact that the bearer may not get the gold or silver

for his note upon presenting it or only after 6 months.

BECKERATH: The risk of the note holder consists in the possibility that the merchants around his residence will

not accept the note like cash.

6.

MEULEN: The risk of the note holder can be compensated for by means of an interest rate, of approximately

1/2 % per month, whenever redemption upon presentation would not be possible.

BECKERATH: When merchants and farmers will not accept the note at par then even a much higher interest rate

will not suffice to counterbalance the discount of the notes which will then occur. Experiences

have been gathered on this.

7.

MEULEN: I maintain my point: The redemption (immediate or postponed) is the essential foundation for the

value of notes. (J.Z.: Meaning: metallic and specifically rare metal redemption, not counting

redemption in goods and services at all! - J.Z., 21.5.03.)

BECKERATH: I maintain mine: The indebtedness of the merchants and farmers to the note-issuing banks and the

reflux (of the notes) following from this, combined with their "shop foundation" is the essential

basis for the value of the notes.

8.

MEULEN: The obligation which a bank of issue imposes upon its debtors: to surrender for notes as many

goods or services as for gold, has only a very minor economic effect.

BECKERATH: This obligation, imposed by the bank upon its debtors, is of very great economic significance. The

insistence upon this obligation enables the note-issuing banks to grant as much in credits as its

debtors possess in goods whose sale is assured. Besides, this obligation assures the par value

between gold an notes as perfectly, nay even better, than a 100 % cover of all notes by gold. It is

this obligation which enables the bank to begin its note-issuing business and to maintain it -

without possessing even a single gold coin. This obligation turns every run into an ADVANTAGE

of the debtors of the bank and of the bank itself, since the run can only be directed towards the

shops and not against the bank.

(J.Z.: And the debtors want to sell as much as they can and can pay their debts to the bank with the

notes of the bank they received in this run. - J.Z., 22.5.03.)

9.

MEULEN: One can provide for a paper money with constant purchasing power.

BECKERATH: A paper money of constant purchasing power is technically impossible.

10.

MEULEN: A paper money with constant purchasing power would be very useful.

BECKERATH: Even if it were technically possible - the economic harm done by a paper money with constant

purchasing power would be much larger then its usefulness.

11.

MEULEN: When the general price level has changed, then it does not matter whether the price changes

originated from the side of the goods or from the money side, whether they were caused by crop

failures or a flood of money, whether through abundant harvests or through money shortages. The

ideal is always: the creditor receives money with constant purchasing power and the debtor pays

with money that has constant purchasing power.

BECKERATH: When a crop failure occurs, then it is only fair that the creditor is disadvantaged by it to the same

extent as the debtor is, in other words, that the prices rise. And if a very abundant harvest occurs

then it is only fair that the creditor gains the some advantage from this as the debtor does. In other

words, the prices should fall in these cases. Gold, especially, permits to account for changes in the

purchasing power of money which were caused from the goods side, with an exactness that is

sufficient for the practice.

A money of constant value would be the sane for the economy as a 'balancing tank' of a ship that

works 100%, even in the open sea. It would mean that the ship would not give way to any wave or

any storm. For a while one could be quite comfortable in such a ship and then the waves would

destroy it.

12.

MEULEN: The English government has the right to declare any good to be "legal tender". It may even declare

a paper, which it considers to be of constant value, to be legal tender. The government may change

any debt contract as it pleases. It may declare silver, copper, anything at all, to be legal tender,

upon its discretion. Knox and Knix may not conclude debt contracts with each other in which a

certain good, which Knox and Knix consider to be suitable, is to be supplied as agreed upon.

BECKERATH: Such things were intolerable even to the Turks under the Sultans, for they rose when the Sultans

went too far. How much more in accordance with freedom and voluntarism is the old law passed

by Frederic the Great, according to which even in case of devaluation undertaken by the State, the

creditor, nevertheless, was not to receive any less in weight of silver than before! Does the

Personal Rights Association teach such a slavish submission to the current English government?

13.

MEULEN: The French government was quite in its rights when once it declared the Assignats to be legal

tender.

BECKERATH: King Louis XVI. was appointed as a guardian of the currency, not as its destroyer. The

compulsory acceptance for Assignats was the beginning of his downfall. Prussian paper money, on

the contrary (and with the exception of a few weeks at the time of Napoleon I.), had never forced

currency (compulsory acceptance at a forced value: legal tender) until Havenstein realized legal

tender in 1909. France's money shortage could have been abolished in a very simple way: by the

introduction of "free banking". The king could have received his taxes very well in private

banknotes.

(J.Z.: All central banks were given great and abusable powers and privileges as "guardians" of the

national currencies and all of them have failed to sufficiently guard their currencies and have

abused these powers and privileges, legally or illegally. Thus by now these central banks should be

deprived of their powers and competed out of existence. - J.Z., 22.5.03.)

14.

MEULEN: A country requires a certain minimum of gold so that its economy can function.

BECKERATH: A currency must be so instituted that the economy it not disturbed even once the last piece of gold

is exported.

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

12. 8. 1935

Bth.

____________________________________________________________________________________________

LETTERS OF ULRICH von BECKERATH

TO HENRY MEULEN, 1946 - 1959

(By the man who thought himself somewhat responsible for WW II. See page 59. Letter of 4, II. 1949. He did have a small chance to kill Hitler - and did not use it. - J.Z.)

It is possible that B. corresponded with Meulen almost to his death - but, unfortunately, I do not have any of his letters to Meulen from 1959 to 1969. They may be still buried among the remainder of his post 1943 library, in Berlin. Alternatively, B. had given up corresponding with Meulen in 1959. That seems likely from the spacing of the last letters here reproduced.

They are slightly edited by me, upon retyping or proof-reading of the scanned text, to eliminate some of his English mistakes, hopefully without introducing too many of my own. - Ulrich von Beckerath, 1882-1969, did not like his German writings to be "corrected" or altered or editorially improved - because he had spent much time and thought upon them and, by his own high standards, had optimised them. However, he did not mind help with his English and was grateful to Meulen for the few "translations" he made of his texts into proper English. Thus I dared to try improve them as well, although not very carefully, just while digitising these letters and in spite of being still not as fluent in it as Henry Meulen was, who, unfortunately, included only all too few writings of von Beckerath in his THE INDIVIDUALIST, especially on points in which B. differed from M. on the subject of monetary freedom. - Note also that B. was usually extremely polite and generous with his compliments towards those whom he did appreciate in one way or the other. He had even some praise for some of his enemies, when he thought they deserved it. - J.Z., 7.1.2003.

==================================================================================

U.v. Beckerath, 1. 12. 1946

(1) Berlin-Charlottenburg,

Neidenburger Allee 16,

care of family BLOESZ

Mr. H. Meulen,

31 Parkside Gardens,

London, S.W. 19

Dear Mr. Meulen,

I received

1.) Your letter of the 16 August 1946,

2.) You letter of the 8 November 1946.

I hardly conceive why your letter of the 16 August did not reach me. You used the exact address of my employer and indicated even the number of the room in which I work, and yet the letter distribution department of the house sent the letter back to London!!

And I am by no means unknown at the house. I find only one explanation:

The men and women are member of the United Socialist Party (merely communistic) and I am not, and also declined membership officially, some time ago. Perhaps you think that such reasons should not be taken into consideration. I can only answer: they must, in this case. -

- - - - - - - - - -

I beg you to try once more to send to me a number of the "Individualist". Please use the address above indicated. But do not join the issues to a letter, but send them as printed matter.

I received the number of October in this way and it was a very great pleasure for me.

- - - - - - - - - -

Concerning price control: I am still convinced that besides war, earthquakes and great diseases, such as pestilence and cholera, there can be no greater disaster for a country than price control. And if price regulation is joined with currency folly, as it is in nearly the whole world, then Negroes in the thickest jungles at the Congo, where are neither prices nor currency, live better, more cultivated and less troubled than the so called civilised nations.

- - - - - - - - - -

Before the war I was an adherent of the gold currency, now, after so many years of paper currency with all its terrors, I am a fanatic of the gold standard though not of the gold standard model of 1913.

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

I am convinced that Germany could buy food, new machines for the machines taken on reparation account, clothing and what she wants, if Germany would offer the sellers a gold basis.

Even under the present state of affairs that would be possible and even easily possible. I think, that Zander explained to you the ideas which our little circle, authors of the 4 bills, worked out already in 1933. If I would not have to work so excessively (I must reduce my sleep to 6 hours a day), then I would write some articles in one of the papers controlled by pro-reason editors, say the "Tagesspiegel", the "Kurier" and such papers.

I am pretty sure, that they would be printed. But never in my whole life did I suffer such a lack of leisure time as now. (They were not reasonable enough ever to accept his submissions! - J.Z., 7.1.03.)

----

If I had the pleasure to see you, if you visited Germany, that would be the realization of a hope of many years.

----

Today I have not the time to write to you about Zander and his interest in Jewish mysticism. I was very much surprised, that the very logically thinking Zander, that such a matter-of-fact man, has anything to do with mysticism. I hope to be able to write to him.

What you write of Hitler's crimes in treating the Jews is perfectly true, but if governments have no programme that is a real programme, they begin to persecute any class of the people -- the Jews in the greatest part of Europe, the Koreans in Japan (where they were accused to have caused the conflagrations after the earthquakes of 1923), the Germans in the USA (before the war and, I am afraid, the more after) -- but the world's history is full of examples.

-----

I hope to be able to write to you next Sunday.

My best regards to you - signed: U. v. Beckerath.

___________________________________________________________________________________________

U. v. Beckerath, 7. Dez. 1946.

(1) Berlin- Charlottenburg 9.

Neidenburger Allee 16,

care of family Bloesz.

Mr. Henry Meulen, …………

Dear Mr. Meulen,

My economic programme for Germany:

1.) A free trade in gold and silver should be permitted; that means abolition of every restriction in the possession, transfer, importation and exportation of gold and silver in form of coins or in any other form.

2.) A free trade in money of any kind, in foreign bills, bonds, scrip, securities, etc.

3.) Permission to use gold or any kind of standard or measurement of value in the determination of prices for goods (bread not excluded), services, (hired labour not excluded) and debts (leases not excluded ).

4.) Permission to publish offered, demanded or really paid prices or quotations for gold, expressed in paper money of any kind, or for paper money of any kind, expressed in gold, also for goods, securities or any other thing, expressed in any standard or measure of value.

5.) Repeal of all restrictions of the stock exchange, of the money exchange or any other kind of exchange; permission to do business in options or futures.

6.) Abolition of the forced currency, repeal of all laws, old and new, by which people are compelled to take paper money at par or at a prescribed rate for gold. (Forced currency was introduced into Germany as late as September 1914.) (The law on legal tender came into force on 1.1.1910 but gold redemption for a while and was ended with the beginning of WW I. - J.Z., 7.1.03.)

7.) Settling of all taxes in gold, including the taxes for reparation purposes. The financial authorities stipulate from to time a rate for paper money, bank-money and other means of payment, accepted from tax-payers, by which is known the quantity of such means of payment accepted instead of 1 gram of gold.

8.) The quotations of war loan bonds and any other security certificates emitted by the Reich, the States, the towns, etc., will be statistically observed, and if, for a period of three months the quotations are not higher or lower then 5% of the average quotation, the shares are converted into gold shares on the basis of the average price or quotation. (I disapprove all arbitrary relations of the quotation or value of the old loans to the presently used currency or to the future currency.)

9.) Certain taxes should be selected to be paid not in money but exclusively in securities of the loans of the Reich, the States, the towns, etc., especially all property taxes, death duties. etc.

10.) English or American Corporations or both, which, by nationality, are not exposed to requisitions for reparation purposes, and others, erect factories and other enterprises in Germany. These factories and enterprises are considered as exterritorial; are submitted to no tax or duty, but have free communication to England and to America, are also free to employ English or American workers or others. (I see no better and even no other way to supply the Germans with bread, shoes, nails, clothing, tools, umbrellas and so many things, which are not on sale now for three years.)

The factories and enterprises must have their own and sufficiently armed police: A very essential point.

Some of the factories may perhaps use "second-hand machines", which will be cheap enough in England or in America. The Industrial plant in Germany is presently in no better condition than a plant equipped with English second-hand machines would be.

The products of the factories have free admittance to any German place. That can be agreed by private treaties with the governments of the newly organized States.

11.) Every price control for goods or services, hired labour included, is at once abolished.

12.) Every law, regulation etc. by which people are prevented from using their faculties or their property in any manner they themselves think to be the best, are at once abolished. The laws concerning labour-passports are repealed.

13.) Free thought, speech and any kind of expression of opinions or any kind of learning other people's opinions are permitted in the same manner as they were in 1929, at least concerning economic matters.

14.) Bills, securities and obligations of any kind, in which there is no redemption promised but merely a promise is given to accept them for their nominal value at a fixed date or a fixable date in payment of debts or goods or services of the issuing corporation or enterprise are permitted.

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

These would be the most urgent measures.

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I still have very much to write to you, also about your private affairs, of your unique library, which the war destroyed -- oh, what a pity, what a pity !!!!

But my daily work is go excessive, that I must work on Sundays as on others.

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Most kind regards to you

signed: U. v. Beckerath

Lack of time prevents me to talk about my political programme whose essential feature would be:

Dominion status for the newly organised German States, English princes as governors or an English prince as Chief governor for all States together.

Bth.

Re-reading this letter I find that I omitted an important point at No. 8:

Not only the shares should be treated in this manner, to find out their real gold value, but also the circulating paper money. The price of gold, expressed in paper currency, should be quoted every day. After some time the quotation will be a constant number, supposed that the quantity of the circulating paper money is not considerably increased or diminished. If in the course of three months (or so) the highest and the lowest quotation did not differ more than 5 % from the average quotation, then a new currency should be created, equivalent in value to one gram of gold.

The conversion can be performed in the usual manner if an old kind of currency shall be replaced by a new one: The financial authorities, the railways, the post office etc. keep the received old currency, in this case the Hitler-Mark, and destroy it. They make their payments by the new currency, whose denominations may be 1/4 gram, 1/2 gram, 1 gram, 2 grams, etc. of gold.

After some weeks the traffic purified of the old currency without the trouble of a conversion action at the counters of the banks etc. And the value of the new currency, expressed in units of the old, is found and not ordered.

The public takes the proceeding merely as a denomination and not a conversion by depreciation.

Bth.

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27.11. 1948

Dear Mr. Meulen,

in the common note of the Western powers to Bramuglia is demanded:

1.) Influence (control) of that part of the Bank of the Soviet-Zone which operates for Berlin,

2.) guaranty of sufficient bank- and credit-facilities for the whole territory of Berlin without regard to the limits of the sectors,

3.) supervision of export - and the export licences to be granted by the magistrate.

(I cite the text today published by the daily "Der Kurier", a French licensed paper.)

