Translation by John Zube, 12.3.1985, of a letter by Ulrich von Beckerath, to Mr. Naumann, 23.I.1957. Dear Mr. Naumann, Mr. Kortmann gave some duplicates of his letter of 20.I.57 to me, with the request to give one to Mr. Zube and one to you. The one for you is enclosed together with a duplicate of my reply. -------------------------------------------------------------------------------- The great aims which we had set ourselves were the following : I.) That no labour for which there is any NEED shall be excluded from employment because there is no DEMAND for it. II.) Since the employment of every labour power in an economy based on the division of labour, is based on the existence of a DEMAND, either for this labour or for its product, the task consists in finding a means by which NEEDS are transformed into effective DEMAND with as little friction as possible. III.) Seeing that goods warrants or clearinghouse certificates or clearing bills, to the extent that they can be utilized as means of payment, do unerringly return as means of payment to the issuer, in other words, that they almost automatically exchange themselves for his product or his labour services and do thereby serve to provide employment, we have demanded that typified goods warrants, in money denominations, should be used as widely as possible as means of payment. Consequently, we demanded that all laws, regulations etc. which prohibit such a use or make it dependent upon a special licence, are to be immediately repealed. We recognized that the freedom to refuse to accept the goods warrants as means of payment is quite sufficient to prevent an over-issue (inflation), moreover, that free market trading in goods warrants would indicate any over-issue that might occur much more rapidly than any control by the State could achieve. Thereupon we demanded that all details of the issue of goods warrants should, without limits, be accessible to the public, so that anyone who would discover any irregularity among them could immediately bring it to the attention of his fellow citizens. IV.) Seeing that the present owners of enterprises ( without even a SINGLE exception having become known ) have shown no interest for the preconditions under which an enterprise can be fully employed, and are also full of errors on these preconditions, we have demanded that the ownership of enterprises be transferred to their employees. We have, moreover, demanded a just indemnification of the present owners. (Via free purchase agreements using bonds as means of payment and amortization of these bonds by instalment payments our of the additional revenue to be expected from this transformation, if it is properly organized. See below, point V. J.Z. 12.3.85.). In this we are completely different from the Communists, whose procedure is well known out of the history of Eastern Europe since 1917, and also from the Nazis, who maintained that an economic optimum could be achieved by DIRECTING the management of enterprises. The Nazis asserted this although their ignorance of everything that is of importance in economics does still shout to heavens out of their writings and their legislation. V.) As the best means to transform enterprises into the property of their employees, we demanded the purchase of the enterprises, in instalments. We pointed out that for many decades the usual means of payment for the purchase of whole enterprises is the transfer of securities to the seller. Interest is paid on these securities, to the seller of the enterprises, at a level that corresponds to the expected income for the seller, if he had kept the enterprise. ( As an example I point out the procedure in establishing trusts. The trust pays the owners of enterprises with trust-shares. In return the trust receives the enterprises as his property.) We have pointed out that for these purchases by the staff, bonds are more suitable than shares. Industrial bonds are amortized in about 20 years. In other words, the bond holder does not only receive annual dividends (e.g. 5% p.a.) but also an additional amount for the amortization of the debt. ( In case of 5% interest p.a. and an amortization period of 20 years the annual payment of the debtor comes not to 5% but to 8,024% . The additional 3,024 % provide for the gradual repayment of the debt within 20 years.) We have endeavoured to find any opportunity to appeal to employees to continuously observe the daily published reports of the exchange, to observe the last paid dividends from them, moreover, to study the annually published business reports. We found out that the annually paid dividends on shares came usually to less than 10% of the annually paid wages and salaries and that the market value of enterprises on the exchanges amounted often to no more than the sum total of the wages and salaries of ONE year. Thus the situation to take over enterprises is quite favourable. Alas, we did not have a single opportunity to publish our findings. IF the current talks of Mr. Kortman with workers of a paint factory in Spanday will be halfway successful then this could indeed amount to a turning point of our so far vain efforts in this direction. VI.) We have also examined the proposals of Theodor HERTZKA ( not to be mistaken for Theodor Herzl, the founder of Zionism ). Hertzka insists not only upon general cooperatives but OPEN cooperatives ( to the extent that they possess monopolies ). Every citizen should have the option to become a member of such a cooperative. In case you still possess the old protocolls of our sessions, you will find the details in them, which account for all objections against Hertzka's system of open cooperatives. We did not accept Hertzka's proposal to provide capital in form of interest-free State loans, seeing that the experience with this system have been unfavourable in so many countries and especially in Germany. Instead we recognized the free capital market ( a really free one ) as a better means. It was a great error to call the present and past capital markets FREE markets. They were quite unfree because on them the supply was quite free but not the demand. The demand was bound to the possession of governmental means of payment or those recognized by the State and it was, thereupon, in times of a monetary crisis close to zero. VII.) We have found that the consistent pursuit of our insights could lead us very far. For instance: In Argentinia, the governments