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Cash
Tax-less
Debt-less
AcdiatuU
For All Citizens 50 Years Of Age
• • •
o
••••• • • •
•^^•^•^••o-
Act Simply and Immediately
Distribute Purchasing Power
Without Interest or Debt
Prevent Currency or Credit Inflation
Eliminate Ruinous Taxation
Stabilize the National Banking System
End Unemployment and Trade Cycles
Distributed by
California Headquarters:
317 SOUTH HILL STREET
LOS ANGELES, CALIFORNIA
Michigan 2523
Copyright 1938
Price 2 5 C
HOW MANY?
Population groups in the United States,
(From World Almanac, 1938, p. 248)
Total population, 122,681,024.
Under 50 years of age:
Males
Females
Native white, native parentage 30,044,938 29,540,939
Others, white
16,142,143 15,497,960
Negro
5,073,827 5,374,710
Totals
51,260,908 50,413,609
All, under 50 years of age . 101,674,517
50 Years and over:
Native white, native parentage
Others, white
Negro
Totals
5,383,413
4,666,165
774,778
5,109,963
4,418,091
654,097
10,824,356 10,182,151
(Census of 1930) All, 50 years or over . 21,006,507
(Estimated, 1935) All, 50 years or over 23,719,800
(Census of 1930) All, 60 years or over . 10,385,026
(Estimated, 1935) All, 60 years or over 11,616,000
PUBLISHED BY
UNITED PRINTING CO.
317 South Hill St.
IT!
The great illusions are evaporating:—
Gold as the only real money;
Security based on savings and
investments;
Speculation as a source of wealth;
These are nearly gone, for the bulk of Americans. We have been forced to give them
up, but thereby have suffered
-•-
NO LOSS
THE NEXT STEP
Is to establish an economic procedure
so just, so generous, so scientific, that
security and progress will follow necessarily, endlessly.
-•-
AX OUTLINE
of the problem and of its solution is
in this pamphlet. The underlying ideas
have been steadily promulgated since
1913. The work of many groups now
makes possible their general acceptance.
YOUR PART
in this consummation is to read imderstandingly, to keep this pamphlet in the
hands of readers, to enable us to send
it to many others.
ACT NOW!
Use the order-form in the back of this
book, or write us separately, enclosing
money for as many copies as you wish
to have or wish us to send out for you.
The idea will propagate itself wherever
it is read.
Faithfully yours,
NATIONAL PENSIONS
317 South Hill Street
Los Angeles, California
We shall need managers
in every County in the
United States, and for
each 25,000 population
in cities. If you can act
as such, please mention
the fact when ordering.
NATIONAL PENSIONS
1
I
Challenge
The time has come to talk sense and facts.
Theories based on inexperience; the practice
of turning business into rackets because rackets
have become businesses; building a corner in the
hope that a false prosperity would come around
it;—such opposites of plain common sense have
only increased confusion.
We cannot depend on some "happy accident"
to solve the personal or the national problem. We
recognize a "balance of forces" as the leading factor in mechanical, chemical, and electrical affairs.
We call this balance "law". The "laws of physics"
we claim to understand. Do we understand that
there is a similar balance, or "law", of moral
forces? In economics is there such a "law", and
if so do we understand and obey it?
We apply mathematics to physical things, in
order to understand the laws that govern them.
We speak of "110 volt" electrical current even
though no one ever saw a volt or the current. No
one ever saw the "ton" in a ton of coal. He saw
the coal, and in his thought he applied to it a
number, 2000 pounds, as a unit of measure.
Economics, on the contrary, is arithmetic. You
do not apply numbers to economics, as you do to
coal; without numbers there is no economy. The
^ame electric current may be cheap at lc per kiloatt-hour or dear at 4c. Whether the coal sells
at $5 or at $20 a ton, does not change either the
coal or the ton. The economy, however, changes
with the numbers.
The numbers that describe wages, costs, rents,
interest, profits, prices, losses, taxes, are the very
stuff of economic science. Without them there is
no real economy. It is only because some men
are educated beyond their intelligence that they
claim that economics is not a science. They have
dealt with the absurdities of public and private
rackets, have defended poverty amid plenty, have
waged war to achieve peace, have had something
for nothing, for so long that they cannot maintain
their undeserved pre-eminence nor retain their
destructive privileges without repudiating science.
So they elect to stand pat, and economic science
becomes an easy sacrifice to them. By denying
that it exists they side-step the necessity to think
scientifically.
We could perhaps dispense with arithmetic and
science everywhere except in economics, and still
get along. We might still mine and burn coal
without "tons" to measure it. We might still have
HOW
MUCH?
Table showing per cent that wages be^r to value
of product, or (*) to gross revenues, or (v) to gro
sales.
(Data irom Standard Statistics Co., vol. 3, No. 1, Sec. 1,
p. 493, July 5, 1937, as printed in Congressional Record, remarks ot Senator Bone, Feb. 21, 1938, p. 2996.)
PER CENT WAGES TO VALUE OF PRODUCT
-Telegraph
:;
Coal Mining
^Telephone
-Railroads
*Gold Mining
Shipbuilding
Building
Lumber
Aircraft
Office and business equipment
Machine tools
*Traction
*Lead mining
* Manufactured gas
Silk and rayon goods
Boots and shoes
Furniture
Glass
*Copper mining
Carpets and rugs
Cotton goods
Machinery
Locomotives
Textiles
Agricultural implements
Woolen and worsted goods
Radios and phonographs
Auto bodies and parts
Iron and steel
Electrical equipment
Bread and bakery products
Printing and publishing
Leather
*Electric light and power
tDepartment stores
Rubber tires and tubes
Cement
Locomotives
Paper
Nonferrous metal manufactures
fVariety stores
Beverages
Canning and preserving
Chemicals
tMail order outlets
{General merchandise stores
Tin cans
Automobiles
Food
Fertilizers
'.
Paints and varnishes
Soap
Petroleum refining
Meat packing
Cigars and cigarettes
Sugar refining
Flour
60.0
55.0
45.0
45.0
40.0
35.8
35.0
33.2
32.8
31.4
30.6
30-50
30.0
30.0
26.9
26.6
26.2
25.2
25.0
24.8
24.1
23.9
22.8
22.6
22.1
21.4
21.3^-,
21.^
20.6
20.1
19.1
18.1
18.0
18.0
17.5
17.4
16.4
15.5
13.9
13.0
10.9
10.9
10.1
10.0
10.0
9.5
9.1
8.4
7.8
7.7
6.4
6.0
5.8
5.4
3.7
2.9
NATIONAL PENSIONS
3
some sort of electric service without counting the
volts". But we cannot have economic order
vorthy of the name without numbers or without
meticulous obedience to the rules of common
arithmetic.
This obedience must be both positive and negative; we must do the right things and we must
equally refrain from doing the wrong ones. Thus
a child may learn that 2 x 2 makes 4, but that
knowledge is of little value to him, practically,
until he learns that 2 x 2 does not make 1, 17,
86, or anything but 4. Only when he is sure that
he will never put down any result but 4, as the
product of 2 x 2, is he, that far, a scientist. The
child "must" obey to make progress because he
deals with law that knows no exceptions. Economics requires no less from us, and for the same
reasons.