I think that in these times the adherents of free banking should contribute something to solve the Berlin currency question, although the probability of being heard may also be very moderate.

"The man who possesses a clear program will win", is an old experience. I think that free banking men are the sole economists who are able to represent a quite clear and constructive programme. The propositions of the others do not deserve the name of a programme, being a compromise of the worst monetary plan so far known in financial history, that is still the currency law for the Western sectors and the communist currency principle.

The free banking men of Berlin have no right to speak up; if they had, they would demand:

1.) The right of issuing notes should no longer be a monopoly.

2.) The old German paper currency rule, confirmed by many laws of many German States - "paper currency shall never be a forced currency" - should immediately be restored. It is forgotten that this rule was abolished not before the 1. 1. 1910, when the notes of the Reichsbank became legal tender.

3.) Banking business should no longer be a monopoly or dependent upon permission by the magistrate. (Banking business in the sense of lending money, accepting deposits, granting clearing accounts and other business belonging to the above-mentioned.)

What is here demanded are no privileges for bankers but rather rights for workers. Bankers and bank institutions, as they have been until now, have proven to be incapable of supplying the workers with currency sufficient to enable the frictionless exchange of labour among the different classes of the working people.

Banking institutions of today totter between inflation and deflation without knowing where the limit of the one or the other is to be drawn. They are to be excused, for nobody knows these limits under a system of forced currency.

The amount of "West-mark" in the Western sectors of Berlin is now 200 per capita, but was less than 100 per capita in Germany before the Nazi government. Considering that in West-Berlin more than 3/4 of the wages, all rents and the greatest part of the victuals (food requirements - J.Z.) are legally paid in Eastern money, obviously, there is inflation in the Western sectors of Berlin. Nevertheless, money is very scarce in these sectors, so that many firms now pay their employees two times a month or weekly, who before the currency- "reform" paid them monthly.

Personal and political liberty are in the long run impossible, if the worker is not able to exchange in small parts, of equal amounts (as money is subdivided [denominated - J.Z.]) his labour against the labour and goods of others. Under the present system of note issuing and banking such an exchange is either impossible or depends upon the good will of two or three men, who are not duller than others but who are vis-à-vis a task like that of shooting a bat in a great dark stable (as one of the German economists called it). (Never forgive them - for they do not know what they are doing to us and do it nevertheless! - J.Z., 22.5.03.)

Only abolition of the "cours forcé" of paper money can help and introduction of a free market for every kind of paper money, the word "free market" taken in the sense which it had in the 18^th and 19^th centuries.

To bring the system of free banking to its fullest extent, the right of every group of workers to choose any person of their confidence as their note-issuing banker should be expressly acknowledged. The readiness of the workers to accept the notes as payment for their services should be acknowledged as a sufficient cover of the notes.

The free exchange rate of the notes and the right of everybody, except the issuers, to refuse their acceptance form the most effective barrier that is imaginable against the misuse of not-issuing, much more effective than any governmental control.

Inflation is technically impossible if the means of payment are submitted to free market rating. A means of payment, whose rate is 99% instead of 100% is refused by the public.

Inflation is possible only with the help of a forced currency.

(Since the end of WW I some economists used the world "inflation" simply in the meaning of "dearness". Now this misuse of the world "inflation" has become almost general in the whole world, although the old sense is not yet quite forgotten in scientific literature. It is not superfluous to remember that the word is taken from the slang of the butcheries of Chicago in the American Civil War. It meant the practice of the cattle-dealers to give the cattle firstly salt, as much as they liked, then to let it become thirsty and then, immediately before delivery to the slaughterhouse, they gave them plenty of water, to increase their weight.

Nobody has a right to bring as good, distinct, old and generally understood words as "dearness" in English and "Teuerung" in German into disuse. The distinction between the two different facts depends upon the use of the suitable words.

Inflation simply means the augmentation of forced currency beyond the amount accepted by the economy, if the paper money were not given "cours forcé".

Dearness is the consequence of bad harvests and similar causes. It is, as all elder economists pointed out, in itself the best means for a return to normal conditions because dearness -- of course -- encourages production and trade. Adaptation of wages to dearness is no obstacle to a rapid return to normal conditions. Wages do require today in England (and in Germany before the Nazi-regime), about 50% of the national product. If wages are doubled, prices increase therefore only to 50%. If then the wages are increased by 50%, prices rise then only by 12.5 %,. If wages are then increased by 25%, the price level rises only about 6% and so on. That may be called a "spiral, but it is not a "spiral without an end".)

The free market of the notes must be acknowledged as the right of every worker to judge about the value of the notes himself and to risk his own property when he accepts the notes for a value over par or agrees to a discount when he pays with the notes.

The right to form a group for the issuing and the acceptance of notes is to be acknowledged as a part of the right to associate for any non-criminal purpose.

The right of free banking includes the right to possess and to legally transfer any material fit for measuring value or serving as a means of payment, gold, silver or other materials always having been used in the economy. The laws of the Western Powers that prohibit the possession or the transfer of such materials are to be formally repealed.

The above right includes the right to subdivide gold or silver etc. into equal parts in the form of coins, either in multiples of the old gold-mark or in grams or multiples of grams.

If Berlin does have factories for minting coins then any factory abroad, that stamps medals, should be permitted to coin gold or silver in commission for the people of Berlin.

Every coin should have inscribed:

a) the weight of gold or silver contained in the coin,

b) the weight of copper or whatever is used alloy in the coin,

c) the addresses of the manufacturer and the commissioner,

d) statement of the thickness and diameter, expressed in millimetres or another international standard measure,

d) the date of coinage (day, month and year).

In one word: The state of the English currency system before 1844 should be introduced with the alterations now required, due to the experiences of two wars, three years of inflation, 12 years of nazi-slavery and the years of ignorance and incapacity, in money matters, in the years before.

Very truly yours - signed: U. v. Beckerath

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(Appendix - page 4)

That import - and export - licences are the most superfluous thing in the world under the rule of a currency without "cours forcé", I need not explain to you, an old champion of free trade.

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"Experts", and other economists that believe themselves to be experts, will find it very insolent if simple workers demand freedom, majority and permission to dispose of their own affairs, if these affairs seem so complicated as the currency affairs. To them may be answered:

Under the rule of the experts, the best times of the national economy were characterised by the destruction of many thousands of tons of victuals, while in the same economy there were many hundred-thousands, who would very much have liked to consume these victuals, if the government would have allowed them to pay for the victuals by the system of free banking. Bad times were characterised by the destruction of many hundred thousands of tons of victuals and the hunger of millions. The difference was great - - admitted - - but was certainly not to the honour of the experts. After so many years of expert-government, the workers have claim the right to take their affairs into their own hands and claim also the right, which President Roosevelt claimed at the beginning of the New Deal:

To make mistakes, at their own risk, in the first steps and learn from their own experiences.

Roosevelt, although probably to be mentioned among the 100 most intelligent men in the USA, committed the mistake to realize the advise of his brains trust. The effect is known.

The effect could not be another one, for monopolised banking and cours forcé darken the path of the most able rulers. Besides that, the New Deal was an experiment without foregoing experiences.

But workers, who claim the right of free banking, in the above-mentioned sense, take a road illuminated by the natural movements of a currency not submitted to a cours forcé and by a century of experience, elevated from the simple observations to true experience by the most enlightened authors, the last but certainly not the least being the author of Free Banking. Therefore, the workers will not be forced to use their incontestable right to make their own mistakes before becoming experienced themselves.

____________________________________________________________________________________________

U. v. Beckerath …. 4. XII. 1948

Dear Mr. Meulen,

Free Banking means also the liberty for everybody to base contracts in general, and banking contracts especially, on any measure of value that he and his contracting party like to agree upon. 100 and more years ago this right was acknowledged, not only in England but in the world, although not expressis verbis. But many contracts of old times, still kept, prove the existence of this old right. Fixing obligations in terms of corn was frequent in agrarian business and, as Adam Smith remarks, such obligations often preserved their purchasing power while contracts, stipulated merely in money lost it. For the rest of the people took, as measure of value, the best known in their economic world, gold in England - - but also silver - - on the continent in most cases silver.

The official standard of value meant merely that this standard was to be applied if no express other value was mentioned in the contract.

Then began, prepared by the law of 1844, which gave the Bank of England a monopoly for the note-issue, a time when paper money got a cours forcé and by that became also a measure of value.

Now, in perhaps all countries of the world, the paper money is the only legally admitted standard of value.

The greatest part of the population, especially the working classes, thinks such prescriptions to be quite right, while peasants and merchants still distrust the paper money as a standard of value and demand permission to conclude contracts on the basis of gold.

Kant says in his political writings that the people form their ideas of right from the existing legislation, while it is the natural privilege of the men in government and administration to form the legislation from the philosophical ideas of the true right.

(A privilege they seldom use, while, on the other hand, only that part of the people, whom Aristotle calls Banausoi is in the habit of framing their ideas from the legislation of the times -- both, in most cases, requiring very many improvements. So the application of right to legislation is, as a rule, entrusted to men of letters and - - as Kant also emphasises - - therefore the right of free speech and a free press is always the most important of all political rights.)

Since the legislation established the unit of the circulating paper money as the unit to measure value with (certainly a very bad law), so that e.g., all prices in the stores must be indicated in that unit and all wages, too,

the people, as far as it belongs to the banausoi, in the sense given to the word by Aristotle, considers paper money as the given and true measure of value as well as the given means of payment.

This idea will not disappear before the cours forcé of the paper money is repealed and even after the formal repeal it will remain for some time, for months or even years. That is true for England and for all countries in the world. For these reasons the unity of paper money must be admitted, also in Free Banking, as a measure of value (besides other possible measures of value - - gold, silver, even copper and grain).

Free Banking will here say: It should not be prohibited, although it seems (hardly? Corner cut off! - J.Z) the best and certainly will be abandoned after some experience with different measures of value has been made possible. At last gold (will? Corner cut off! - J.Z.) be accepted as the best measure. Some German economist (Roscher?) said:

Nature gave men gold and silver as measure of value as it gave them iron as a natural material for tools, water for drinking, oxygen for breathing, the stars for measuring of time and the foot for the measuring of space. The acceptance of gold as a measure of value is therefore not an arbitrary decision.

Herbert Spencer wrote about 80 years ago a chapter: "The Coming Slavery", in which he prophesised in much detail all terrors of a centrally managed economy. But what neither Herbert Spencer nor anybody else seems to have observed is that the abolition of Free Banking laid the foundations for that coming slavery - - for several hundred millions of men, not coming but then existing.

Free Banking presupposes political and economic freedom as well as political and economic freedom presupposed Free Banking. Both must, therefore, be established at the same time, from a new spirit of liberty, a spirit which, in nearly the whole world, seems extinguished now, but in today's England is still not extinguished, as proven by the continued publication of "The Individualist".

Very truly Yours - signed: Bth.

____________________________________________________________________________________________

5. 12. 1948. (I)

Dear Mr. Meulen,

cold fingers and lack of light prevented me from answering all details of your letters. I am very much obliged to you and esteem highly the honour that you took the trouble to translate some of my utterings into English and even will publish them in the Individualist.

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In your letter of the (left open! - J.Z.) you expressed an unfavourable opinion on the gold standard. We discussed the matter some years before the war. Our correspondence is burned (That of Meulen as well as that of Ulrich von Beckerath, by air raids, but at least B. did not burn himself his later correspondence, like Meulen did. - J.Z.), but I remember the main content.

There are different kinds of gold standard possible and each kind contains several details. Perhaps the English word "gold standard", in its present sense and the German word "Goldwaehrung" in its past and in its (somewhat different) sense at present do not mean the same.

In the older scientific economic literature the word gold standard meant in Germany simply, a condition where the debtors were obliged to pay in gold coins if the creditor demanded it and no other kind of payment was agreed upon. Such was the state of law in old Rome at the later time of the emperors and was e.g. the state of law before 1870 in the city-state of Bremen, where a gold standard was introduced though no Bremen-coins were minted. Foreign coins had a fixed exchange rate.

When the central banks came up, then it was considered to be essential for the maintenance of a gold standard that the central bank gave gold coins for its notes at any time. It was held to be sufficient that only a part of the amount of the outstanding notes - in most cases 1/3^rd - was held in the vaults to satisfy even excessive demands of the note holders. Of course, this rule was as arbitrary as dishonest and was disproved by experience.

During the war of 1914-1918 the Bank of England did no longer redeem its notes into gold but still gave notes the old relation if anybody brought it fine gold. The obligation to redeem the notes was not formally repealed - as Maynard Keynes explains in his work on money - it was discarded by the practice of redeeming: Everyone who brought large amounts of notes for redeeming had to wait so long that he and his successors at the counter (only one counter was opened for redeeming) lost patience and went home. But formally the standard of gold was maintained during the war. After the war, the obligation of redeeming was formally repealed; there remained only the obligation to exchange gold, delivered to the bank, into paper money, which can produce no danger for the bank. Economists pretended that this condition rightfully deserved the term "gold standard". This system is now accepted by several central banks, also by the American, with the natural effect, that the price of fine gold, expressed in notes, is much higher (on a free market) - - e.g. Mexico for USA or Tangier for England) than the purchasing price of find gold declared and officially maintained by the central bank. The last mentioned circumstance does not prevent economists from declaring that all the central banks or this kind are still on a real gold standard. (I consider that to be a misuse of words.)

If I demand a gold standard for Free Banking, I demand the following detailed role for gold:

1.) Gold coins should not be prohibited. Everyone should have the right to get gold coins stamped and there should be mints in all communities to coin gold in the same way as it was used in 1913. If a community does not possess a

mint, then private institutions should be allowed to coin medals, the size of gold coins, as was allowed in California during the first years of the gold boom.

2.) A gold-clearing-standard should be permitted (not introduced but merely not forbidden) whose essential feature would be the general permission for everybody

a) to possess, sell and buy any amount of fine gold in the form of coins or in another form,

b) to conclude contracts by which the debtor is obliged to fulfil his payment obligation in so much local currency. (Paper notes of private bankers, town money, railway money or whatever may be in use in the community) as at the exchange or at the free market - - the word taken in the sense of Adam Smith - - is quoted for gold.

Example: The local currency is a paper currency issued by the town where the contracting parties live. The town money may be at the nominal value of old gold Marks. An old gold Mark was, by the old German mint laws 0.35… grams of fine gold, or 2790 gold Marks = 1 kilogram. By an over-issue or for other reasons the town money may be at a discount, so that at the exchange for 1 kilogram of find gold in form of known coins 5580 paper Marks of the town must be paid. Then a worker, whose wage is fixed at 10 gold Marks a day, shall be entitled to get 20 paper Marks. Such a system was in use in Germany in the years 1922 and 1923. My own salary as actuary of the Deutschland Rueckversicherungs-Aktien-Gesellschaft, Berlin-Nikolassee, was in 1923 fixed at 80 gold Marks a month. At that time the purchasing power of gold was so high in German, that 80 gold Marks a month was a high salary. I had plenty to eat, was well dressed and bought many books. [Books and clothing were consumed by the flames on 22. XI. 1943.] To tell the truth: the trade unions did not encourage the system. But the higher officials in private firms demanded and obtained it often.)