before Peron, that of Peron and the present government would have prevented, with armed force, the emancipation of the workers by the takeover of enterprises. They would have ignored agreements of the employers with such takeover bids. But if the Argentinians had demanded in time the reform of the militia law of their country in a democratic way, then no Argentine government would have considered interfering with such transformations. And Peron would have been rendered harmless upon his first attempt to establish a dictatorship. In Germany there was no shortage of proposals to establish a democratically organized militia. When in 1918 and 1919 the protection of Germany against communist attacks became acute, only the veto of the Allies prevented the establishment of a militia and even the "Einwohnerwehren" (Citizen Patrols), which had replaced the no longer functioning police forces, had to be dissolved. During the fight against the Spartakists in Berlin, tenthousands of workers approached the government and demanded weapons against the Spartakists. But the government had to respect the wishes of the Allies. One thing is certain : A militia would have made the rise of a regime like the Nazi-regime impossible. Already by its mere existence would a militia have suggested to any government not to interfere with any peaceful negotiations between employers and employees on the purchase of enterprises. VIII.) We have reckoned with the possibility that in case of an aggression against Germany a part, probablly even the largest part, of the soldiers ordered to participate in this attack, would refuse. Instead, they would fraternize with the German militias. But one of the preconditions would be that within a few hours several million soldiers would be provided with non-exploited job opportunities, which would make them independent from concentration camps and similar evil emergency measures. Our system would provide these employment opportunities without difficulties. IX.) We have found that none of the measures proposed by us can be effective as long as the decision on value preservation, inflation, devaluation and everything belonging in this sphere is in the hands of a small council or even of a single person, like the president of the central bank of issue. The most intelligent, learned and honest person would commit errors in such a position. We have therefore tried to conceive the plan for a currency that offers stable values, can neither be inflated nor deflated and does not require a "defence" in the usual meaning of the term, nor could it be harmed by speculation. Our motto was : The best possible currency is just good enough for Germany and first of all for Berlin. We found that a currency with the following characteristics came closest to our ideal : A.) Coinage of gold coins, their free transferablility and the expression of prices in gold-weight-units (Goldmark) should not be prohibited. B.) A claim to gold coins should not be actionable before the courts. C.) Opponents of the gold standard should be permitted to employ whatever value standard that satisfies them and means of payment that is associated with it, in all their transactions among themselves and in exchanges with all people who are agreeable to their conditions. D.) All foreign exchange controls and every regulation associated with them should be immediately repealed. E.) Commerce should be at complete liberty to utilize full-weight silver coins and under similar conditions as above mentioned under A.), B.) and C.). X.) We demanded Free Trade, complete freedom to engage in any profession or occupation, and freedom of association - even for the provision of credit. We demanded that enterprises which had become unprofitable due to technical or social progress, should have the right, to appeal to the capital market, without any restrictions, to transform their productive activities. ( Possibly the coal mines will soon come into this position.) - - - - - - The above amounts only to a short extract of a programme that is known to you. The complete programme contained in the protocolls of our sessions, would fill many pages. - - - - - - Very important is the following : Should any society consider ONE point of the programme as being or PRIMARY importance and should it resolve to discuss for the time being only to propagate this one point, then in quite a short time it would find out that in reality the programme does form a single programme. Example : Quite possibly, one society might want to do nothing else than organize the purchase of enterprises through their employees, organized in productive cooperatives. Then already after a few negotiations the society would be driven to expand its programe in the following way : a.) The sellers of enterprises ( employers ) would demand value preserving clauses for the remaining debt. Thus the society would have to include our currency programme in its programme. b.) Employees and employers would demand some kind of guaranty against the risk that some dictator would act like Mussolini did in his time and declare every social reform to be a monopoly of the State. ( He brought about the dissolution of the lease cooperatives of agricultural workers and the restoration of the unrestricted landed property of the landlords. ) One would find that only a militia could offer the rightly asked for guaranty. c.) One would object againt the new society that a situation could develop in which the cooperators would want to change their jobs or in which other employees would want to share in the privileges of the new cooperative. Thus the new society would have to adopt the proposals of Hertzka on open cooperatives to answer such objections. d.) The society would certainly hear of the unpleasant experiences of all enterprises during monetary crises, e.g. the crisis that began in July 1931. Thus the society would come to realize that an enterprise that pays with clearing house certificates cannot be effected by any monetary crisis and can even help other enterprises to overcome their illiquidity, provided they adopt its clearinghouse certificates. Thus the society would have to enlarge its programme correspondingly. e.) A major objection would also be that a third world war would anyhow make all reform attempts in vain. The society could only answer this objection by making the our military programme its own. --------- With best wishes signed U.v. Beckerath.