It is in this spirit of obedience to the necessities
of mathematical law that the proposals set forth
in this pamphlet are made. Here is not the space
to discuss all of their implications, nor to relate
them, positively and negatively, to the successes
and failures that make up American history. A
list of books and papers is printed at the end of
this pamphlet, for reference. With their principal
teachings these proposals are entirely consistent.
America has succeeded greatly; it has also failed
greatly. Its success is not unqualified and its failures are not absolute. We can make either success
failure complete. Which one will dominate our
nistory it is for us to say. If we follow the fearless, democratic, individualistic, scientific precedents given us by the national heroes whom we
honor most — Franklin, Washington, Jefferson,
Jackson, Lincoln — we shall extend their works
into the future. If, on the other hand, we prefer
to adopt the toryism, grafting, exploitation, collectivism of European origins, we shall thereby
get European results, quickly enough. We are
only now winning the war which began with the
Declaration of Independence.
Nationalism
It seems to be fact in the history of war that
nations never bomb each other's munitions factories and steel works. The invisible supergovernment of finance forbids it. It maintains
its own invisibility and puts forward its nominees
as the apparent wielders of power, on both sides
of the conflict. Thus, American millionaire-funds
helped to finance the campaign that lifted Adolf
Hitler to his seat.
AnFRASER
accurate picture of the corruption of British
Digitized for
W h o Owns America ? —
CONCENTRATION OF INCOME.
(Year ending June 30, 1936) )
11.24!*
35.28*
46.54*
THE TOTAL HATIOHAL 1SCOUE FOR TEE T1AR BIDISO JUNE 3 0 , I936 AS RJSCESTLY
COMPILED BT TH1 HAIIOXAL RESOURCES COIflllTTEt WAS $59,25*,62K,000.
IT WAS
DISTRIBUTED AUOKO 39.U5H.3oO FAMILIES AHD S1NOLE IKDIVIDUALS.
THE ACTUAL DISTRIBUTIOI BT VARIOUS IHCOME Q-RCUFS WAS SHOWS AS FOLLOWS:
L IHCOIU
DISTHIBOTION BT
IKCOUZ OROUFS
FERSOHS
DOLLAR DISTRIBUTlOil OF INCOME
iroiviDUAL
AVXRAOI
INDIVIDUALS
$10,806,660,000.
19.573.219,000.
I.U06.
10,576,567,000.
2.3«5-
18.23*
lS,358,aU9
1,000 to $2,000 y r .
35.28*
33.02*
i3.92O.3U9
2.000 to
$1,000 J T . or l e s t
REC'C COLLARS
R I C ' S IKCCWI
$
588.
3.000 y r .
U.2l#
17.85*
U.U3U.O85
3,000 to 5,000 y f .
U.6O*
11.21*
1,«8,269
6.6U3,U63.ooo.
5,000 to 10,000 y r .
1.51*
6.91*
595,908
U,092,226,000.
6.867.
10,000 to 25,000 y r .
.66*
6>3*
260,U30
3,810.613,000.
1U.678.
25,000 to 50.000 y r .
.13*
2.96*
51.M2
1,751,851,000.
33.766.
50,000 to 100,000 y r .
.03*
1.53*
13.0U1
9O8,U*5,OOO.
69.66U.
Orer $100,000 year
.01*
1.86*
5.387
1,095,5UU,000.
203,768.
$1,501.80
TOTALS
100.00*
100.00*
39, ^ 8 . 3 0 0
*59.25*,6a«,ooo.
R1.R2*
51.25*
32,279.298
*30,379.879.000.
17.35*
35.97*
6,8U«,262
21,312.256,000.
AVmA0»
SUIMART
$2,000 yr. or I t . .
2.000 to 10,000 yr.
Orer $10,000 year
3.65".
$
9U1.
3.112.
.K3*
12.78*
330.7U0
7.")66.U9T,ooO.
22.877.
100.00*
100.00*
39.U58,3OO
$59,258,628,000.
$1,501.80
HOTEi Cople o f t h l i 10U page ttudy 'COKSUUER ISCOMES IN TEE UNITED STATES' may v ,
http://fraser.stlouisfed.org/
obtai ed from the Superintendent of Docnnenta, Waahlngton, D. C. for 301.
Federal Reserve Bank of St. Louis
NATIONAL PENSIONS
5
politics, it|s' effects upon the Irish people, its pur^ose likewise to enslave the American colonists, is
be found in the writings by and about Benjamin
franklin. To what extent has Britain changed in
the intervening 150 years? A government that
dethrones a king because he sympathizes with
workless miners, using as an excuse his love for
an American woman; that borrows billions of
American money, refuses to repay it, spends billions on itself and buys ownership stocks in American industries with money owing to the American
government; that consults not its people nor even
its Parliament, but its financiers, on issues making
the future blacker for all liberty-loving Europeans; — such a government, if it claims progress
in the century past, needs several centuries more
to become "democratic" in the American sense of
the term.
In brief, the financial super-government of the
world, operating by instinct and by common allegiance to the quest for money, has played America for a boob and Americans for suckers. In
1929-30 it attempted to remove permanent control of American finance to foreign soil by founding the Bank for International Settlements in
Geneva. Control of the world's gold, then drifting toward the United States, was to be shifted
to the new World Bank. On December 15, 1930,
"TIME" quoted the then president of the B. I. S.
and former board chairman of ihe Federal Reerve Bank of New York, Gates W. McGarrah, as
/Hows: "The B. I. S. may some day become the
central depository for all the gold of all the world's
central banks." This project even then had received a death-blow by the disclosures of its purposes in a speech in the House of Representatives
delivered on February 10, 1930, by Representative Louis T. McFadden of Pennsylvania, then
chairman of the House Committee on Banking
and Currency. The B. I. S. has lingered on, a
mere shadow of its intended over-lordship. Still,
the United States treasury has continued to be useful to Europe, with what commitments we are not
told. In this there is danger, for loans under any
other name ("stabilization" for instance) would
violate the spirit if not the letter of the Johnson
Act forbidding further advances to defaulters and
welchers.
Finance knows no boundaries of nations,
tongues, color, or creed. It is the universal language of exploitation and tyranny. It robs the
American farmer, the Welsh miner, the Czech
glass-worker, with equal complacency. It knows
no mastery but its own, no service but to itself, no
means but money, no end but more money.
Who Owns America? — 2
CONCENTRATION OF BANK DEPOSITS
OR CASH
(On Oct. 23, 1933)
(Data from Federal Reserve Bulletin, May, 1935, p. 316,
and Congressional Record, Senate, remarks of Mr. Bone,
Feb. 21, 1938, p. 2997)
Ova
48.2*
15. Ot
14.8?
22.0*
96.
o
The foregoing chart shows that 49,815 accounts, out of
a total of 34,186,012, (or 2C <) owned 48.2% of all bank
deposits. This included all "member banks" of the Federal
Reserve system. These figures were for Oct. 23, 1933.
Later figures have not been published. However, the Federal Deposit Insurance Corporation is compiling data as to
size of accounts, to submit to Congress early in 1939.
The largest accounts shown in the chart were those
"Over $50,000". The next, "$10,001 to $50,000". The third,
"S2,501 to $10,000". The smallest, "$2,500 or less". The
average sum of the smallest group of accounts was $176
each.