Obviously, the system is not merely applicable to wages. In its general application it was at that time called "Gold-Rechen-Waehrung" (Gold-Accounting-Currency - J.Z.), which was a good expression.

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Such a gold standard cannot be considered as injurious or oppressive for anybody. It needs no introduction by the government. It is sufficient if the government does not forbid it. If the people in all countries would not be prevented by very hard punishments and the formal declaration of the law, that obligations on the basis of such a gold standard will not be acknowledged by any court, then this kind of gold standard would be an action of the people themselves, introduced in the whole world.

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Today is election-day. Therefore, the electricity works of West-Berlin grant a few hours of additional current. (Reason: The votes must be counted, which can hardly be done at the light of candles.) The additional light enables me to write to you some more words than I would be able to write, otherwise. (Freedom of expression infringed by electricity rationing! - J.Z., 8.1.03.)

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I hope that the Russian gazettes of these days are preserved. If one reads them, then the Western Allies have divided Berlin, also Berlin is not blockaded, the nearly 5,000 tons transported daily by the air-fleet are a pure bluff, etc., etc. They are "documents humains". The nazi-propaganda was far inferior to that.

Very truly yours - signed: U. v. Beckerath

____________________________________________________________________________________________

5. XII. 1948 (II)

Dear Mr. Meulen,

where Free Banking is prohibited or not used, because the economic ideas of the people are not sufficiently developed, there the supply of the individual with means of payment (that is the possibilities of exchanging his labour against the labour of others) depends, first of all, upon the chances in the distribution of the stock of currency.

Suppose the community is inhabited by 10 millions of people able to deal with money, then the distribution of the stock of money, according to the wants of each individual, is no more probable than any supposed distribution is the effect of 10 million tosses of a coin in the well-known game of hazard called "coin tossing". The most probable is 5 millions of "heads" and 5 millions of "reverse". But the odds, that exactly 5 millions of "heads" will come out are practically zero, and the odds, that say - 5 millions and 10 "heads" will come out is a little smaller and practically - - of course - - also zero, the thing considered from an economic point of view. Indeed, practices showed in all periods of history that there, where Free Banking was not in use, nobody had as much currency at his disposition as he wanted - - some having too much and the greatest part of the people not enough.

Secondly, the supply of the community and of each individual depends, wherever Free Banking is not used or not sufficiently used, upon the ideas and the good will of the men to whom the note issue is entrusted.

The experience of decades in many countries teaches that the emission of a forced currency cannot safely be kept in the accurate middle position between inflation and deflation. A more developed theory of currency will even prove that in the case of the issue of a forced currency always one part of the economy is under inflation and the other part under deflation, so that the problem of a rightly dosed emission would be altogether insoluble.

But Free Banking solves the problem with ease: Under-issue at once induces any banker to offer his emission-services to that part of the community which suffers from a lack of means of payment, although it has, ready for exchange, goods wanted by other parts of the community. Over-emission is at once answered by a discount of the notes. Notes that suffer a loss in exchange are refused everywhere and at once disappear from circulation, before they influenced the general price level.

Free Banking is not merely an improvement in banking or note-issue: Free Banking is an essential part of economic life. All restrictions of Free Banking, by law or bay a low standard of economic customs in a community, are a restriction of economic life (and by that of personal and political life), and all other kinds of banking are mere "Ersatz".

Free Banking is a very good and probably the best means of economic education of the people. An economically educated people is able to watch over the economic institutions and the economic activities of the government. Under the rule of monopolised banking and monopolised note issue, it is not the people that watches but it is watched.

If the prices rise, the government, the papers and the churches reproach the people, for having lost their old buying morale and for driving up prices, in their eagerness to obtain real values. If prices decline, the people are accused of saving money in an excessive manner and admonished to "spend wisely", and so to avoid unemployment.

Under the rule of Free Banking, any man, who would try to influence the buying habits of the people by moral exhortations, would be looked upon as 200 years ago the end-of-the-world-prophets were by enlightened people, if the latter were summoned to stop going to the pubs, to save their souls instead and, to make a beginning, to assist the prophet's preaching by a decent donation.

To suppose that monopolised banking and note issue could render the same services as private bankers in Free Banking business, note-issuing included, is about the same as supposing that motor cars and bicycles were superfluous because we have excellent great railways. The use of motor cars and bicycles compelled men to acquire a great quantity of technical and even scientific knowledge, which would never have spread if only railways were in use. So the use of Free Banking will spread a great quantity of economic knowledge among the people which can never be acquired by reading weekly reports of monopoly banks and considering papers on them.

The present political situation leads us to reflect on the best method of war financing. I assert that in times of war, too, a worker, whose wages are financed by free banking, will produce at least five times the quantity of war material that is produced by a Russian worker under the Soviet system of monopolised banking and note issue. The evil effects of this system are more indirect than immediate but, nevertheless, severe. The Russian historians glorify the valour of some Russian armies than vanquished the nazi-invaders though only one third of the soldiers were equipped with rifles, the supply of the 2/3^rd not armed being the rifles left by the dead and wounded. From a military point of view they are quite right. Such a valour is nearly unequalled in history. But this fact was no reason for boasts for the Russian arms industry. If there had been private bankers and private businessmen in Russia, they would have easily mobilised the reserves, contained in the incredible waste in production, transportation and distribution.

In the war of 1870/71 Moltke "produced" one dead Frenchman with an expenditure of about 80,000 hours of labour. At that time Germany did not have a system of completely free banking but the number of note-issuing institutions was more than thirty. The French government, with its monopoly bank, needed about 300,000 hours of labour to "produce" one dead German. Of course - the great strategic ability of Moltke and the good training of the German soldiers contributed to Moltke's success. On the other hand, the French Chassepot-rifle was far superior to the Prussian needle-gun, and the courage of the soldiers was equal on both sides.

The "white" armies which fought in the first years of the Russian republic against Moscow were all lead by men that had not the least understanding of war-financing. Their system amounted merely to plundering the peasants, a system which mainly contributed to Napoleon's defeat in 1812. (Explained in the work of the German General Staff: "Heeresverpflegung" (Provisioning an Army), published in 1913. The principle of Free Banking could have been applied to finance the civil war in Russia against the Moscow regime. How? That was explained, although in very general terms, in the book: "Cash payments in Occupied Territories" by the late Dr. Holzhauer, a young economist, who completely understood the system of Free Banking. It is not generally known that Holzhauer's system was applied by the Japanese armies in the first years of Japan's war in China, to the very moderate pleasure of the author, whose intention was mainly to provide a system of finance to German anti-Hitler forces, which were, in the year of the publication of this work (1938), already in the process of being organized. Holzhauer used so general terms that the nazi-department for military literature found nothing dangerous in it and even recommended studying it.

Very truly Yours - signed: U. v. Beckerath

____________________________________________________________________________________________

9.12.1948.

Dear Mr. Meulen,

some time ago I wrote to you about persons who are able to move a magnetic needle by pure will power. Such persons are very rare - - possibly only a few in a million, but they do exist.

If such a natural power as magnetism can be influenced by the pure will of some person, then the question arises whether other natural powers can also be influenced in this way. It may be that there are quite new ways of acting upon things that are seemingly or really without life, by living bodies and by action from a distance, actions that can still be discovered, equivalent to the phenomenon with the magnetic needles.

One may even discover that the action from a distance, as used in this instance, is not bound to a living body but can also be produced by some kind of apparatus and is not restrained to iron or metal but is, rather, of a universal nature.

Probably you have read of the strange procedure of Chinese thieves, who by their will are able to move light objects, say pearls and jewels, and compel them to come so near to them that the thieves can grab them. That agrees with the report of Marco Polo in his memoirs, that he saw, at the court of Kublai Khan "magicians", who were able to transport, merely by their will, and acting from a distance, the goblets of the Khan from the end of a table to immediately before the Khan.

A friend of mine, the manager of the Assurance Company "Volksfuersorge", in Hamburg, Mr. Emil Thiele, saw one of his acquaintances move a box of matches in a similar way.

Systematic exploration of such facts may lead to a procedure by which men, merely by their pure will, are able to bring atomic bombs to an explosion in the air, may, or may not -- but you know, what Indian Fairs are capable of doing.

Very truly yours - signed: U. v. Beckerath

(Note by J.Z., 8.1.2003: Nuclear weapons are set off by H.E. and this can be set off by detonators, which essentially produce fire, i.e., high temperature gases. There are numerous reports that some people can start fires at will, at least not very far away from themselves. Thus they might also be able to set off nuclear weapons nearby - in suicidal attempts, if not at a great distance. But more useful would be a power, from a great distance, to prevent the explosion of any nuclear weapon, perhaps by teleporting sufficient neutron-absorbing materials into the centre of a nuclear explosive device, so that, upon ignition, it would tend to fizzle-out or not come close to the critical mass at all. I would prefer that approach, if it were possible, to exploding these devices. Somewhere I noted a report that a relatively small quantity of a certain element, I forgot its name, if I am right something like 500 grams, if only it could be inserted into a nuclear reactor, could suffice to bring the chain reactions to a stop. True or false? - According to "ANALOG", June 2000, page, one such material is gadolinium. It stops neutrons. - J.Z., 31.5.03.)

____________________________________________________________________________________________

11.XII.1948.

Dear Mr. Meulen,

with mixed feelings I read in "Der Tagesspiegel", that Russia bought in Malaya great quantities of rubber, of which 5,000 tons will be delivered still this year. These purchases must at least raise the quotation of your shares, but it reminds me of the purchase of Krupp canons by the Japanese government before the first world war. A very short time later the German soldiers at Tsingao were killed by these very canons.

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On my daily work to the office, there are some bookshops which I inspect from time to time. Yesterday I found in one of them a book which you probably possess: Arthur Kitson, "The Bankers' Conspiracy which Started the World Crisis". (Note by J.Z.: In his later writings, Arthur Kitson, originally a monetary freedom advocate, became a fan of "Social Credit" notions. I suppose this is one of his works from that period.)

There are many people who, without having read Kant, admit, that every change in the world has a cause and produces an effect. But if they are dealing with economic and social matters they forget that universal law and all evils are there ascribed by them to the wickedness of some persons. No more do they think in terms of "cause and effect" but merely in notions of "guilt and expiation". That habit is hereditary -- I think -- from the time, when the larger part of all men were in a state of absolute slavery, a state which endured perhaps several hundred-thousands of years. For slaves the mood of the master is their fate and they know, in practice, of nearly no other kind of causality, beside some superstitions, by which they explain even occurrences like the kindling of a flame or the shining of the sun by demonic powers, which may -- as every eclipse of the sun "proves" - - fail, if the demon is of a bad humour or attacked by stronger demons. The "personal" kind of thinking is the thinking of the masses. Therefore and always, if there comes a man with a reputation, who explains the evils in a "personal" way, instead of by causes, the he is successful. Kitson is no exception. Add to this that he obviously believes himself what he says. That animates his style, which is already very good, to a high degree of impressiveness.

I regret sometimes that the people do no longer believe, so sincerely as they did in olden times, in the devil. 500 years ago, one would have ascribed a crisis like that of 1932 simply to the devil or, if one was "enlightened", to a bad constellation of the planets (as very many people still do - - I personally know such people, and you do, certainly, too.)

Acts of the devil can be counter-balanced by gifts to priests, but acts of wicked men will be punished if the injured get the chance to do so and that is sometimes a serious thing. Some years ago, in Silesia -- so told me an acquaintance of mine -- in a village some cows died, nearly all at the same time. The most natural explanation for the peasants was to look for the witch, who had killed the cows. Of course, they found the witch and the poor woman was boycotted by the village. If they would have ascribed the death of the cows to the devil, then the priest would have come, would have sprinkled the rest of the cows with holy water, would have received some money, and the affair would have been settled. In France, I read, in the 19^th century a sect sprung up, "les satanistes", which no longer believe in a god but strongly in the devil. In India they have had for thousands of years the Siva sects, with the same belief. Perhaps the satanists do the same good in Europe as the Siva followers do in India: their religion prevents much prosecution of classes or races, by ascribing all evils not to classes or races or conspiracies of men - - bankers, workers, Jews and unbelievers - - but to the devil.

Mais revenons à notre mouton.

Kong Fu Tse, asked by a pupil, which would be his first task, if he became a dictator, answered: To ascribe to every word a quite fixed meaning and to prohibit the use of the word in any other meaning.

Kong Fu Tse was a very wise man! (His Luen Yue were among my books consumed by the flames of the conflagration of November 22^nd, 1943.)

Kitson misuses the words. He attacks the gold standard, but what does he mean by "gold standard"?? He means by that the legal right of the creditors to claim gold coins.

The right of the creditors (sometimes with exception of the wage-earners) to claim gold coins is, in the scientific literature of the 19^th century, demanded as a means to assist the gold standard, to guarantee it better than it would be guaranteed if that right would not be acknowledged. Insofar it was considered as a part of the gold standard, but it was not identified with it. I refer to such a work as "Money" by Stanley Jevons.

Certainly -- and there Kitson is very much in the right -- the said right of the creditors is a highly disastrous right - - in the long run impossible to maintain, moreover, it is even quite unfit to strengthen the gold standard. If in so many (I think in all) countries the gold standard was abolished, it happened because the said "right" could no longer be maintained and was proven to be a great evil and the source of much more and greater evils. But gold standard is - - to repeat it - - by no means identical with the creditors' right to receive gold coins.

The true gold-standard does not need to be legally introduced. It is quite sufficient not to prohibit it. If it would be permitted, people in the whole world would at once fix prices, wages, rents, and whatever may be a subject of valuation - in units of gold weight, grams (which would be the best and was widely used in Germany during the Great Inflation and in the years after), multiples of grams or parts of grams, ounces, etc., such as 1/2790 kg = 1 Gold Mark, 1000/344,44 grams = 1 old Gold Franc, etc.