The 49,816 separate accounts were probably owned by
less than 20,000 names, in view of the common practice
among large corporations of maintaining a number of accounts in different banks.
Such concentrations are EFFECTS of which monetary
defects are the causes.
"Every city or house DIVIDED AGAINST ITSELF shall not
stand."
NATIONAL PENSIONS
•r •
• -
'"••
, , . . . . /
7
'
Beauty, pfeace, brotherhood^ — it has heard of
*iese and calls them "utopian".
For^igii'tr^de is the lure that leads us to take
in the bait—^andthe hook—^- of International finance. We are told that prosperity would reign
at home if only we could ship more gdods abroad.
Cotton—our No. 1 foreign-trade item—-could all
be used by Americans if those who raise it, and
other low-wage groups, could buy and wear as
much cotton clothing as do others. The cotton
problem is a problem of purchasing-power, American purchasing-power or the lack of it.
Our foreign trade amounts to around 7 % of
our total business. Until it can be carried on with
benefit to both sides, we can dispense with it and
not suffer. Other nations do not want our goods;
we protest receiving theirs. Agreement should
therefore be easy.
It is distress at home that makes foreign trade
seem so desirable, but we need to understand that
the cause of the difficulty is—and that the cure can
come only—in our home affairs. The proposals
here made look toward a democratic liberation
and stabilization of production, exchange, and
consumption, among Americans at home. When
that is accomplished they can trade abroad if permitted, and can stay at home if they must. Only
by setting the example of an economic house in
order can we show to foreign peoples—as distinguished from their financial rulers—the way of
emocratic economic security.
Repudiation
Surveying the economic problem at home we
find the ownership and the control of property,
the receipt of income, and the ownership of bank
deposits or money, so concentrated into the hands
of a very small number of people that ordinary
business is suffocated for lack of the financial
atmosphere which it must breath to live. Millions
of men cannot support themselves. Other millions live like animals and savages. Millions of
women work from necessity, deprived of husbands, homes, children.
We cannot take space here to describe in detail
these explosive conditions. They should shatter
and destroy every citadel of complacency. We
address ourselves to those who are awake and active, who know that all people are threatened
when any are in danger. The self-propelled economic bullet that pierced your neighbor's heart is
ever in search of victims, and it will cease only
with your awakening or with your economic assassination !
W h o Own* America*? — 3
CONCENTRATION OF BANK ASSETS
(All commercial banks, Dec. 31, 1936)
(Data presented to House Committee on Banking & Currency by Mr. Patman, in hearings on H. R. 7230, Mch.
2, 1938, p. 37-40).
30.88*
9.125?
o
Accompanying the data shown above, are tables
showing the rapid concentration of resources in the
hands of banks from 1919 (average resources, 1626
thousands per bank) to 1936 (average resources,
4223 thousands per bank).
Such
concentrations are EFFECTS of which
defects are the causes.
monetary
"Every city or house DIVIDED AGAINST ITSELF shall not
stand."
NATIONAL PENSIONS
9
Finance, speculation, gambling were obstacles
o the American spirit of liberty and industry
during the Revolution. Jackson encountered them
when Biddle's loans to Congressmen nearly controlled the government. Lincoln took their punishments during the Civil War. And while Harding, Coolidge, and Hoover turned their backs, if
the speculative "boys" didn't get theirs they must
have been blind or crippled. The temporary appearance of success among big speculators makes
imitators among small ones, and the moral disease
spreads until a general collapse of speculation, as
in 1929, causes people to search for the homelier
and steadier reliances of useful work. It should
not be surprising that the paths leading toward
home are not found at once by those who have
been accustomed to look for roads to sudden
riches.
Individuals find their ways back, if at all, more
quickly than do governments. The banks, the
insurance companies, the stock brokers and their
customers, the promoters, the newspapers, that
led the frenzied procession of fictitious "dollars",
do not give up their pressures and positions at
once. They demand, and the government must
give, relief designed to help them, whether it
helps the general public or not. They are alert,
informed, combined; the public becomes so more
slowly.
So we have had and now have various devices
iat benefit some but not all of the people. The
public has been assured, and some have believed,
in a degree, that all would benefit, but as the crisis
continues and deepens, the assurances are seen to
be false and the hopes vain. No wonder these
false props are being repudiated.
First among them is the destruction of the
bounties of nature, plowing under cotton, killing
pigs and dumping them into muddy rivers by the
thousands. So long as any human being has a
decent unfilled need for food or clothes, such destructions spit into the face of a beneficent Providence and will bring their own remorse.
The Home Owners' Loan Corporation wears as
deceptive a title as any financier ever pinned upon
a come-on scheme. Sour loans that threatened to
swamp the big lending corporations were taken
over by the thousands. Incidental benefits to borrowers kept up the front of a benevolent purpose,
while the corporation was operated by and for the
benefit of the financiers. Its foreclosures took
in 104,078 separate properties, by July 31, 1938.
These it sells for what they will bring on the market.
If a property must be sold at a loss, the cor
Who Own* America]? — 4
BANK-CONTROL OF CORPORATIONS
v
OWNING $56,000,000,000
(Data presented to House Committee on Banking & Currency, by Mr. Patman, in hearings on H. R. 7230, Mch. 2,
1938, p. 43, 47)
The same 24 banks that own 30.88% of the banking resources as shown in chart No. 3, appear here
as dominant in 100 corporations in various industries, with assets of $56,532,000,000.
[Year 1935. Banking Resources, 1936]
Summary by industries of 100 corporations having interlocking directoratei with
i,\ largest banks
Kama of industry
Steels
. ,
Metals..
Public utilities
Telephone and telegraph
,
Total-
Assets (millions)
Bank
Directors connections
Number
o( companies
37
65
88
36
194
70
202
258
121
119
218
84
18
10
US
19
36
16
47
64
<>7
35
82
33
3
5
6
2
14
5
15
13
7
9
15
4
$2,164.3
856.0
2,194.5
745.5
1,944.8
3, 649.8
1, 956. 5
10,375.5
1,909.1
8, 441. 9
14,091.5
5,255.1
$2,012.5
573.0
2,171.9
592. 5
1,63!. 4
2,930. 4
1,330.1
14,119.3
1,801.3
8, 555. 3
14, 389. 4
5.924. 1
1,543
403
100
53,584.5
56, 53?. 0
Such concentrations are EFFECTS of which
defects are the causes.
Jan. 1,
1930
Dec. 31,
1935
monetary
'Every city or house DIVIDED AGAINST ITSELF shall not
stand."
I
NATIONAL PENSIONS
11
^oration forbids the former mortgagee and memjers of his family to buy it back. Thus the process
of making the rich richer and the poor poorer
goes on under government sanction, using government money. Such is the history of government,
until the people awake.
The Social Security law is now recognized as a
direct tax upon the earnings of the underpaid
workers of the country. It is like the student's
answer to Prof. Agassiz's question, What is a lobster? — A red fish that moves backwards. Good,
said the professor, except that it is not red, is not
a fish, and it does not walk backwards. This law
does not provide security, socially or otherwise.
It has piled up a bookkeeping "reserve" amounting to 95 millions for the State of California and
1810 millions for the United States. It took
that sum out of wages and industry. Instead of
allowing it to be used to buy goods and promote
trade, it "invested" it in government bonds at 3 %
interest. A national society devoted to promoting
social security legislation criticizes this law as having failed entirely except for the jobs it gives to
the clerks who administer it.
Insurance companies have also diverted billions
of dollars into bookkeeping "reserves". They
worship these "reserves" religiously. Generally,
insurance companies pay their losses out of current premium-income, showing the possibility of
inning insurance on a pay-as-you-go basis. The
reserve" superstition was borrowed from insurance practice when the Social Security law was set
up by the government. "Reserves" mean nothing
of practical use unless they consist of tons of
beans, canned meat, metals, textiles, and other
tangible goods in warehouses.
Reserves of a purely financial, bookkeeping
character presuppose that the population will always be divided into rich and poor, masters and
servants, and that by piling up "credits" in "reserves" the poor will be in perpetual servitude to
the rich. The fallacy of this superstition appears
clearly in our country and our time, for we see
goods in such abundance that the rich can neither
use nor even waste them, — enough to make the
poor richer than the kings of old lime if they had
the goods and leisure that are daily wasted in idleness. Financiers strive to protect their "reserves"
— empty shells of departed economic power. We
strive to liberate, and to distribute with equity, the
abundance which the hands of the people, by the
grace of God, can provide.
Every thoughtful person knows that we are in
Digitized
FRASER
anforemergency,
and that it grows deeper daily. It
W h o Own* America w ? — 5
CONCENTRATION OF PROPERTY OWNER*
SHIP IN CORPORATIONS
(Dec. 31, 1935)
(Data presented to House Committee on Banking & Currency, by Mr. Patman, in hearings on H. R. 7230, Mch. 2,
1938, p. 24-30).
175 non-banking
corporations .^»
Other
non-banking VVW^B
corporations.
F * 70,822,500,000J
22.15
15.
\ \
$ 200,000,000,000
All
other
persons.
The national wealth, estimated at 320 billions, is
shown above as being in the hands of 175 non-banking corporations, and other corporations, to the
extent of 120 billions. "All other persons" includes
banks (66 billions), life insurance companies (24
billions), and similar holdings, reducing the 200
billions to be credited to 128 million people as individuals, to the vanishing point.
Such concentrations are EFFECTS of which
defects are the causes.
monetary-
"Every city or house DIVIDED AGAINST ITSELF shall not
stand."
i
NATIONAL PENSIONS
13
will diminish only as we reduce it by definite action directed against its causes. Its chief cause is
a monetary mistake, the monetization of anticipated profits, ("m.a.p.") which prevents those
who produce tangible goods from enjoying all the
goods they make or have made in the past. NATIONAL PENSIONS, earmarked for pensioners,
merchants, manufacturers, and workers AND
FOR NO OTHERS, will correct that mistake.
Accomplishment
The waste of America is unparalleled in the history of the world. We cut the forests and allow
rain water to take itself and our precious soil into
the oceans. Since colonial days we steadily sent
overseas more goods than we received, to pay interest to foreign creditors, amounting to many billions in value. This was changed when we became
the creditor in the World War. So we lent even
more billions in goods than we formerly paid in
goods, — lent to our former creditors, nearly all
of whom now as debtors refuse to repay. No
wastrel people ever dissipated its patrimony with
greater profligacy than did we as a nation.
Despite the waste there remains a continent of
farms and cities, girded with highways for travel
and communications, dotted with schools and libraries, and above all a fairly homogeneous popu^tion apt at play and at work, with a high average
ultural level and easily aroused instincts of democracy and fairplay. Over-simplifying the picture and exaggerating it for emphasis, we have an
invincible nation of ten thousand towns each of
ten thousand people, any one of which can furnish
the talent to staff the government.
Just who built the bridges, roadways, skyscrapers, factories, and machines that make up our
modern plant? Except for what has been done
in very recent years, these are the handiwork of
those men to whom industry now says: "Sorry, too
old; can't use you!"
No one supposes that the wages they got were
always the full value of what they produced. The
enormous wastage, and the enormous remainder,
show the contrary. What is called "the iron law
of wages" — always driven down to the minimum
for which men wilt reproduce — has been at work
in this country. (Eleven dollars a week is the pathetic basis of the new Federal hours-and-wages
law). What the producers did not consume in living .expenses, if any remained over, they deposited
in financial institutions where it slid off into the
pockets of other men. But the bridges and build
ings and roads stayed, and we use them daily.
Who Owns America? - e .
CONCENTRATION OF PROPERTY, IN LIFE
INSURANCE COMPANIES
(1906 to 1937)
(Chart from The Association of Life Insurance Presidents,
New York, N. Y.)
Such
concentrations are EFFECTS of which
defects are the causes.
monetary
"Every city or house DIVIDED AGAINST ITSELF shall not
stand."
NATIONAL PENSIONS
15
/
Sustenance
There we have an actual, tangible "reserve" if
you please,' which the bookkeeping "reserves"
only mimic. We cannot eat or wear either the
bridges or the bookkeeping, but whatever economic hindrance we may suffer from financial
"reserves", the roads, buildings, machines, and
bridges daily help the nation to produce more and
more goods more and more cheaply.
If it were necessary to decide who has a better
right to these tangible remains of industry, the
men who made them or the other men who acquired them, we might decide for the former on
such moral grounds as underlay the ancient Hebrew law of the sabbatic and jubilee years. Modern
financial and legal reasonings would, of course,
favor the latter, overlooking simple moralities.
A simpler choice is open to us. A man is not
disinherited by society merely because he is hired
by an employer at a wage. That is so even if the
wage is top-scale, set where labor is free and in
demand; and it remains true when the employer
does not recapture the wage by the workings of an
unbalanced economic system. What the hired
man makes or discovers today is imitated a million
times on some tomorrow. He has added to the
common stock of society of which he remains a
member. All men do the same, and no one can
ell definitely where one man's contribution
topped and another's began.
The goods efficiently produced today flow from
the services of the men now employed, coupled
with the present use of means provided by other
men in the past. Some of these are no longer
with us; these we honor. Others could enjoy the
riper years of experience and insight; these, in
the main, we neglect. As a society we took the
best efforts they could give us; we dissipated their
savings; we favored their exploiters and taxed
them at every turn. Now, if we are ever to start
on the road toward regaining our economic sanity
and moral self-respect, we owe it quite as much
to ourselves as to them, to provide them a decent,
sustaining revenue, on the sole ground of age,
out of the products of the prolific social mechanism which they helped to create. We complain
of its idleness and of its present restricted output;
in this field of old age pensions it can be justly
enlarged.
To begin the discussion, let us set the age of
eligibility at 50 years. The man over 50 who can
get a job is the exception. The moderate sum of
$50
per month seems reasonable. The amount
I N D E X OF ORDERS
FOR MACHINE TOOLS
Signposts of Depression
By F. A. BLETHEN
With deadly accuracy the coming of depressions is indicated by the record of machine tools placed in operation.
History shows quite plainly that when industry has installed new machinery at a rate greatly exceeding the
average, for two years in succession, that a major depression will follow within a year, and that the vicious cycle
of unbalance will require from 8 to 10 years to overcome,
even partially.