Certainly, in the beginning of such a legal condition, in which gold is permitted as a measure of value and a means of payment (which the debtor would have the right to "impose" upon his creditor in the form of well known coins, but which the creditor would not have the right to demand, which was the legal state in Germany after 1914 and is the legal state since centuries in the whole East), some people would, for religious or other reasons, not use gold at all, but corn or the paper-money of the bank which they trust, or silver (not the best, but economically possible), or cowrie-shells or something of their own invention. They should have full freedom to do so, supposed that they find friends to contract or trade with them on this basis. With a probability of more than 99% one can expect that experience will teach them, in less than a year, that gold is better, and if they will not accept what experience teaches them, or do not acknowledge their own observations as a true experience, then let them, in three devils' names, continue to exchange on any other basis than gold. We had that in Germany. Corn (in very numerous cases, especially in Pommerania, where corn notes circulated), gas, coal, labour hours, wood, silver, tin, kilowatt-hours (often used), were used as measure of value in long-term contracts, and a collection of all the clauses used would be the most interesting of all unwritten monetary books. But at last even the fanatics observed that a commodity, that is not daily quoted at a reliable exchange market, is as a measure of value far inferior to a commodity daily quoted and whose quotations can be verified by buying or selling small quantities. Only gold was such a good. In most cases - - at that time - - Dollar notes were considered as equivalent to gold, but some preferred the quotations at the gold market of Pforzheim - - an old jewellery town - - where grams of find gold were bought and sold.

By a gold market and especially a free gold market, the merchants as well as the public understood a thing very different of that which Kitson means. In Germany the words "Freier Goldmarkt" were used in the same sense as they were used in English literature, at least until the times of Jevons and probably many years after Jevons, who died in 1882, 47 years old, a loss for the science of economics which is - - I think -- still felt.

A Free Gold Market (Freier Goldmarket) is in the sense of the elder literature firstly a market. Everybody has - - as long as the market is free - - the right to publish at the market his offers and his demands. He may repeat his offers and his demands as long as he found none willing to accept them. From the chapter in Kitson's book "Evil effects of London's Free Gold Market" (page 79 and the following), I learn that K. means by "Free Gold Market" the right of owners of notes to go with the notes to the Bank of England and convert them into gold coins.

Where is here freedom? The owners of the notes are free to claim coins, but the bank is not free (or was not at the time, which Kitson means) to decline the demand. And then: Would not everybody have considered the owners as crazy if they had demanded more gold coins than they were entitled to receive by the Bank Law? And would they not have been considered as even crazier, if they would have accepted an offer of the Bank to give them less? Where is here the market?

Set aside the misuse of the words "Free Gold Market", Kitson is essentially in the right. No right of the owners of notes can reasonably be acknowledged to get gold in form of coins or bars for notes. But, on the other hand, if the Bank has gold in form of coins or bars, it should have the right to buy with this gold its own notes for their face value or a price under their face value. (In debts owed to the bank it should have to accept them at their face value. In the free market it can buy them below their face value. - J.Z., 8.1.03.) That transaction is always possible, and it may be useful if the notes are at a discount. But the redeeming of the notes for their face value is only in that case possible where the bank has, in its vaults, the whole amount of the outstanding notes in gold. That the bank never had. The few cases, where a central bank had so much money ready as to exchange at every time the whole amount of its notes against gold are so rare that they do not have economic significance. But both possibilities have obviously nothing to do with a market.

Kitson gives the example where some bankers drew 11 millions of pounds in gold from the Bank of England and transported the gold to America. He cites from the Banker's Magazine a calculation which teaches that this transaction lowered the quotation of 325 representative investments for 115 500 000 Pounds St. Kitson is quite right to demand a money system by which such events are impossible. But under the rule of a really free gold market (whose locality would not be the Bank of England, but the Exchange or even a room in any tavern - - curb exchange - - if the official Exchange declines to place localities at the use of those who wish to sell or to buy gold) the removing of 11 000 000 L St. would have no greater effect on the quotation of English investments than the removing of a quantity of coal to the value of 11 millions or of any other commodity.

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Kitson does not see that the true reform of the old system, with its note-redemption prescriptions and other misuses, of which the monopoly of the Bank is the worst (though not remarked upon by Kitson - - you are the only writer who noted it) is not replacing gold by notes. (It seems, he means cours forcé notes.)

Free Banking, on the other hand, fills every need for means of payment within some hours after the need is felt - by some newly created Free Banking facilities.

(Note by J.Z., 8.1.03: In his early, 1903 book: "The Money Question, 231 pages, reproduced in PEACE PLANS

Nos. 42-44, he did oppose the money-issue monopoly!)

Kitson will replace the monetary slavery of England - - which he well perceives as a slavery - - by a system which already has shown itself as a much more evil slavery. He is excused because at his time the new slavery was not yet as visible as it is now. Modern disctatorships are impossible without the very system which Kitson proposes, where a single man decides in what measure the people shall be permitted to exchange their goods and their labour against goods and labour of others, where the same man decides the amount of the purchasing power of the notes he grants - - if in good humour - - to the people.

It is astonishing (but for all well trained sociologists not astonishing at all) that more than 9/10^th of all reformers propose new tyrannies to abolish old ones.

Goethe says on this:

"Ich habe gar nichts gegen die Menge; "I am not an enemy of the masses;

"Doch kommt sie einmal ins Gedraenge, But if they get into difficulties,

"So ruft sie, um den Teufel zu bannen, Then, in order to banish the devil, they call upon,

"Gewiss die Schelme, die Tyrannen." For certain, the scoundrels: the tyrants."

Kitson, in this respect, is not any better than others. Very few appeal to freedom instead of new tyrannies and the author of Free Banking is one of the very few. Appealing to freedom requires a positive programme of organisation and that requires thinking, experience and the firm will to manage by oneself one's own affairs. Men of the people do not like to think constructively, they do not believe in older experiences ("Before our times there were quite different circumstances!"), and they demand that others conduct their affairs for them. At least 90% of the present European population are the descendants of slaves.

On many details Kitson is in error:

At page 68 he pretends - - as do so many writers, who do not know the history of money - - that money is a creation of law.

But money is, primarily, a creation of the readiness of important creditors to accept it. This readiness may be voluntary or enforced. If the readiness is not given then all the laws in the world cannot achieve turning paper money into a good money. Nero, a short time before his death, debased the denar. But then he ordered that, for paying taxes, old denars must be used. No law could then protect his denar from depreciation. I personally think that this order was an essential factor, one for which the Romans left his cause.

In 1923 and 1924 the German railway issued tickets for one gold mark, two, etc. These tickets could not be redeemed in gold or paper currency. Instead, they were accepted at their face value at the ticket counters. The public preferred this railway ticket money to all other kinds of money.

On page 67 he ascribes the fall of the value of silver during the 19^th century to its demonetisation. He does not know that the demonetisation was necessary because the production of silver became more and more a by-product of lead. The more lead was produced, the more silver came automatically on the market. The price of silver was of no great significance for the producer. Kitson confounds here cause and effect.

At page 34 Kitson speaks of the currency in Germany after 1871. He does not know that at that time notes for less than 100 gold marks were prohibited. It is clear that such a foolish restriction must cause a severe deflation.

That a man, who does obviously not take his information from scientific literature, confounds inflation and dearness and deflation and "sinking prices", cannot surprise. One is the effect of the other, but is not the same.

At page 35 he pretends: Inflation has never ruined any nation. It would be a just punishment if a man, who utters such words, must live at least some days under conditions as the workers lived under in the year 1923. But men like Kitson do not consider the workers as a part of the nation. (They do it in theory, but not in their mind.)

At page 34, he repeats the old error, that the increase of prices was due to the increase of the gold and silver stock after the discovery of America. He should have looked at the statistics of the manager of the American mint about the production of gold in the world since 1492. From 1493 to 1520 there were won in the world, per annum (average) 5,800 kilograms of gold and 47,000 kilograms of silver.

Perhaps the population economically concerned with this production may be estimated at 150 millions. (Europe, oriental countries, Africa.) The new production would then be about 1/30^th grams of gold per head and year (I make it 0.038666 grams if my calculator is correct: 5,800,000 grams divided by 150 million, or 58 grams by 1500 people. - J.Z., 8.1.03.) and 1/3^rd gram silver. (I make it 0.31333 grams. - J.Z.) And this small quantity is supposed to have produce a raise in prices, taken also into consideration that a very great part of the newly won precious metal was absorbed by the oriental countries, where it disappeared in the treasuries of the princes and the rich.

(Moreover, the population increased fast, probably faster than the total gold stock, and so did its total production of goods and services, all requiring additional means of exchange. Moreover the monetary exchange economy had not yet been fully expanded, i.e., did not yet replace all barter exchanges, not even in the somewhat developed countries. - J.Z., 8.1.03.)

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It begins to get dark. I must close.

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Very truly Yours - signed: U. v. Beckerath.

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15.12.1948.

Dear Mr. Meulen,

today I visited the British Information Centre and asked the lady-librarian whether your "Free Banking" did arrive. The lady remembered the book at once and could tell me, that it was already lent out.

Yesterday I visited the American Information Centre in the Kleiststrasse. There the lady-librarian was so occupied, that I could not ask her. But the book was not at the shelves and, therefore, I assume that it was also lent out. But if I come again to the America-House (they have light and heat there), I will ask the lady.

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At the American library I found: "Money and Banking", by Prof. Bradford from the Lehigh University, 2^nd edition, 1941, Longmans, Green & Co., an American book and a good one.

Bradford uses the terms market and gold standard exactly in the same sense as the terms Markt und Goldwaehrung (gold standard - - the word is not seldom used for "Goldwaehrung") are used in German literature. Also the world inflation is used by Bradford in its old sense and not simply for "dearness".

I see from Bradford, that Kitson's terminology is not justified by scientific literature of our times.

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What neither Kitson nor Bradford noted is, that the readiness to accept paper-money or cheques is a security for the paper money or the cheques, if the person or the concern or the office, where the paper is accepted, is easily attainable to the bearer of the paper, so that he may utilise it without delay and difficulty, if he wishes to do so, say, because he does not trust the paper for any reason. The German railway-money of 1923 and 1924, issued to an amount of about 1 1/2 thousands of millions (about the income of the railway for 4 months), was such a paper. Supposed the railway-money gets a discount at the free market, at once all persons, who wish to use the railway, would have bought or lent the railway money, would have used it as a means of payment at par at the ticket offices of the railway and would have had a profit equal to the discount. If they had lent the railway-money, the profit would have been diminished for the amount of the interest they must pay. Practically, the railway-money would disappear from the market, by the buying up, together with its discount and could not be re-issued by the railway as long as these notes are offered on the market at a discount -- for nobody takes a note at a discount in the usual business. The trouble is too great.

Very truly yours - signed: U. v. Beckerath

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17.12.1948

Dear Mr. Meulen,

Russia's present economic system is often called "Communism".

Let me remark that this name in Russia's case corresponds neither to actuality nor to the designation in Russia.

Communism is the economic state which is aspired to.

(I suppose that on this point the 13 rulers in the Kremlin and the leading members of the party are sincere.)

It is not without intention that the Russian Commonwealth is called: Union of the socialist Soviet-Republics; they are not called "communist".

Stalin himself (and in consequence many Russian writers) designed twenty years ago the economic state of Russia and the underlying principles as Leninism.

Modern writers call it Stalinism and are quite right to do so.

Under Lenin about 1/4^th of the Russian industrial workers were permanently unemployed. Stalin removed unemployment in less than three years (some say in less than a year) and created a demand for labour which still surpasses the supply. Set aside the means by which Stalin attained such a state of affairs, it must be acknowledged that his success is probably the greatest economic success ever attained by a single man. ("Even the devil should not be maligned" says the proverb.)

Stalin himself continues in his writings to speak of "Leninism" - - obviously for modesty, which also must be acknowledged.

In actuality, the Stalinism is pure state-capitalism. State-capitalism has now proved to be able to remove unemployment. Admitted! But the price which the Russian workers paid is high enough: In most countries of the world the unemployed live better than the employed in Russia. This fact, in connection with the very high degree of employment, should be analysed with the means of Western economic science.

In every case State-capitalism should neither be called communism nor socialism.

Very truly Yours - signed: U. v. Beckerath

(Here he should have at least mentioned the many millions of forced labourers, largely unpaid, in the slave labour camps of the Soviet Union. They, like the conscripts, and the masses of bureaucrats, could hardly be considered as being productively "employed" in the Western sense. Nor are those who are forced to attend schools, although they would rather do some paid work. - Was he still employed in the Eastern Zone, then, and thus under its censorship? - J.Z., 8.1.03.)

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U. v. Beckerath …. 18.12.1948 (I)

Dear Mr. Meulen,

I think, we agree that Free Banking means real freedom in all banking business, the word taken in the sense which it had in the time of 1844. To this freedom belongs the freedom to offer payment in notes, this word taken also in the sense of 1844.

If there are enterprises with a greater turnover than a private banker may have, without ceasing to rightly claim the term banker, then such subjects must have all the freedom which a banker may justly claim, supposed that these subjects are sufficiently supervised in all details of their business and the results of the supervision is published, in short intervals, at least weekly - - if possible daily. A further condition may be that everybody must have the right to participate in this supervision - in a manner that is not vexatious. Such firms are railways and similar enterprises, department stores and factories. Some decades ago, when currency was short in Germany, due to the foolish prohibition of notes in smaller denominations than 100 Marks in the Bank Law, it was difficult for employers to find currency for wages. Thus such employers as Krupp in Essen helped themselves in this way: They founded a cooperative store for their workers and took care to provide this store better than other stores of the town were provided, so that the workers had a real interest to buy at that store. Then they paid their workers with cheques or notes or certificates - - whatever name may suit - - subdivided like money - - which were accepted as cash at the cooperative store. The store paid its suppliers in the way usual in wholesale trading, where no cash currency is required.

I found the same system in the North of France at Hénin Liétard (a great mining centre in the Pas de Calais) and heard from the miners that the system was widely used in the whole Pas de Calais. That was in the years from 1915 - 1918, when the German government called me to the Armierungsbattalion Nr. 38, I. Company, where I helped it to lose the war. (For a year I managed the military library and reading hall at Fouquières - lès - Lens. You may imagine what kind of books I furnished the soldiers. Kant, "About an Eternal Peace", of course, was among the books and was a "good seller". In 1917 the battalion moved to the south and I had to move with it. I can say that many comrades at Fouquières regretted that the battalion moved, because they understood me very well.

At Hénin-Liétard the Krupp-System was used in a way that must be called tyrannical. The workers were lodged (very well lodged - - to tell the truth -- ) in great blocks, consisting of a dozen or so houses (very well built houses), with a great courtyard and a garden for each house in the middle of a block. But the block had only one entrance, and the porter examined every worker that passed the entrance (more so the women) and asked them to open parcels brought in. If he found items that were obviously not bought at the store of the mine, then he reported this to the Mining Company (Société an. des Mines de Courrières) and the worker was liable to lose his job.

The payment was not in certificates but in currency. That may have been the true reason why the system was introduced. The system enabled this company to use constantly the same fund of currency and therefore the company was independent of the bankers. I asked the workers whether the quality of the purchased goods was bad. But they all assured me that the quality of these goods was as good as it could be, and that they would also buy at the store if there were no supervision at the entrance of the block. But they added: We realise very well that we could exercise a pressure on the company by the threat to no more buy at the company's store. Through the system used by the company it is nearly impossible to exercise such a pressure. The company would have attained its aim much better by paying the workers with certificates as Krupp did. But this kind of payment was prohibited by law (as it is now in Germany and in nearly all countries of the world) because the socialist parties at that time declared:

The economic power of the bourgeoisie should not be augmented by granting it the power to make its own money. (Sheep!)