We had two years of such industrial expansion in 1919
and 1920, followed by the 1921 depression. 1928 and 1929
were two more years of great industrial development, and
the depression that followed is still fresh in our mind;
Then, contrary to the general understanding that "capital***
had been dried-up by so-called "unwise" government policy
and attitude towards business, industry spent more for
machines in 1936 and 1937 THAN IN ANY OTHER
TWO YEARS OF OUR INDUSTRIAL HISTORY.
At the end of 1936 the "signpost" was pointing to
another depression, altho the actual recession started in
the summer of 1937, reaching the acute stage by winter.
In December, at the Congress of American Industry, a
sober warning was given by Virgil Jordan, president of
the fact-finding National Industrial Conference Board. He
declared:
"This country is in a thoroughly rotten shape. It is sick
to the core with economic disorders and political diseases.
In essence they are the result of more than 20 years of
unsound economic policy and false economic thinking persistently pursued by both Government and the business
community. I BELIEVE WE ARE NOW IN A MAJOR
DEPRESSION WHICH INVOLVES THE POSSIBILITY OF A BREAKDOWN OF OUR ECONOMIC
AND POLITICAL ORGANIZATION."
NATIONAL PENSIONS
17
can be raised, after it has worked successfully,
isier than a larger sum could be adopted at the
art.
The pensioner may work or not, as he chooses.
The pension will help him, if he works, to find his
best, mature self-expression.
Practicability
Immediately the question arises, How is it to be
done? And with the question comes the objection that many proposals having the same objectives are patently impracticable.
We may well approach this problem with caution. Workability is fully half of the solution.
The other half — the ability to produce enough
goods for all — has been solved.
We will be helped by glancing briefly at the
past. Figures compiled by The National Industrial Conference Board, of New York, show that
the income produced by the nation rose from 27.2
billions in 1909 to 83.0 billions in 1929. For the
21 years the total income produced amounted to
1168.0 billion dollars in value.
Now, it is the sound theory underlying American business practices that a man, a community,
or the nation, can start afresh every day or month.
By exerting itself it can produce goods out of raw
materials, and by permitting every man to exchange the goods he makes for goods he wants,
II of the goods can be removed from the market
make room for new goods. This exchange, of
course, involves translating goods from the numbers of pounds and tons, into the numbers of the
dollars they cost to make. It also involves their
sale in a competitive market, and in theory, as the
goods leave the market their sale retires the debts
incurred for making them.
At the expiration of the 21 years mentioned,
however, we found the country and its people burdened with debts that had not been retired year by
year, and that could not then be retired, of about
232 billion dollars, or about 2 0 % of the 1168
billions of income produced. That is the problem in its largest form. Solutions that are not
based upon an understanding of the reason for
the existence and persistence of the debt-load are
likely to fail. We shall not attempt here to discuss that phase of the matter, beyond referring to
the books listed at the end of this pamphlet and
also pointing out the pivotal fact in a sentence.
Before 1909 the general practice of banks did not
permit them to lend merchants or manufacturers
the whole costs of their goods; afterwards, and
particularly
with the advent of chain-banking, it
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NATIONAL PENSIONS
19
came the custom to lend them more than the
sts, namely, the prices, of their goods, as in the
financing of installment paper; thus they put out
credits which no one had the means to redeem;
namely they monetized the anticipated profits
(abbr. "m.a.p.") of trade, and these in the main
constituted the 232 billions of accumulated debt.
We leave the analysis of past experience with
the statement that no future plan can succeed unless it shall correct the error of the past procedure,
in so far as it uses that procedure. Inasmuch as
past business and banking methods accumulated
unpayable debt (a process still going on), the financing of national pensions must be so arranged
that the error will not occur in the issuance and
redemption of pension moneys. That having been
done in the proposals here made, we advance them
confidently as embodying all of the good and none
of the bad of our past financial history.
It is a truism, as sound as any axiom, that —
MONEY JUSTLY ISSUED UNITES MEN IN
EQUITY!
Who will question the justice of issuing money
to those who built our nation, and whose further
labor we do not now need? Except for the workers of the past, there would be no nation, no
banks, no money, no credit.
The complete proposal consists of nine steps,
ach one of which is vital to the others. Any judgment for or against the plan as a whole would be
taulty if it did not take all of them into account.
In the main, the various steps are repetitions and
continuations of established currency and banking
practices. Where they vary in details, the variances are designed to insure the complete success
of the program.
Preliminary
Business is carried on mainly with bank deposits, transferred by check. A little — a very
little — metal and paper currency is used for
small change. In one four-year period the New
York clearing house used only $1.87 cash for each
$1000 cleared — less than 2/10 of 1 % cash; the
rest was deposit-money.
Deposits are created—made out of nothing, by
marks written on ledgers—when somebody extends "credit" to somebody else. We are here
concerned with government credit and shall trace
it. The government issues bonds for some millions of dollars, bearing interest. The banks "buy"
them, with what? With entries on their books giving the government the right to draw checks for
its expenses and for relief.
20
NATIONAL PENSIONS
,
However far these relief checks may trav*
however often they may be deposited and checker
out again, they always end up by causing a mark
to be made in the ledger of some bank. There is
no escape from this routine. They began as bookkeeping credit, and they always return to the same
form. Banks "pay off" by giving the payee the
right to draw checks of his own.
Relief checks go to W P A workers; they endorse them to stores, stores to manufacturers, and
so on. The W P A claims that for each dollar it
spends several other dollars' worth of work are
done. That means that the manufacturers of the
goods sold to W P A workers, pay the money to
their own workers who buy more goods, so that
the W P A dollar circulates several times.
The question is, Why does not the W P A dollar keep on circulating indefinitely? The answer
is that there are several deductions from it that do
not ultimately go back to buy goods. Interest on
the bonds is one, although that is not so large a
factor as it is sometimes said to be. The profit of
the financier, merchant, jobber, manufacturer is
another.
Here we need to separate the idea of profit into
its two parts. One is profit taken in goods — better clothes, houses, education, travel, etc., for the
worker and his family and for the business man
and his family. The other is profit taken at th
middle of the cycle of "production — exchange —
consumption," in cash. And cash means bank deposits.
When profits are kept out of the trade cycle,
in cash, and the cash is not spent for goods, the
normal sale of that same quantity of goods is never
consummated. There is no other money to buy
them, for the practice is universal and all goods
suffer for lack of buyers. When the cash deposit
was originally created, especially in private manufactures, it was a debt and the debt was promised,
directly or indirectly, to be paid off by the sale of
the goods. That part of the goods that could not
be sold normally was matched by that part of the
debt which could not be paid. So somebody gave
a mortgage for it, the mortgage was bought by
some insurance company for its "reserves" or by
some bank as an investment, and that is the way
the 232 billions of unpayable debt that hung over
us in and since 1929 originated.
The goods could not be kept in warehouse for
21 years, as the banks and insurance companies
could save up the debts, transferring them from
one person to another. So the goods were "in dis
tress", as they say, and were sold at a sacrifice,
NATIONAL PENSIONS
21
/
re burned in desperation, went bankrupt, were
old" to foreigners who never paid for them,
were spent in war. That is the principal "blessing", the main cause, of war—it uses up goods
which the people at home need but do not have
the purchasing power to buy.