I read in an old report from a currency congress (burnt with 3,000 other books) - - if my bad memory does not deceive me, it was a congress held in 1878 - - that in Belgium the system was much improved. There the cooperative stores lent the employers the amount of certificates required for paying wages (or a considerable part of the wage amount). Now the thing had another face: It was the worker himself that exercised banking power and some even considered the system so framed as the beginning of a socialisation (which could easily have come true if the workers would have fully understood the power they had in their hands. But - - as is usual in such matters - - the masses of the workers were quite indifferent, the women were a little bit dissatisfied and said: We want to buy where we like and not where the cooperative thick-bellies like, and today the system is sunk into oblivion. - - I do not know the cause of this in detail.

One thing is certain: Granting the worker a legal claim to what W. B. Greene called "exclusive currency" is a severe restriction to Free Banking, the word taken in its widest sense, and for this reason is a severe obstacle to true socialisation, the word taken in the sense which it had in the earlier scientific literature, where it was by no means restricted to State capitalism.

Modern laws, e.g. in Germany, grant the workers the right to legal currency (exclusive currency), but do not grant him the right to renounce the exclusive currency and to agree with his employer upon payment, say, in notes of a banker whom both parties trust.

The trade unions and the parties of the workers represent this miserable state of affairs as a success of the workers' movement of the past. "We compelled - - they say - - the bourgeoisie to use State money instead of enriching it by the making of private money."

That should be sufficient to state: One of the greatest errors in Marxism is the opinion that the workers, by their position in capitalistic production, have become a revolutionary class. The still occurring revolts of workers have been no true revolutions, and if a revolution will change the industrial injustice into industrial justice, it will be done by the educated classes of the people, with participation by the educated part of the workers, not in a single day but so quickly, that every one may hope to experience it. Nor will it happen in all parts of the economy at the same time, but by conquering one part after the other, probably silently and without any bloodshed.

To illustrate this expectation, I may remind you of one of the greatest revolutions in history: The revolt of the German people against the government's "exclusive currency" in the years 1922 and 1923. Every day new thousands declined the notes of the Reichsbank and accepted other kinds of money or money-substitutes. If at that time a programme of Free Banking had been known to the public, thousands of Free Bankers would have replaced the Reichsbank, the crisis of 1930/32 would not have occurred, Hitlerism would have been impossible, no war would have happened, Germany's towns would still stand, I would still have my 3,000 books, you would still have your library - - probably with a second copy of Greene's "Mutual Banking" - - a terrible loss - - and we would correspond upon details of Free Banking in Germany.

Free Banking is not merely an improvement in banking: Free Banking is that which puts the economic pyramid upon its foundation. With it, it requires to further assistance for its stability. Instead, it has been made to stand on its top, where every breath of air upsets its balance, in spite of all assistance. If that is true then the following conclusion is true also:

Free Banking must be recognized as a right of men and citizens, firstly by the UN, who now tries to improve the work of 1789, then by the constitutions of all countries, firstly by that of Germany, whose provisional constitution, framed in these days at Bonn, is valueless in style, content, aims and even improvement options. (I suppose that you read it.) Economic rights of individuals are not even mentioned in it.

The Personal Rights Association should apply to the UN to recognise the right of Free Banking and of Note Issuing as a primary right of man. The Personal Rights Association could add to its application that all rights of men cannot be maintained if the right of Free Banking and of Note Issuing is not formally acknowledged and practically exercised.

And The Individualist should publish the text of the application.

Be assured, dear Mr. Meulen, it would not remain unnoticed.

I also see no reason why the Association should not apply to the parliaments of all countries in the same way as it applied to the UN.

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Very truly Yours - signed: U. v. Beckerath

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18.12.1948. II

Dear Mr. Meulen,

the habit of thinking in the categories of "cause" and "effect" is only found at the end of long scientific training. The people do hardly think in these categories. Even scientists do not always think in the categories of cause and effect if they are concerned about matters outside their usual sphere. There they are, as the people are, inclined to take the events or the changes as the intentionally performed work of some persons.

In economics, Karl Marx, certainly a scientific thinker, furnished an example of this easiness with which even philosophers turn to "personal" thinking in their own domain if they met with details not to be subsumed under the rules or notions they habitually apply. Marx derived all economic misery from the separation of the worker from his instruments of production. But in his book "Das Kapital", where he describes many single inconveniences in factories, mines and estates, he describes them always as the effect of the wickedness of the capitalists. The temptation was near at hand, for evils like "the factory leg" have obviously nothing immediately to do with the separation of the worker from the instruments of his production.

For about 20 or 30 years the detection of the "cause" element in accidents, even presently still and simply ascribed to the guilt of those concerned, has become a special science. If at the time of our grandfathers a worker suffered an accident then it was the usual way to judge about it, that the worker was not cautious enough. Today a well-trained engineer inspects the place where the worker suffered the accident and finds, perhaps, that the lighting of the room was insufficient and measures the degree of insufficiency. Probably neither the workers not the employer had noticed this insufficiency.

These seemingly purely theoretical considerations apply to an important feature in the economy of Russia and, therefore, to the economic and political situation in the whole world. The rulers of Russia do not think in the categories of cause and effect, they think in terms of "intentions" and "guilt". That applies not only to the rulers in the Kremlin but still more so to the rulers of 2^nd, 3^rd, etc. class, down to the overseer in a mine. All that does not harmonise with the "plan" is "sabotage", every delay, every running off the rails, every breaking of a tool is considered to be intentional by those who are concerned and is punished, at least in a concentration camp, and often by punishments that amount to capital punishment, as the work in the Uranium mines.

How long can such a system endure? Experience shows, that it endures as long until those threatened by it find the ways and means to revolt against the rulers. If they do not find these ways and means then that system may endure for centuries, as taught by the history if Imperial China, where every failure in administration or on the battlefield cost the life of the "guilty" official or general. If the supreme ruler believes in the system of "every failure is due to guilt", then the life of his next subordinates are always in danger. But these subordinates are the true rulers of the country and, therefore, it is not rare that they succeed in removing the supreme ruler. A classical example is the history of the National Convention in the years 1793 and 1794. Robespierre and his "clique" were removed at the very day when about a dozen deputies detected that their names were on a list of Robespierre of those to whom he believed guilty of the slow progress made in "renewing" society according to the principles of Rousseau. (The romantic story of the detection of the list, by the mix-up of a fancy dress at a masked ball, was often told and sometimes filmed.) Two days later Robespierre was guillotined.

The neighbours of a state like the Russia of today may always suppose that a great part of the ruler's subordinates or of the leaders of the armed forces feel themselves threatened and will act anyway against the ruler if they would see any possibility.

It was the great merit of the Romans firstly to suppose such conditions to exist in all despotic States with which they had relations and, secondly, never to apply the principle: every failure is due to sabotage. The application of these lessons of history is near at hand: Induce the military or the civil ruler of a province to secede from Moscow. Offer him help in a way that appears evidently possible to him; assist him by a good social programme (aim: in 30 years or so the Russian workers are to live as now the Americans life), and the Russian government will be no more secure in the Kremlin than the Tsars were in their palaces at and around St. Petersburg.

Such considerations are not beyond a scientific management of foreign policy.

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Very truly yours - signed: U. v. Beckerath

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U. v. Beckerath, …. 28. 12. 1948. Your letter from 14-th of December, received at 25-th December.

Dear Mr. Meulen,

concerning: Long-term credit by Free Banking.

I think we agree in the following principles:

1.) The banker and his debtors form an economic unit. The nature of such a unit was, in Germany, first set in the right light by Knapp In his work: "Staatliche Theorie des Geldes" ("Theory of money, considered from the standpoint of the State.") Knapp called such a unit - - it need not be a registered society - - whose members

accept a means of payment as if they would receive cash money, a Zahlungsgemeinschaft" (perhaps to be translated as a "payment community").

In the case of a forced currency, the inhabitants of that territory, in which the forced currency must be accepted, form a "Zahlungsgemeinschaft". Those persons also, of whom a note-issuing banker may be sure that they will accept his notes at par, do form a payment union.

I do not know whether in England or in America the notion of a "Zahlungsgemeinschaft" has been used in the theory, of money. In any case, it is an interesting new notion and of practical value.

As an example of an interesting "Zahlungsgemeinschaft" I would still mention the inhabitants of old Prussia until 1871. Until this year all gold coins of the continent were accepted at the public pay offices, at a fixed quotation and with very few exceptions. If England created new coins, she supplied, at the same time, also Prussia with gold coins. The same was the case with France and other countries. The inhabitants of Prussia formed a payment union with the whole of Europe and the USA, by the wise monetary policy of the old statesmen of the school of Freiherr vom Stein.

2.) It Is the task of a banker to help his customers, especially his debtors and his creditors, to use their goods, labour and claims as ready money or - - if they preferred this - - as a money employed in the future.

So far we certainly agree.

Perhaps we do not yet agree but certainly will agree later on the following principles:

It is essential for the working of Free Banking and does constitute a fundamental principle that a debtor of a note-issuing banker is formally obliged to accept the notes of his banker at par, regardless of how they are quoted at the market or at the exchange, at least to an amount equal to his debt + a little more, say 10 % or 20 % or so.

It is essential, too, that every businessman knows up to what amounts the debtor is ready to accept at par his banker's notes.

It is further essential that the debtor of the banker obliges his debtors (I called them debtors of the second order) to likewise accept the banker's notes at par, at least up to the amount for which he is indebted + a little more.

Theoretically, the debtors of third and higher orders should be loaded with the same obligation, but in practice the possibility to secure an acceptance at par by indirect debtors of the banker will cease at debtors of second order. If it would be possible to secure the readiness of owners of goods, skills or claims, when they are debtors of any order, then the banker's notes would, as far as what the par value is concerned, be secured like it is in a forced currency.

I know that we do not as yet agree but I strongly hope that later we will agree on the following principle:

The debtors of a note-issuing banker should be so selected, that their goods or services are of the kind called in German "Gegenstaende taeglichen Bedarfs" (daily wanted consumer goods or services). It there arises any distrust in the notes - - say, by fear of a war, of a revolution, an invasion - - things which have nothing to do with the banker's honesty - - then the note holders should have the option to "realize", without much delay, his notes into goods or services. It that principle is followed, even in times of panic, then the notes cannot get a discount.

It is remarkable that if the principle is followed then a tendency arises - - feeble as it may be - - for opportunities for labour and even for the banker. Of course, the notes which disappeared so quickly from the circulation must be replaced, for even in times of panics the people cannot be without typified means of payment.

(The stores had rapidly sold out goods, in this "run" upon their stocks and they must put in replacement orders, which require labour to be fulfilled. To that extent business as usual goes on. - J.Z., 9.1.02.)

It the banker is the municipality of a town, car yards and watchmakers must not be excluded from the possibility of becoming debtors of the bank. (In old times towns as bankers were not an unheard-of thing.) The same would apply if the banker has a very wide-spread sphere of debtors, so that the probability is more than 90 % that, in times of panics among the note-holders, there will also be people who buy a car rather than keep the notes in their pocket.

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

That the debtor of the banker should always have the right to repay his loan is a principle which was known, obviously, already at the time of Adam Smith and was generally practised. I conclude that from the report of Adam Smith in the chapter "Of Money" in his "The Wealth of Nations".

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

You are quite right to demand that the regular publications of the banker should also contain details on the length of the agreed-upon time for the repayment of loans. But here I go farther than you insofar as I

1.) firstly demand, that not only the average length should be reported, but that the report should contain what in German is called a complete "Liquiditaets-Bilanz", (Liquidity balance - J.Z.)

2.) an indication of the length of every loan.

The time factor is rarely considered in economic considerations and if it is considered then not in a sufficiently detailed manner. But in Free Banking the time factor is decisive.

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

The average length is not sufficient, which becomes evident from the following example:

One million of money units (marks, pounds, dollars, etc.) is lent out in notes for - - say - - 20 days (the average length of loans at the old Reichsbank) and 100,000 units for 1 year. Then the average length, exactly calculated, would be:

1,000,000 x 20 + 100,000 x 365.24 = 51

1, 100, 000

That would seem to be a little too much, but would not seem in to bring the note holders into danger to lose with their notes. But if the old paper money theory (emphasised by Adolph Wagner, by Michaelis and nearly all others in Germany) is right, then the 100, 000 units constitute not only a danger, but the certainty of bankruptcy.

I think that, in reality, the banker will not even calculate thus. He will reckon as follows:

10 000 loans of 100 units each. (Let us suppose that the numbers were correct.) Each loan has a length of 20 days.

One loan of 100 000 units. (Let us suppose that this figure would also be correct.) Then, the banker calculates:

10, 000 loans at 20 days length

1 loan at 365.25 days length,

average:

10, 000 x 20 + 1 x 365.25 = 2000365,25 : 10,001 = 20 days average length.

10,001

Probably the most honourable banker would calculate in this way and so deceive himself and others. Honesty does not include the knowledge of the theory of averages.

Darkness.

(Meaning: Now darkness prevails again, due to rationing of electricity supplies and I cannot continue writing. - J.Z., 9.1.03.)

___________________________________________________________________________________________

29. 12. 1948.

For the purpose of my demonstration I suppose that the debtors are obliged to repay their loan every day with 1/20th of the original amount, so that at the 21^st day every loan is repaid.

A regular repayment or at least a repayment in short intervals was the usage at the old Scottish banks as reported by Adam Smith.

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

That the loans were to be repaid in notes of the banker is essential. Not in all cases will the debtor be able to procure enough notes of his banker for his repayments. Then he may pay with other means of payment (coins, treasury notes, other "local currency"), but with a little additional amount, say 1/1000. That additional amount is necessary for the banker. He must buy at the market or at the Exchange his own notes - for coins, notes of other banks, etc., so that a continuous demand for his notes is maintained in the community. This demand may come from the debtors or from the banker himself. The buying of his own notes costs something for which the banker must be compensated by the debtor.

The principle is old. It seems that it was first used in Prussia in the year 1815, after the Napoleonic Wars. In April 1815 a Prussian law prescribed that 1/2 of all taxes must be paid in paper money (Tresorscheine). For every Thaler that was paid in silver instead of in paper (as far an the 50 % were concerned) the taxpayer must pay an additional "Groschen", which at that time was 1/24 th of a Thaler, and 1 Thaler was about three old Shillings.

So the additional amount was equal to 1/24^th or about 4 %. (In our days a smaller additional amount will be sufficient.)

Some years later the additional amount for the Prussian taxpayers was reduced and some decades later it had fallen into oblivion.

But the aim was attained. A continuous demand for paper money was created, so that sometimes the Prussian paper money quoted a little over par at the exchanges, e.g. at Frankfurt on the Main. And in reality the State was bankrupt!

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

For the purpose of my demonstration I have sketched a model of a report to be published by the note issuing banker,

A.) for the case that he operates on the plan which I think right and which would have been the plan of the Cheque Banks according to Bill IV of the celebrated "Four Bills". (Zander, the apostate, was one of the authors.)

B.) A Plan according to your ideas on granting long term loans by Free Banks. I used as example the length of one year, although you had, probably, in mind a length of several years. But the case where one year is adopted as a normal length shows - - I think - - that already such a length is economically impossible.

If the average note holder reads a report like the enclosed, he will - - I think - - trust the value of the note. And if he does not trust it, then he goes to one of the stores or firms published (they are also, recognisable by posters), buys what he in need f and is thus rid of the note and his distrust.

The only effect of his distrust is an acceleration of the turnover in a store. The storekeeper - - perhaps also distrustful, takes the note, pays with it a part of his debt to the banker and the thing is insofar settled.

Very different the situation of a banker who operates on a plan such as yours.

If the note-holder reads m report like that here enclosed, he will he terrified. At once he will come to the banker and demand gold, for "The last is bitten by the dogs!" (Den Letzten beissen die Hunde.)

In a banking-business on the basis of the Four Bills gold is quite useless, at least in the vaults of the banker.

That gold is not forbidden in the community, that is essential.

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

Darkness.

30.12.48.

From the preceding it should not be concluded that a note-issuing banker's help is unnecessary for procuring a long-term credit. But the security of the notes should, in the case of long-term credit, not be that, what the debtor has to offer as a security, say a house, a factory, machines, etc., but the security should be that what the man possesses who will be, at last, the creditor (*) of the debtor. Let us consider an example.

(*) (J.Z.: He should he have said "debtor" here, I believe. Lastly any debtor can repay his debts only out of his income, i.e., out of what his debtors owe to him. - J.Z., 9.1.03.)

Suppose a Building Society wishes to build 100 houses, each worth L 5,000. The houses will be sold through the well-known hire-purchase system. If a tenant pays monthly L 48.80 and that punctually for 144 months, the house is his property at the end of 12 years.

If no interest would be demanded, a monthly payment of 5000 : 144 = L 34.72 would be sufficient. The difference of 48.79. - 34.72 72 = 14.07 secures an interest of 1/2 % monthly on the outstanding debt. (An interest rate of 1/3 rd % monthly would require a monthly payment of L 43.78)

The Building Society wants L 500, 000 to perform its program.

Now many people say: Very simple - - let the banker lend the society L 500, 000 in notes. The society repays the loan in 144 instalments of 100 x L 48.80 =L 4.880 or a little less, if he in willing to receive less than 1/2 % interest monthly on the rest of the debt. But that in economically impossible.

Adam Smith speaks about that principle of "raising money by circulation" in his chapter "Of Money". There he says: A note-issuing bank is an excellent creditor for the debtor of long -term credit, but a debtor of long-term credit is an evil debtor for the note-issuing bank. Here Adam Smith does here not speak of the trustworthiness of businessmen in the usual sense. He speaks only of the economic nature of that kind of loans.

Possible and desirable is another way.

The banker, the building society itself and their friends look out for persons or firms that possess goods or are ready to render services (say a bus line) but wish to receive the equivalent not at once but later and to whom the plan of liquidation - - 144 terms - - is convenient. The bus line may have a demand for its superannuation fund, other people for other purposes. Then the banker sells the enterprise some shares or certificates or whatever they may be called, which are equipped like gilt-edged papers usually equipped. The bond contains a plan for redemption by drawing, as it usually is. The buyer of the bond obliges himself to pay it in lump sum at a fixed date or by instalments. (Selling bonds by instalments is prohibited in most countries, but such a prohibition goes too far.

Now the banker lends to the building society so much in his own notes as he is able to sell in bonds. Say, within a week he sells L 20. 000 in bonds and under conditions, that make sure that the buyers will have paid the bonds within one week or two.

Then the banker can lend the building company L 20.000 in notes.

To the buyer of the bonds he says: I accept as means of payment either cash money or - - and I prefer that - - my own notes.

One may suppose that the building society spends the received notes in a short time - - perhaps in two weeks - -for wages, materials, services of architects, etc. The notes will find their way to the people that bought the bonds. If not, and these people pay the banker the bonds by other means of payment, say cash, then the banker buys at the market or at the Exchange, his own notes for the amount he received in cash or other means of payment.

The principle is: There shall never he more notes outstanding than are covered by debts or at least by the readiness of people (expressis verbis stated) to accept the notes, at par, in their usual business. In case of arising distrust, the note holder must always have the option to get rid of the notes by buying things that are daily wanted.

I explained this kind of banking in my dissertations, published in the Annals of Collective Economy (Annales de l'économie collective), edited by Professor Milhaud, who got them translated into French and English. (The English translation is so bad, that it is nearly unintelligible. The French translation is excellent.) I regret that all copies in my possession are burnt. But the editor, Professor Edgar Milhaud, Genève, certainly still possesses copies.

Selling bonds to persons who wish to buy such bonds and to permit them to pay the bonds with the bankers own notes, if such notes are received in the usual business of the buyers, that is all the help the banker can grant to the buyers on the one side and to the society on the other. But this help is powerful.

If - - an extreme case - - nobody in the community wishes to buy bonds of the kind the building society can provide, then the building society can get no loan from any side, neither from a private person not from any banker.

If the banker, nevertheless, lends to the building society notes in the hope that these notes will not return to him, because he is known as an honest man, then he deprives some (unknown) person or persons of the amount of outstanding notes. He diminishes the stock of saleable goods and he augments the amount of the currency of the community, which means a private inflation as long as the notes are in circulation. But such private inflations can never continue for a long time, I think for no longer than four weeks, if the banker publishes his affairs. (Details of his issues. - J.Z., 9.1.03.)

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

The old Scottish bankers were not so cautious as is required by the here explained principle. By the following reasons they are justified:

1.) The standard of the country was a silver standard.

A sum of 100 shillings in silver tears the pockets in which the sum is transported, if the pocket is not made of leather, as, indeed, was usual at that time. But for greater sums people preferred paper money as more convenient. If paper money is preferred to silver money then the banker is much less threatened by a run. Where gold coins are the general means of payment the situation is very different.

(I plead for what the German economists call a: "Parallelwaehrung" (parallel value standard - J.Z.), which is not the same as a double standard), or Bimetallism.)

(J.Z.:In Beckerath's monetary freedom system there would be no fixed rate or legal tender between the two metals but a freely floating rate! Thus the difficulties frequently experienced with Bimetallism would be avoided. - J.Z., 9.1.03.)

2.) The "option clause protected the bankers nearly to 100 %. The time provided in the option clauses was generally 6 moths. (From that I conclude that the bankers did not grant loans in notes for more than 6 months/

3.) The circulation of goods as well as of money was at the time of the old Scottish banking much slower than it is today.

4.) A banker at the time of the old Scottish banking was a very powerful man. Whoever presented him with a great amount in notes for redemption became his enemy - - a serious matter, seeing than such an enemy could not hope to get loans when he needed them. That was even the case at the old Prussian central note-issuing bank until 1871, although the bank had always silver and after 1871 gold enough.

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

That must be sufficient for today.

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

I heartily wish you a happy new year and health first of all.

Yours truly - signed: U. v. Beckerath

____________________________________________________________________________________________

29. 12. 1948,

A B C

Date Amount of outstanding Amount for which

notes. the banker's debtors

are obliged to accept the notes at par

in their usual business.

____________________________________________________________________________________________

1. II. L 1, 000, 000 zero

from 1.II. to 1. III. 1, 000, 000 L 85, 150

1. III. 918, 183 85, 150

1.II. of next year zero zero

____________________________________________________________________________________________

D

Amount of gold or other values ready at the banker's counter to redeem presented notes. (ounces)

Date:

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

The emission is based on a series of loans of the same type, each to be repaid in 12 months and for an interest of 1/3 rd % per month for the outstanding debt.

The interest tables show that for such a loan the debtor has to pay monthly 8.5150 % of the original debt.

____________________________________________________________________________________________

29.12.1948.

A B C

Date Amount of outstanding notes Amount for which the Banker's debtors and other

and of outstanding credits, persons are obliged or obliged themselves to accept

which at any time, on demand, the notes at par (provided the debtors did

may be called in, in notes. not repay their debt before the date) in their usual business.

demand, be called in, in notes.

___________________________________________________________________________________________

1. II. L 200,000 L 220, 000

2. II. 190,000 209, 000

3. II. Sunday

4. II. 180,000 198, 000

5. II. 170,000 187, 000

Etc. Etc.

9. II. 130,000 143,000

10. II. Sunday

11. II. 120,000 132,000

12. II. 110,000 121,000

13. II. 100,000 110,000

Etc. Etc.

16. II. 80, 000 88,000

Etc. Etc.

21. II. 30,000 33,000

22. II. Sunday

23. II. 20,000 22,000

24. II. 10,000 11,000

25. II. All notes returned to the banker In the amounts of this column

or bought by the banker at the market are not included those amounts, which will be voluntarily

if the debtors paid by other means accepted at par by persons, who are not obliged to accept

of payment than the banker's notes. the notes.

D E

List of the main places or persons who are obliged Remarks:

to accept the notes at par, in their usual business.

The notes in circulation after the 2. II. at an amount of

1.) The bank itself. more than L 190,000 correspond to loans contracted

2.) Ware house XYZ. after that date.

3.) Bus line x 1, y 1, z 1.

4.) Tobacco store X2, Y2, Z2.

5.) Theatre X3, Y3, Z3.

Etc.

____________________________________________________________________________________________

31. 12. 1948.

Dear Mr. Meulen,

If one considers the "modern" tendency (it is not so modern, it is some decades old or even older: perhaps you know Max Stirner's "The Unique and his Property", 1844), to give the State as many functions and properties as possible, then you swim against the stream. But, as was often observed, all social or economic developments consist in the formation and subsequent dissolution of whirls. The whirl itself may advance while a part of it seems to retire. This taken into consideration, one must say that you swim with the stream insofar as you move in the direction of the great whirl which moves now all institutions, opinions and individuals. And the direction of the great whirl - - s o great that nobody perceives its beginnings and its true dimensions - - is: replacing the State by voluntary organisations.

The State-socialists (who are always State-capitalists, whether they like to hear this or not) do themselves recognize the fact. I quoted to you an often reprinted passage from Engels' "Development of Socialism from an Utopia to a Science", which is also cited approvingly by Stalin in his remarkable book: "Questions of Leninism". (Page 723 of the German edition.)

What is the centre of the State's power? As statists themselves admit, it is the money-monopoly, more exactly expressed, the monopoly of the means of payment. In 1934 in Russia they had great "forgery" trials, where many factory managers were sentenced. What happened in that year in Russia? The State Bank, for some reason or the other, was unable to procure enough money (*) to pay the wage earners. The workers spontaneously assembled in the factory courts and demanded their pay but the managers had no means of payment and could not get any from the government bank. In this situation the managers found a natural way out of this difficulty. They ordered notes to be printed, without delay, notes that were valid in the workers' cooperative stores, and paid them their wages with these notes.

The government at once and instinctively felt itself endangered, for if this procedure would have spread, then the possibility would have been recognised to exchange goods, labour and all things without the intercession of the State bank and even to finance a resistance movement. "Principiis obsta" (Resist the beginnings!), said the government and sent the managers to the concentration camps as "forgers".

What the Russian factory managers did was using the Free Banking principle, but in an imperfect form. Indeed, the Free Banking principle is the explosive with which the modern, omnipotent, all-exploitative State c a n be blown up and one day will be blown up, with the money mechanism forming the bore-hole. (Mind you, this could be a quite peaceful "blow-up, with not a single drop of blood spilled and not a single building being destroyed. The buildings of the Central Bank, as well, can be used for something more rightful and sensible. - J.Z., 9.1.03.)

You see, dear Mr. Meulen, that you are the most dangerous revolutionist, considered from the point of view of the State. If you want this or not, under the old war cry "Britons never shall be slaves!" the workers of England will begin a revolution, one at the same time national and social. With the invincible weapon of Free Banking they will regain their liberty.

(J.Z.: Regain? Did they ever have full liberty before? And have "the workers" shown any interest in their monetary freedom options? - J.Z., 9.1.03.)

The sons will not believe that a government could prescribe their fathers what they were permitted to eat, to drink and otherwise to consume. And your name will be mentioned simply because you are now the only man in England who still fights for Free Banking.

Remember the 12 pioneers of Rochdale 101 years ago. They were poor weavers and - - as often remarked - - transformed a good part of the world's economy. If their success was not greater, it was because they did not know the principle of Free Banking. It must be your task to spread the knowledge of the principle among England's workers. Let not the year 1949 pass without having won at least 12 adherents among the working class - - men that claim as a personal right, which no majority can abridge to a minority: to take all of their own affairs into their own hands, which they are willing and believe themselves to be able to conduct, beginning with the exchange of labour-products without the interference of monopolistic banks.

In this sense: a happy new year!

Yours truly - signed: U. v. Beckerath.

____________________________________________________________________________________________

(J.Z.: Alas, when Meulen died, in 1978, his THE INDIVIDUALIST had not many more than 100 subscribers and I doubt that a single blue collar worker was among them. Even Meulen himself was not prepared to quite freely discuss all monetary freedom options that deviated from his own "free banking" project. He never explained why the remaining monetary freedom option (which he claimed did exist), for the issue of notes not promising redemption in gold or English government pounds, were not taken up by any of the money reformers in England, least of all by himself and his own little group, the Personal Rights Association. The only English "goods warrant", that I ever encountered, was a canteen coupon for some food at the airport, when my flight was diverted to London due to fog in Frankfurt. English trade union workers certainly showed no interest in alternative means of payment for themselves and for unemployed workers and, to my knowledge, they still don't. Even the somewhat better educated civil servants have, apparently, never demanded to be paid in a currency that is more sound, and sufficiently supplied at the same time, than is and was the governmental paper pound. - The publication of small and short newsletters - The Individualist had only about 60 pages p.a., in 6 issues - seems to indicate that even among their subscribers there are not enough people who have the interest, time and energy to read and write more, particularly when these newsletters have become very personalised ones, like Henry Meulen's little freedom journal was. Just 12 pages every 2 months! Their readers become then largely a small in-group of largely closed minds for everything outside their "party-line" and the programme of the journals tends to become just that of one man, the editor. An open-input rule should be applied, as far as possible. Few editors manage to do that. - With alternative media one can adopt such a rule to an almost unlimited extent, especially when it comes to CD-ROMs and DVDs reproducing many long texts. - J.Z., 9.1.03 & 22.5.03.)