Pensions From Waste
The waste which we have suffered, as a nation,
is the source from which NATIONAL PENSIONS
are to be paid. What harm would have come to
anyone if the 232 billion dollars of debt had been
paid out to the old folks, year by year, from 1909
to 1929? That would have been nearly 11 billion
dollars a year for pensions—astounding! Had
that been done there would have been no dizzy
speculation, no violent crash in 1929, no industrial paralysis, perhaps no war in 1914 or in 1917
because we could have bought all of our own goods
for home use. We could have spelled P R O S P E R I T Y in fadeless capital letters that would
have shone around the world. And by our good
example we could have saved the world from its
present peril. That is something we cannot do with
armies or navies.
The nation has proved that it can waste ten
billions a year, besides wasting young folks in
war, old folks in want, and workers in the weariness of doubt, stress, and perplexity. If that has
ot ruined us, we shall not be ruined — but
father saved — BY TURNING THE WASTE OF
IDLENESS AND CONFUSION INTO PENSIONS
AND USEFUL GOODS.
We propose to do that by using accepted methods of business and finance and by using existing
officers and institutions. Minor changes will be
made, in important details, the chief of which are
concerned with making it certain that the pension
moneys will not be locked up in big, idle pools of
privately owned credit, but will buy goods again
and again and again.
We have already said that bank deposits or cash
stop buying goods mainly because they are
drained off as profits taken in cash but not in
goods. This process can be illustrated by following $1000.00 through several cycles in each of
which the cash profits taken by the financier,
manufacturer, jobber, and merchant amount, together, to 30%.
After the first sale, there will be $700.00 in the
hands of workers, to be used to buy goods again,
and $300.00 to be "invested" in mortgages or
stocks. Similar results follow succeeding sales,
as
shown in the table:
22
NATIONAL PENSIONS
Unuser
Cash
Sale
Price
Costs, Wages
Profits
First . . . $1000.00
$700.00
$300.00
Second . 700.00
490.00
210.00
Third . . . 490.00
343.00
147.00
Fourth . . 343.00
240.10
102.90
Fifth . . . 240.10
168.07
72.03
Sixth . . 168.07
117.65
50.42
Totals . . $2941.17
$2058.82
$882.35
882.35 (recaptured)
$2941.17
If it required sixty days for each complete cycle
of "production — exchange — consumption", the
table would show the lapse of a year, at the end of
which only $117.65 of the original $1000.00
would be still in the market for goods. The rest
exists as suspended credit or debt, and the goods
it should buy are first held over, then sold at a
loss, or sacrificed in bankruptcy. Later when the
debt is to be paid, the goods that should have redeemed it are gone. That is the dilemma to be
avoided in paying NATIONAL PENSIONS.
The successive cycles, from production to consumption,
begin before former ones are completed. They overlap
daily. Accordingly, six may be too few for the year's turnover in many businesses. On the other hand, certain businesses (notably in the marketing of foodstuffs) may not
make 30% profit. The table of figures, therefore, is use**
only for purposes of illustration. Twice the number c
cycles in a year, at half the profit, would produce abou.
the same net results.
That the table fairly represents the average of all business, appears from the fact that the huger sums of Federal
relief money (raised on bonds, issued b) Treasury checks,
and deposited, as here outlined for pension funds) disappeared from useful activities in a little over a year after
their being spent. Instead of re-capturing the W P A funds
after they had ceased to pay for goods or labor, the government permitted financiers, speculators, giant corporations, and insurance companies to take what the government should have re-taken, as it will re-take National Pension funds when they no longer move goods or pay wages
not exceeding $10,000 a year per man. Failing that, the
W P A money is now locked up as shown in Charts 1 to 6,
pages 4 to 14, of this book.
It is doubtful whether any figures sufficiently accurate
to make the foregoing table fit accurately all business, or
all concerns in any one line of business, exist. However,
it is definitely known that of all payments made in the
United States' about 65% are for wages, leaving about 35%
for profits, hundred-thousand-dollar salaries, corporation
lawyers' fees, and unproductive graft. On the other hand,
we have shown an excess of about 20% during 1909-29,
which; might easily have become 30% if panics, bankruptcies, and speculations had been less. The table therefore is sufficiently near the truth to be useful.
STEP 1 — Registration
of the age of 50 years
Every
American citizen
NATIONAL PENSIONS
23
or over Will register, on identification blanks simiir to those now used by the Postal Savings Banks
at (a) any bank of his own choosing, or (b) at
any postal savings bank. Falsification as to age
or citizenship or duplication will disqualify the
culprit from thereafter receiving any pension.
STEP 2 — Tabulation
The results of the registration will show how
many persons are entitled to pensions, where they
are located, and the agencies they have chosen
through which to receive payment. The amount
of money to be supplied therefor becomes a matter of simple calculation.
STEP 3 — Bonds Issued
The government of the United States will issue
its bonds, in large denominations (inasmuch as
they will not be bought and sold for private investment), for enough to cover the need. There are
23,728,000 people over 50 years of age in the
country. If they were all eligible, it would require
$14,236,800,000 to supply them each with $50
per month for a year. Part of this sum would revolve in repeated purchases of goods, part of it
would come back to the Treasury of the United
States at the end of the year. These steps will be
explained later.
These bonds will read exactly as do the bonds
now issued, excepting (a) they will mature "on
demand" instead of on a fixed date, and (b) they
4vill bear no interest. When the government promises "to pay to the bearer, on demand, without
interest, One Million Dollars" it engages to pay
out one million $1 bills, or other denominations
to that amount. The inconvenience of handling
large sums in currency-bills is a guarantee, then
as now, that such demand will not be made. If it
is, or if the government, for any reason not now
discernible, decides to retire the pension bonds,
it can do so at any time by replacing them with
currency or with credit certificates or with any
other documents of like tenor. We understand
the bond procedure, because it is in daily use.
Every bond now owned by the banks can be converted into currency now in case of need. It will
be the same in the case of the pension bonds.
STEP 4 — Checking Credit
The pension bonds will be deposited in the
Federal Reserve banks for checking credit, and
the Treasury will issue to each private bank and
to each postal savings bank a check for the amount
to be disbursed that month. The bank, in turn,
will enter upon the ledger card of each registered
pensioner
a credit of $50 for the month, and will
24
NATIONAL PENSIONS
issue to each pensioner a book of blank checks '
which he can fill out as needed to pay for m
purchases.
The services of the banks will be paid for by
the pensioners, out of their pensions, at a rate
fixed by law, perhaps 2c per check drawn, 6c per
deposit entered. Payees to whom pension checks
are drawn will do the same.
Distinctive Color
Present bonds, bank notes, checks, etc., are
mainly printed on white paper with green and
black ink. A distinctive color will be selected for
NATIONAL PENSION bonds, currency, ledger
cards, checks. We may assume that the color will
be a light brown for the paper and a dark brown
for the ink, and we may refer to pension funds
and moneys derived therefrom as "brown" money
or trade, and to the present customary transactions as "white" money or trade.