(*) (J.Z.: After the fall of the Soviet regime and while its communist central banking and all too much of its centrally misdirected "planned" economy was continued, and even during a rapid paper money inflation, government employees were often unpaid for weeks and sometimes for months!

On a smaller scale, we have governmental payment difficulties even in government finance in "democracies" like Australia. The Australian Defence Minister, whose bureaucracy had greatly underestimated some defence costs, could not even resort to a supposed cash surplus account of 1 billion, intended for emergency spending, because even this supposedly "ready cash" was, as he said, tied up in red tape! (According to a recent newspaper report.) Via taxation and other charges governments often withdraw much of their monopoly money from circulation and then there are so many and long delays through their bureaucracy, before this money is spent again, that quite severe deflationary effects, with mass unemployment, can appear. According to research of the circle around Ulrich von Beckerath, on the already all too short supply of government cash, just after the Great German Inflation, which ended in 1923, up to one quarter of the supposedly "circulating" new notes were held up in government offices, on their bank accounts, between their collection as taxes and their spending for various government programmes. That kind of government created bottleneck for an essential commodity, namely cash exchange media, has been all too little studied. It is simply taken for granted that taxation would not even temporarily reduce the note circulation. Indeed, governments are "great" spenders and often even spend more than they rob in taxes. But often they do not spend as fast as they take and under a money-issue monopoly that can create great difficulties. Then and thus the make even the raising of further taxes difficult - because there are not enough means of exchange to pay them with. What results may then be comparable to the attempt of an Inquisitor to extract a confession from a dumb and deaf victim. - J.Z., 9.1.03.)

____________________________________________________________________________________________

2. I. 1949. Your letter of 28^th of Dec., received the 30^th of Dec. (!!!!!!)

Dear Mr. Meulen,

your letter is most interesting. You knew Kitson personally!!

That Kitson represented you as a bad Englishman was the worst he did. If your ideas, for which you took so much trouble, would be realized, in every part of the world, there would arise a strong movement among the people to become a member of the British Commonwealth. Opposing governments in India, in Burma, in China and other countries would be swept away. People would say: A nation, which is so well organised, creates labour for every individual, and is ready to communicate its methods to everybody who likes to learn from them, protects self-government in every country and gives to everybody who lives under its flag the possibility to die as a rich man, such a nation we would like to join! But the methods proposed by Kitson are now - - at least concerning the State-monopoly of money - - realized and the indirect effect is or contributed to the present state: What more than 3 centuries built up is lost in less than 3 decades - - India (practically) lost, Burma lost, etc., etc. Kitson is excused by his ignorance on the principles about which he would instruct others. But that is no glorious exculpation.

When I was about 15 years, I spoke to an old man about the war of 1870/71. I was a pro-Prussian - - of course -- for we are all born as nationalists and fascists. Then the man asked me simply: And what would your point of view be, if by chance you would have been born in Paris??? That puzzled me and at last I understood him.

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

Benjamin Tucker's " Instead of a book. After the repeal of the socialist-laws in 1889 there was founded in Berlin a little group of Individualist Anarchists - - peaceful reformers such as Tucker was, whose aim was merely to confine the State's activities as far as technically possible. (Here the Tucker-Group was in the same line as Herbert Spencer, Kant, 100 other excellent thinkers and the old and so often misunderstood Manchester School.) I got some pamphlets edited by the group and read also - - with all enthusiasm of that age - - Max Stirner's "Der Einzige und sein Eigentum". Since that time I tried to get "Instead of a book" but I never got it until some time before the 22nd of November 1943, when a great air-fleet burnt my library, my house, some thousands of other houses, killed many women and children, but spared the high furnaces on its way from England to Berlin. It was convinced to have contributed something to its own glory and the end of the war. Among the burnt books was that of Tucker, and I had not yet found the time to read it. Now I am too old and will never rend it.

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

In the 90's there appeared in New York a periodical "Sound Currency", excellently edited and in its content near to the ideas of the Four Bills. One of the best articles was that of John DeWitt Warner: The "Currency Famine of 1893", published in 1895 and reprinted 1896. The author explained the goodness and economic possibility of Free Banking by the example of the "Clearing-house certificates" very generally used in the weeks of the currency famine. I think at London this magazine is still obtainable. If you will read it, you will be very pleased.

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

I will take it as a good omen that you entered the new year in relatively good health.

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

I do hope to be able to continue next Sunday. Please do not ascribe the voluminous letters of these days to other reasons than the fertility of the thoughts in your letters. That my nature does not tend to loquacity in writing I have proved - - not to my honour, indeed - - in the last year, when my expense for ink ribbons was smaller than in any year before.

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

Very truly yours - signed: U. v. Beckerath.

____________________________________________________________________________________________

2. I. 1949.

Dear Mr. Meulen,

the importance of the subject may justify me if I write you so much about it. The monopoly of the means of payment is, probably, besides atomic bombs, at the moment the most serious menace to the world's culture - - not only the Western world's, as the events in the Far East teach. The history of the world is not, as Marx erroneously believed, a history of class-wars, it is essentially the history of the means of payment.

Gibbon - - the splendid and unique Gibbon - - was quite right when he stated: If the monks, who brought silk from China to the emperor Justinian, would have brought from there paper and the knowledge to manufacture it, and if Justinian would have been intelligent enough to use it for paper money, then the history of the world would have been very different from what it became and a better one. (Among the 3,000 books of my library were also those of Gibbon.)

If the danger through the monopoly of the means of payment is so large, as I see it and as you see it, then Free Banking is the most important thing in the world. Suppose, any enlightened government grants it to its subjects, and the subjects do not use it in the technically and economically right way, so that the notes get a discount immediately after their being issued and then are declined by the people, everybody will ascribe the failure not to the special application of the Free Banking principle but to the principle itself, and it may be, that the principle never has a further chance, because everybody believes it refuted by experience.

(J.Z.: Compare how the results of the lack of sufficient freedom was often ascribed "laissez-faire", or to the free market or to competition, or to free enterprise capitalism, while neither were as yet sufficiently realized and all the remaining man-made evils were really due to the remaining monopolies, other interventionism and ignorance and prejudices. - J.Z., 9.1.03.)

The greatest danger to Free Banking is the seeming possibility to create by it an immediate possibility of long term credit. The opinion that the Free Banking principle may be used for this purpose is widespread. Permit me to demonstrate the right principle of Free Banking by some propositions (?suppositions"? contrasts? - Here the text is an illegible: o--ositions. - J.Z.)

Under the heading I, I will lay out the application of the principle as it would be, if Bill No. IV of the Four Bills would be enacted by legislation. Under II, I will lay out the application, if the proposal: "raise money by circulation" is applied.

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I.) Free Banking creates means of payment by subdividing money-valued, ready claims originating from selling goods or labour. The claims, running to great sums, are converted into notes by the banker.

II.) Free Banking creates money by converting the value of the claims or goods, due at once or later, into money.

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I.) What keeps the notes in circulation is the certainty for every note holder

(J.Z.:B. usually says: "note bearer" and I replaced it with "note holder". His term may not be as common but is insofar perhaps more correct, as the note bearer seems to be on the move and seems to already offer his notes in exchange. - J.Z., 9.1.03.)

that he may convert the notes at any time into objects of daily want, say victuals, barber services and similar ones.

II.) What keeps the notes in circulation is the trust of the public in the honesty of the banker, the word honesty taken in its usual, moral sense.

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I.) It is an advantage, especially for the banker, if his notes return to him as quickly as possible.

II.) It is an advantage if the issued notes are in circulation as long as possible.

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I.) Gold has nothing to do with the business of Free Banking, excepting the case of the banker's debtor having gold coins and being willing to pay with them. But the banker would in this case have the right to claim a little premium. (10/00 or so.) The banker should not be entitled to demand gold coins. (Nor should the creditor be entitled to demand gold coins from the banker. - J.Z., 9.1.03.)

II.) A stock of gold is a useful help in the business of Free Banking.

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I.) The asset of a long-term credit is always, in the last resort, a house, a great machine, a ship or a similar good, for normal buyers not payable in a lump sum. The goods produced by long-term credit are - - and that is very important - - produced by workers - - the word taken in a wide sense, including managers of factories - - who, on their part, consume goods as victuals, clothing, etc., that is goods in daily demand. Insofar the use of long-term credit for the production of goods, of the above-mentioned kind, is an exchange of goods in daily demand against houses, ships, machines, etc. Free Banking takes that circumstance into consideration.

II. The note-issuing banker has nothing to do with such considerations. Expressed in ideas of his business: The intercalating of short-term credit between the financing of the mentioned goods and the issuing of the notes is quite out of the banker's considerations.

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I. If the house, the ship, the machine etc. is manufactured and the manufacturing well financed, there are bondholders, who are now the creditors of the house owner, the ship owner, the machine owner, etc. The banker has nothing more to do neither with the owners nor with the bondholders. The notes, by which he financed the production have all returned to the banker.

II. All notes used for financing the houses etc. are in circulation and return to the banker to the degree in which the owners of the houses etc. pay their debt to the banker in notes.

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I) If the owner of the house will repay to the creditors (bond-holders) the interest and the instalments, it may well be that he applies for financial help to the banker. If he does, the process of financing is accomplished a second time in (reverse?) direction - - of course for the banker's advantage.

II. That is an idea quite outside of the usual business ideas.

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I.) The Free Banking principle may easily be used for the external trade. The importer may issue, with the help of the banker, certificates not convertible into cash but only to be accepted as cash in the debtor's usual business. The denomination may be - say - 100 dollars or more per certificate.

Say, into England would be imported goods from abroad for an amount of 1,000 millions of dollars within half a year. All Gazette-economists faint and think England's industry will be ruined. Then they begin to meditate: By this principle of payment every dollar of imported goods must create corresponding labour for English workers (the word taken in its widest sense) and the amount of currency in England remains quite unchanged.

II.) Free Banking has nothing to do with external trade.

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So much today. In a few minutes the current will be switched off.

Yours truly - signed: U. v. Beckerath.

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2. I. 1949

Dear Mr. Meulen,

Schopenhauer in his dissertation "Ueber Geistersehn und was damit zusammenhaengt" and also in his book "Der Wille in der Natur", explained, that many of the "magic" apparitions, such as spectre apparitions, do not prove an individual immortality. (His views were somewhat those of the modern School, which supposes the existence of a "group soul", but Schopenhauer's views, founded on Kant, are much more superior.)

The thing is important enough, since the ghost apparitions in the "séances" of the spiritualists seem to reveal a world no less terrible than our present world, but ridiculous in all its dreadfulness. Schopenhauer demonstrates that the apparitions are to be interpreted in a manner quite different from all interpretations given before him and, above all, different from the seeming immediately following from the observations.

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The most astonishing phenomenon reported from the séances is that which happened in the 70's of the nineteenth century in experiments of Professor Zoellner at Leipzig with the medium Slade. Zoellner summoned the "spirits" to change the polarisation angle and the polarisation direction of a solution of grape-sugar, what the did. Zoellner published his experiments in a volume "Transcendental-Physik" (a pearl of my library, burnt). The experiments were watched by some of Germany's first scientists, such as Wilhelm Weber (the man who 80 years [ or so]) ago firstly calculated atomic energies and said: in a copper penny there is more energy than would be used in transporting a great steamer from Hamburg to New York and back), Scheibner - - an excellent physician and mathematician, Fechner, the founder of the modern Kollektiv-Masslehre", that is of modern Statistics.

If it is possible to change the "atomic" structure of matter by intervention of that unknown force still now called "spirits", then the possibility to bring atomic bombs to explosion before they are transported to the spot where the transporters will let them explode, is given. If Zoellner still lived, he would simply say: Well, I will ask my "spirits"!

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The dissertation "Ueber Geistersehen etc." in the work "Parerga and Paralipomena" you will have read in less than two hours.

I think the German text will be intelligible for you.

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These few words in haste.

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Very truly yours - signed: U. v. Beckerath.

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U. v. Beckerath, … 4.1.1949.

Dear Mr. Meulen,

in countries like England or Germany, in times of a stable currency, the demand for opportunities to invest is always greater than the demand of trustworthy debtors for new credits. Look at the English or the American Building Society movement. Especially in England, not in any year were the Building Societies in difficulties getting new money. But they had often difficulties in investing money. About 20 years ago, some of the greatest Building Societies found it necessary to restrain the influx of new money. (The Building Societies Gazette, Cursitor (Oursitor? - J.Z.) Street, will give you all the information. You can also get information from the Abbey Road Building Society under the brilliant management of Sir Harold Bellmann [I do hope he is still alive] - - but I forgot its address.)

The interest rate, under such circumstances, is practically equal to the costs of administration + the risk premium, that is about 2 1/2 p.a., in Germany a little more.

If one acknowledged these facts then one will agree that the task of a banker, the word taken in the sense of 1843, will be less to create capital for trustworthy debtors - - say by note-issuing - - but to intermediate between debtor and investor. This intermediation also requires note-issues - - a fact, although it seems that even now it is seldom noticed, although it was certainly used already, for practical financing during the times of the old Scottish banking.

The intermediation consists in subdividing the investors' capital into money-like pieces and to hand these to the debtor in the form of these pieces, that is in notes. The intermediation requires a very short time, so that the banker's capacity for new note-issues is restored at short intervals.

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According to the old "raise money by circulation" theory, the banker must not look out for investors. Investors are superfluous for long-term credit. The issued notes themselves are a good "Ersatz" for the investor, and the banker's capacity to issue notes is the inexhaustible source of long-term credit, whose ultimate foundation is the trust of the note-bearer in the banker's honesty, the word taken in the usual moral sense.

But the following consideration show that in this idea something must be wrong.

Everybody will admit that there is some limit for the quantity of currency in a community. For England the limit may be L or L 10, 000 millions or more, some limit exists, provided a pound represents a tolerably stable quantity of goods or labour for the time under consideration.

NOW - - after the limit is reached, obviously no further issuing of notes is possible, except by proclaiming the notes a legal tender. (Cours forcé). Here this case shall not be taken into consideration. If no further issuing of notes is possible, then the former source of long-term credit does not longer exist. Is long-term credit then impossible? Certainly not, but then it is only possible by any other system, e.g. by the system of the Four Bills.

And now the question arises: Why not at once begin by this system without trying to supply long-term credit simply by issuing notes??????

Yours truly - signed: U. v. Beckerath.

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U. v. Beckerath, … 14. I. 1949. Your letter of 9. I., post stamped 10. I., received yesterday.

Dear Mr. Meulen,

In great haste I pick some points from your extremely interesting letter.

You are right: "The history of banking shows that the function of gold in exchange has been to support or supply the defect of mutual trust". But

I.) Kant teaches, that the principles of that which should be done cannot be taken of that which has been done. Reason is (says Kant - - and I agree with him - -) the source of the principles which should regulate the action of man.