The purpose of the distinctive color is to permit
an easy check on the amount of "brown" trade
done by any one during the year. The cash profits
which he is accustomed to taking on "white" trade
he will take then as now, paying his income tax as
provided by law. On "brown" trade he will take
out all of his costs, the same as permitted by income tax laws as to "white" trade, except that his
own and his employees' salaries will be considered
as costs only up to $10,000 a year each. The clear
profit in "brown" money, above all costs, a i /
above salaries up to $10,000 a year each, whic».
the government has handed to him by issuing
NATIONAL PENSIONS, he will pay back to the
Treasury, in "brown" checks, 100%. This will
avoid the disappearance of purchasing power, as
shown in the illustration used on page 22, for
the Treasury will issue it again as NATIONAL
PENSIONS in the year following. These details
will be discussed later, and are mentioned here
mainly to state the reason of recording all pension transactions on paper of a distinctive color.
Let no one say that business-men would object
to "brown" pension money, merely because of the
slight extra trouble of listing totals of "brown"
transactions. In theory, they sell goods for "cash";
but they "charge it", investigate their customers'
pedigrees, psycho-analyze them, sue them, blacklist them, maintain credit ratings, collection agencies, and spies, to get that addition to their business above what straight "cash" would permit. In
comparison, keeping a list of "brown" sales, separate from "white" (and merely as to totals) is
a triflle. Moreover, should that slight difficulty
Digitizedbe
for urged
FRASERas an ostensible objection but for dif
NATIONAL PENSIONS
25
ferent aiid hidden reasons, the proper answer to
ucli objectors would be to ask them to favor the
ssuance of all money, for all industry as well as
for pensions, on the system here proposed. Then
no distinctive color for either will be needed.
STEP 5 — Currency
The exaggerated idea commonly held, as to the
part played by currency, (green bills and coin),
in daily business, is due chiefly to the fact that we
have it in our pockets, and to the fact that a $1
bill in pocket impresses the senses more than a
$10,000 check in a bank. We have about 6 billions
of paper money, and much of this is in Europe, in
South America, and in Cuba. Less than 1 billion
is in the hands of American banks and probably
less than 1 billion is in use as pocket money.
This currency is of three kinds, United States
notes dating from Civil War days, silver certificates issued on silver held by the Treasury, and
Federal Reserve notes isued against government
bonds and other eligible paper. We hardly notice
the differences between them.
It is probable that 300 or 400 millions of
"brown" currency will be enough to make change
and act as pocket money for pensioners. It will
be issued against an equivalent amount of pension
bonds and will read as do present Federal Reserve
notes, distinguished only by the brown color. It
will be drawn from banks by checks of pensioners
d others, as needed. It will have all the priviges and virtues of present Federal Reserve notes.
It is a physical and practical impossibility to
conduct any considerable part of the nation's business with currency. With much of our present
currency in foreign lands and with some of it permanently lodged in safes, the Bureau of Engraving
at Washington prints about four tons of new
money every working day in the year, to replace
worn out bills. These bills weigh about 500 to
the pound. The country uses some 50 billions of
bank deposit money. This changes hands at least
six times a year, making a total of 300 billions
of money transactions. If all of these were conducted with paper bills printed at Washington, instead of checks, handling money would begin to
take on the cumbersome difficulty of handling the
iron money of ancient Greece or rhe stone money
of the island of Yap.
"Brown" currency will have all of the privileges
and virtues of present "white" money. It will
pay any debt, all taxes, buy any property or goods
or services. The only difference between "white"
business and "brown" business will be the return
to the Treasury of 100% of speculative cash busi
26
NATIONAL PENSIONS
ness profits in ^brown'? money, above Icoslff and i
individual salaries of $10,000 a year each.! Large
salaries, paid from "white" money, may oontkiti
as now. Insofar as wages are paid from "brown"
pension funds, there will be a ceiling oil salaries,
at the $10,000 level, and a general tendency to
level salaries and personal earnings up to that
figure.
STEP 6 — Circulation
The situation of the pensioners, with $50 per
month of "brown" money in hand, will be the
same as though they had that amount of the present "white" funds. They will buy with it whatever
they wish or need, at any time, in any place.
Merchants receiving "brown" checks or currency will deposit them in bank, and will draw
"brown" checks of their own to pay for merchandise received from jobbers or manufacturers.
These will do likewise. All of them will pay their
employees with "brown" money or with "white",
without distinction, both of them, from the standpoint of the employees and of the employers, having equal standing. As already shown in the table
on page 22, much of the "brown" money (and
also the "white") will make several circuits of the
goods market. .It will be spent first for goods,
then for wages; then for goods again, then for
wages; again for goods, and so on. In order that
no part of "brown" funds may accumulate in
speculative pools, on the one hand, and as unpayable debt, on the other, it is provided that at year'
end the excess above what is used to make and to
buy goods—and services up to $10,000 a year—
shall be returned to the Treasury, 100%, as shown
in the next step.
STEP 7 — Income Tax
Under present income tax laws single persons
with a net income of $1000 or more, married persons with net income of $2500 or more, and all
persons with gross income of $5000 or more must
file returns to the government. This practice will
continue, and income from "white" and from
"brown" business will be added together to make
the totals.
Each seller of services or property of any sort,
whether as a merchant, stock broker, or landlord,
will be required to keep a record of sales for
"brown" money, in order that he may be able to
make a statement on his income tax forms of the
proportion which his "brown" business bears to
his "white" business. His net gains will be divided
in the same proportion. Thus if 8 0 % of his business sales is "white" and 20% "brown", his
gains will be thus apportioned. The first part
NATIONAL PENSIONS
27
» (80%) 4 iM Pay income tax according to present
'aws.
To the second part (20%) will be added
of that part of all personal salaries paid and
y0%
charged in as costs, which exceeds $10,000 a year
each; the sum so computed will be paid back to
the national Treasury, 100%, in brown checks, to
be paid out again in pensions the next year.
On 14 billions paid out for pensions in a year,
about 42 billions of new business will be done at
cost, with maximum salaries of $10,000 a year.
About 20% (2.8 billions) will be saved by workerg (not speculators) and about 11.2 billions will
return to the Treasury, recaptured, to go out as
pensions in the following year. No interest being
paid on the bonds, the addition of 2.8 billions a
year to the national debt will cost nothing, exactly.
The only new accounting detail which NATIONAL PENSIONS impose upon business is that
of determining what part of sales was made for
"wThite" money, what part for "brown".
This
s'ight burden will not be felt, in comparison with
the great relief of having a greater volume of
sound, cash business, greater regularity, and a new
case in paying adequate wages to all workers.
It can be seen that this method of issuing, recapturing, and re-issuing "brown" money could
be applied to "white" money as well. In that
case, of course, the use of a distinctive color for
pension funds would be needless.
STEP 8 — Savings
The re-capture of that portion of "brown" pension funds, will prevent their sequestration, away
from the channels of trade, in large pools of stagnant credit. On the other hand, "brown" money
not so re-captured will flow constantly through the
channels of trade from pensioners, to merchants,
to wage earners in industry, repeating the cycle
about every sixty days. There will be no hindrance to pensioners, to wage earners, to small
merchants, or to salaried executives earning up to
$10,000 a year, who wish to save some of their
"brown" money for future use.
The 100% re-capture of "brown" speculative
profits will tend to prevent the use of "brown"
money for speculative purchases. That means
that "brown" money will tend to be used to buy
the more ordinary goods and services, constantly
returning to and through the hands of those who
make the goods and render the services. The
savings of "brown" money will therefore be in
small units, distributed among millions of persons. They will accumulate their savings in the
form of credit balances on their "brown" bank
accounts, subject to check at any time.