II.) The blocked brains who tried to supply trust by gold overlooked

a.) that trust cannot be replaced by gold. If people do not trust a banker, the banker will not do business, even

if he possessed Solomon's treasures.

b) that banking business requires much more than trust (and gold), trust being one of the many elements, such

as ink, paper, tables and rooms to treat the customers' applications.

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You are also right:

"As trust develops, less and less gold is used." But is there a causal connection between the two facts:

a.) gold is less and less used, and

b.) trust develops - ??????

I think there were bankers (note-issuing bankers) did business, the trust of the banker's customers was as good as it could be and not capable of a further development. What could be developed was the number of the banker's customers, and this number was always as great as it could be under the given political, economic and legal conditions. But it is rightful to say: trust increases, if only the number of the trusting men increases. Nevertheless, the two cases must be distinguished: "the degree of trust increases" and "the number of the trusting people increases".

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You are very right when you said: "all schemes to compel trust have foundered on the rock of primitive human distrust."

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You say: "… the old Scottish banks made their notes redeemable in gold". Hm, hm - - did they not make the notes redeemable in silver ??????? Or at the, option of the banker in gold or silver???????

There is a difference. People prefer paper to silver for amounts of about more than five old shillings. But they prefer paper to gold only for amounts of about more than five old pounds. The factor is an "irrational" one, but utilised by old banking. (I know it from Germany's history of banking. Before 1871 Germany possessed about 35 note issuing banks, more than old Scotland had of Banking-Corporations. But - - it is true - - the note-issuing private banker was unknown in Germany.)

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You say: "I think that new banks which offer to redeem their notes either in gold (at the market price) or in the notes of well established banks, will find it easier to get started than banks whose notes can be redeemed only in the goods of people who have published their willingness to accept the new notes."

I.) I think you will not prohibit banks on the basis proposed in my letters; that is all I demand.

II.) As a counter-gift I will not prohibit your basis, but I must demand full publicity - - on which latter point we do agree, I think.

III.) You - - I hope - - will not prohibit people to fix and to measure prices, wages, rents etc. in gold coins. I mean here the system used not only in Germany at the time of the Great Inflation, but also in other countries, say Austria, Poland, Italy, etc. It was even - - although only in a restricted measure - - used in England at the time of the bank restriction, before Parliament prohibited it. ("Mit dem Belagerungszustand kann jeder Esel regieren" [With a state of siege every jackass can govern! - J.Z.], said the very clever and experienced Metternich.)

The system consisted in fixing a "floor price" (Grundpreis) in gold coins and paying the price in so much paper money as was indicated by the price of paper money at the Exchange. Example: A book was priced: 10 gold-marks. At that day, when a man bought the book, the price of a ten gold-mark piece was 1,000 paper marks. Then the man paid to the bookseller 10 000 paper marks. Many Englishmen who visited Germany, Austria or Poland etc., after the first world war, will remember this system - - simple and effective, until the moment came when the time difference of a few hours caused variations in the price of gold coins that could not be neglected.

Now, say, a note is issued with the inscription "10 gold-Marks" and then this note is accented in all stores which operate on the described system for the value of 10 gold-Marks, that is, the purchasing power of the note is so constant as is the purchasing power of a 10 Marks gold coin. In the "Four Bills" such notes or typified cheques are provided.

In your system the inscription of the notes obviously is: 10 paper Marks. This requires a definition of the notion "paper mark" on the note. The notion could be defined as: "Paper marks of the value of the paper marks issued by the central bank of the country" or "paper mark of the bank X." And now we come to the central point.

If the people do not use the permission to fix the prices, wages, rents, etc. in gold coins, but fixes them in the same paper unit as your notes are fixed, then perhaps your system may operate for some time. If prices rise, the people in this case do not ascribe to the rise to an inflation coming from the money side (say, an abusive issue of the notes by the central bank, in whose money units the private notes are here supposed to be valued), but to an influence from the side of the economy or any other side.

The workers will say: The capitalists have once more made too high profits, and therefore the prices have risen. The journals and the "experts" will say: "The wages are too high". The astrologers will find the reason in some star constellation. (They always find them after the events happened.) And the churches will assert a new lowering of the people's morale.

In this case the price of gold coins or bullion at the Exchange is not observed by average people. Therefore you may offer to such people, when you redeem notes, the price of gold coins at the exchange.

(I do not find B.'s remarks clear enough here. Precisely because average people will not have observed the fall of paper marks or pounds at the Exchange, against gold coins or bullion, they will be shocked when, upon presenting their paper marks or pounds for redemption into gold, they will have to pay much more in paper money for gold than they had expected. They will feel cheated and protest, for the old relationship between not yet or not as much depreciated paper money and gold weight units will not be altogether forgotten. - J.Z., 10.1.03.)

Things are very different if the notes are valued in paper units - - say notes of the central bank - - and the prices in the stores on a gold basis. A fortiori things are very different if, at the same time a note-issuing bank does business whose notes are issued as gold-mark-notes. Then the people - - and also average people - - compares.

As old Buffon says (His works are burnt - - 9 volumes of the splendid Cuvier edition and 9 volumes of Schaltenbrand's excellent translation - - both more than 100 years old - - eheu - - my nice library - - but the nazis did no better with your library than did the English air fleet at the 23^rd of Nov. 1943 with mine.)

"To know is to compare."

Say, prices, expressed in paper money double within 24 hours, which they did at the 19^th of October in Berlin - - for bread they even trebled - - and the price, expressed in gold, remains unchanged. What do you think about what the people would say???????

And how they will talk of the bank whose notes were gold notes in the sense previously described?????

People will speak thus:

The bank whose notes are on a paper basis offers us as redemption half of the quantity of gold that it offered yesterday.

And if the prices rise, as they rose 1923 in Germany or 1948 in China, the bank will redeem its notes with a quantity of gold less than the ring at the finger of its banker. We go to the bank issuing gold notes.

In all your explanation you suppose:

a.) Notes on a paper basis, so that the meaning of the world Pound or Mark or Dollar etc., is fixed either by the

banker himself or by another banker, say the manager of the central bank.

b.) Price expressed in the same paper unit and not in gold or silver (or rye as they were expressed 1922 and 1923

in some places of Pommerania).

Do you really believe that people will not express prices, wages etc. in gold, if they are permitted to do so??? Experience shows that in every part of the world the people express prices in gold or silver if they are permitted to do so.

So much for today. I hope to write next Sunday some more words. Cold fingers, lack of time and - - a greater evil than all others - - lack of light prevented me from writing more to you and to reply to your letter six weeks ago.

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Very truly yours - signed: U. v. Beckerath.

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(B really tried to get some more sense into the head of Henry Meulen, on monetary freedom matters. But, did he succeed, in years, if not decades of seriously and extensively trying? Not that I am aware of. Temporarily, H. Meulen sometimes retreated, e.g., in his discussion with B. on "overpopulation" - but some time later he again fell back into the long refuted prejudices on the subject. Fixed ideas can be found even among the best kinds of people. - J.Z., 10.1.2003.)

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U. von Beckerath, … 17.I. 1949.

Dear Mr. Meulen,

industrial credit for small and medium sized firms is always scarce for European countries, Belgium perhaps excepted. Even in times of abundance of capital, the artisans and small shops (have) (originally B. wrote "find". Then he crossed this out and substituted, in handwriting, a short word that I cannot read: "met"?. - J.Z.) difficulties in finding credit. One of the reasons is, of course, that the investor cannot give credit in the form that is to him most convenient, that is in the form of buying bonds.

In Germany and, probably, also in England it was sometimes proposed to establish associations of small industrial firms. Such associations could create bonds. Scratchley, an excellent mathematician and economist, the man who gave the Building Society movement a scientific basis, published about 1870 a collection of pamphlets, one of which was the elaboration of a plan to create "local enterprise associations" on the model of the Building Societies.

(I owned the book - - but it is burned.)

For the sums won by selling the bonds of the associations, credit could be granted. The duration of the credit would depend on the repayment date of the bonds. An average duration of about 5 years seems to be the most suitable. (Credits to be repayable in the average within 60 months by equal instalments.)

It would be very important to get the recognition of such bonds as trustee securities in the sense of the Trustee Security Act. If this acknowledgement is attained, then savings banks, insurance companies, superannuation funds and building societies (which often do not find good investments), would have the opportunity to buy these bonds.

Scratchley advised -- and the American experiences with building and loan associations give confirm him - - to confine the activity of a local enterprise association to a relatively small district, say a little town. The administration cost of such an association - - whose debtors can be reached with a bus or a streetcar - are always small, seldom exceeding more than 1 % p.a. of the outstanding capital.

In England and in all countries a law is missing, which declares every investment, that is guaranteed by a credit insurance, as a trustee security in the sense of the Trustee Security Act. If such a law existed, it would be sufficient to insure the bonds or, at least, a part of them, by a credit insurance, to endow the insured bonds with the quality of a trustee security.

In a book, published 1929 ("Die Reform der Muendelsicherheitsbestimmungen …" - - "The Reform of Trustee Security Legislation") Prof. Dr. Rittershausen demanded what I just pointed out. If a member of parliament would carry through such a bill as here sketched, he would be a very great benefactor of his country.

(Politicians are not in business to benefit "their" countries but, rather, themselves. Obviously, they could not gain many votes with such a bill. - J.Z., 10.1.03.)

(For months I have had an article, 9/10^th written, in my drawer, which I cannot finish for want of heat and light. In this article - - which wants only the "finishing touch" - - I demand the "Muendelsicherheit" for every credit-insured investment. I think it possible that all credits given to the Industry of Berlin could become credit-insured and also all credits given by Berlin's industry to customers abroad. It would certainly facilitate the supply of Berlin's industry with capital.)

Very truly Yours - signed: U. v. Beckerath.

(That article might still be unfinished, unpublished and buried in his papers. The most sensible proposals still do not have a regular platform and are not systematically archived and made accessible upon demand. - J.Z., 10.1.03.)

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U. v. Beckerath, … 17. I. 1949.

Dear Mr. Meulen,

I thank you very much for the very interesting letters of Victor Gollancz and of Ian H. Christie to the editor of The Times. Christie and the numerous people who share his opinions do not take into consideration a most important circumstance which was already pointed out by Gibbon. Gibbon says, that in a commonwealth with good roads, so that a great mass or troops can easily be transported from one frontier to the other, an army of the size of 1/100 of the population is sufficient to keep the population in a state of absolute subjection, provided the population is without weapons and military organisation. Gibbon is right. At the time of the Roman Empire the number of the soldiers was about 400,000. The number of the inhabitants was estimated between 40 millions (the most probably number) and 60 millions. In the 18^th century the relation was a little changed. The army comprised about 4 % in France at the time of Louis XIV and about 3 % in Prussia. In the 19^th century the old relation of 1 % was restored in most countries.

The man, or the group of men, who controls the army, controls the people. If the ruler thinks it fit to compel the people into a certain religion or some public opinion, he will succeed if he uses merely the general political dexterity of rulers. Therefore, Adam Smith says - - starting from similar considerations - - that a people will not conserve its political liberty if it does not possess a militia. As long as the Americans have their militia (now more than 10 million of men, I think), they will conserve their political liberty.

(J.Z.: Alas, it has long been under State control and legislative intervention and juridical interpretations of the constitution and of the Bill of Rights have "gone wild" and wrongfully restricted every basic liberty - while most Americans remain uninterested in individual rights and in better and more complete drafts of them than can be found in the Bill of Rights Amendments to the Constitution of the US. - J.Z., 10.1.03.)

It is the habit of more than 99 % of all men to judge peoples, and everyone who belongs to a people, according to the principle of collective responsibility. This principle says:

1.) Every man is responsible for that which his government does or neglects;

2.) Every man is also responsible for acts or neglects of his countrymen.

To judge in this way is an intellectual remainder from the Stone Age. Even in the Bible the principle of collective responsibility is used as self-evident. How often punishes the God of the Jews the whole people for acts of its king (e.g., a census) or of a citizen (a theft, a marriage with a non-Jewish wife)? In the New Testament this is the same. It is reported that Christ threatens the towns, which do not welcome his disciples with the fate of Sodom and Gomorrah, little children included and those, who had no opportunity to hear the disciples. (I am convinced that the words of Christ are fully misunderstood - but the churches accept and endorse the text of the evangel.

In discussions between Germans and others the principle of collective responsibility is always the basis. The fact, that neither the people as a whole nor the single citizen has any possibility to act on the government is always overlooked and that on both sides.

"The Germans are aggressive neighbours!

Such nonsense. The "Germans do like - - as do other men - - to sit peacefully at home, eat and drink as plentifully as possible, play cards and do not care for affairs not in their immediate surroundings and requiring meditation. But if anyone were to say:

A German government with absolute power over the 70 millions inhabitants will always be a danger for Germany's neighbours, for it will - - as every government does - - begin a war, if it does not know how to settle internal difficulties, the man would be in the right. But he can say the same about France, if he is an Englishman, of England, if he is no Englishman and of every other State, if he is not its subject.

The same kind of wrong is committed by the Germans, who judge a single Frenchman according to the now ordered destruction of the watch factories in the French zone and then a single Russian for the present politics of the Soviet Government. (The Germans do that. I must admit it.) The single Frenchman has no more influence on his government than a German had and has on the German governments.

The power of the principle of collective responsibility (which Dupiat represents as that part of social mentality which caused more disaster than any other) is now to be seen in an interesting case. In Berlin the inhabitants of the two districts begin to consider each other as two nations. If I get more time, I will write you some details.

All men in the world, Germans and Negroes, Englishmen and Frenchmen, Indians and Eskimos, have the common interest to create a state of government in which no government is able to begin a war and mobilise its subjects for purposes that, in every war are contrary to the true interests of the peoples and of 99% of the single subjects.

Every war is a civil war!

Experience has already shown that the creation of the UN is not sufficient. Herbert Spencer, in his Social Statics, chapter 19 ("The right to ignore the State") and long before him Fichte, in his "Considerations on the French Revolution", proposed independent associations which would have about the rights of the old knightly orders, e.g., to remain neutral in the case of a war. There is much to be said about this.

Very truly yours - signed: U. v. Beckerath.

As long as the true solution of the government problem is not yet found or recognized, I think it best for the case of England & Germany that those German territories, which by plebiscite decide to become a part of the British Commonwealth, on a Dominion Status, should be admitted.

May every factory, suspected of becoming an ammunition factory in times of war, be occupied by English soldiers - - that does no harm to the German economy, but the Dominion status should, on the other hand, be really and honestly established. I confess that in the year 1945 I sent an application to the British Government to get a permit for the beginning of a movement for the organisation of Germany as a member of British Dominions. You will believe me without proof that I never got a reply. And yet I know that, especially in the district of Brunswick, for many decades, people think that to be a g