28
NATIONAL PENSIONS
STEP 9 — 100%-Reserve Banking
There will be no way for pension mone
("brown"') to come into existence, in the first
place, except through pensions. No one will be
able to create or lend "brown" money except as
it was issued for pensions. It will differ from
"white" money in that respect, for bankers can
lend "white" money, by check, for many times the
currency or bonds which they have actually in
hand. This is true because it is privately created,
and it would cease being done if "white" money
were issued by the government, for permanent
use, in the manner here proposed for pension
funds. In the course of time, as savings of
"brown" money accumulate, there will be lendable
"brown" funds in the banks. Each dollar of it
will be derived from a pension bond issued by the
government. The money will belong not to the
bankers, who will be trustees of it, but to their
depositors. It will be the depositors' property,
not a mere claim against the bank. If and when
the banks find that "brown" money can be lent
to advantage, they will act as lending agents for
their depositors, dividing the gains from such
lending, if any, with their depositors as may be
determined from time to time by law or by private
agreement.
This 100%-reserve "brown" money will accumulate from year to year, augmenting the monetary capital resources of the nation. About 5^
billions of "white" deposits now serve inadequately. One defect in them is that they are temporary, requiring renewal perhaps every 60 days,
and thus requiring a total issue and retirement of
as much as 300 billion dollars each year, in the
country as a whole.
There is therefore ample room on the books
of the banks for the creation of a back-log of
100%-reserve "brown" money which will not
fluctuate in quantity arbitrarily and which will
feed the industrial tree with nourishing financial
waters where it most needs them—at its roots.
By the table used on page 22, more than 80%
of "brown" money paid out for pensions will be
re-captured each year, leaving about 20%, or less,
of the 14 billions, outstanding, to be used in further purchases or savings. If the entire balance
of 20% were saved, the addition to 100% bank
reserves would not exceed 3 billions a year. It
would cost the nation nothing to create or maintain these funds. It would take nearly twenty
years for them to reach the sum of temporary
money now used by banks, and it would take a
NATIONAL PENSIONS
29
century to/ accumulate enough to meet the entire
ar's needs of the country's business.
^ Business will grow, besides. Thus there will be
ample employment for both temporary "white"
money, and for such permanent "brown" money
as people may wish to save.
Commercial Effects
U. S. Department of Labor Bulletin No. 658
claims that for each hour of labor directly performed for the W P A , about 2.5 additional hours
of indirect labor were stimulated through the demands for materials. The table we have used on
page 22 shows total sales of about $2.9 for each
$1 issued as pensions. From <mch calculations
we may conclude that a national income like that
of 1936 of 60 billions results, directly and indirectly, from basic expenditure of 20 billion dollars; further, that 14 billions of pension money,
if all of it is spent, will increase national business
by about 42 billion dollars a year, or 70%. This
new business will naturally be divided between
stores and factories now in business and new ones
that will start up. No man can tell who will get
how much. It would be conservative, however, to
expect an increase of at least 2 5 % in the business
done by existing stores handling staple merchandise, the remaining 4 5 % going to new and smaller
establishments.
We shall therefore use as an illustration, a store
w doing a gross business of $400,000 a year,
'ith executives drawing $10,000 a year or less,
and making a small net profit of 4 % on its turnover, — total gains $16,000.
Next year its sales are increased 2 5 % in
"brown" money. It therefore does a gross business of $500,000. It can probably handle the
larger volume without increase in rent, in the
same space it now uses, with the same executives,
and with less than 2 5 % increase in clerk-hire. In
other words, its unit-cost of doing business is lowered by having the increased volume. It may
therefore make a profit of 5 % instead of 4 % ,
raising its total gains (before income tax) from
$16,000 ( 4 % on $400,000) to $25,000 ( 5 % on
$500,000).
On its income tax return it will show net gains
of $25,000. It will show $400,000 of "white"
business and $100,000 of "brown" business. Dividing the $25,000 net gains in the same proportion, it will have $20,000 net gains on "white"
business against $16,000 the year before, despite
the fact that it will pay 100% of "brown" net
gains, or $5,000, to the national Treasury, to be
out again as pensions in the next year.
Digitizedpaid
for FRASER
30
NATIONAL PENSIONS
In addition to the increased efficiency of business due to a larger volume of trade, there will )
economies resulting (a) from better credit stain,
ing of customers and less trouble in making collections; (b) from less competition among merchants striving to take the same dollar from one
another because there are too few to go around,
hence reduced advertising costs; (c) from definite
location of purchasing power in certain persons at
certain addresses at definite times; (d) from increased regularity in demand for staple goods,
instead of the hectic chase after fashions and foibles, to gain quick but elusive profits. It will be
easier to pay adequate wages in "brown" funds,
thus increasing purchasing power where it is most
needed.
Similar results, with even greater economies
due to increased volume of business, will appear
among the manufacturers who supply the merchants.
No Inflation
Inflation is an evil to be avoided. Inflation
comes when the supply of money outruns the
supply of goods. The supply of goods can become short through refusal of producers to make
them, for reasons of economic uncertainty mainly
due to taxes that exceed the ability of industry to
PayHowever, all of these factors are absent froir
the operations herein outlined. True, prices t
staple goods will "stiffen" through the absence of
goods sold in distress because there are no buyers
for them; on the other hand, other goods now
sold at high prices, loaded with profits to cover
risk, will be cheaper as the risks of no-sale and
of non-payment subside. Merchants will not need
to destroy one another to sell their goods. On the
other hand, there will be a known increase of purchasing power, available on certain dates, to certain people of known locations, habits, and ages.
Give sixty days' advance notice of the fact, and increased goods to supply the coming demand will
meet it on the spot. Thus the gamble which creates inflation will be absent.
No Tax
"Brown" pension money, issued by the government, travels through regular routes from pensioners to merchants, to workers, back to merchants for more goods, again to workers, and so
on around and around. In the end it is all accounted for under two heads, (1) the unneeded
excess is re-captured or (2) it is saved by workers
J
NATIONAL PENSIONS
31
(not by speculators) for future use and thus supplies bank reserves on a 100% basis.
NATIONAL PENSIONS, therefore, need no tax
lo justify, liquidate, or redeem them. The part
re-captured reclaims for the government the portion which is not used finally to pay wages.
The destructive effect of ordinary taxes is not
generally appreciated. If a merchant makes $10
profit on selling $100 worth of goods, he can pay
a tax of $10 by foregoing any advantage to himself from the business. The moment his tax rises
to $11, however, he can no longer do the business
at all. The community loses $100 turnover of
business for the sake of the excessive $1 of tax.
Many of the recent and repeated declines in business activity are caused by the invisible but inexorable arithmetic which destroys business when
taxes exceed net gains.
Conclusion
Reformers have generally argued for their advanced steps on the grounds of what is right and
just, — that is to say, on moral grounds. Admittedly the argument has had all too little force,
in years past, when the advantage seemed (but
only seemed) to lie on the side of chicanery,
"smartness", and all the evils that led to, but not
inside, the jail door.
It is our privilege to live in a time when morals
<md necessity join hands, — when the moralist
10 is not also a scientist, and the scientist who is
not also a moralist, loses all permanent authority.
In brief, only that which is right will work, and
to find something that will work we must find
what arithmetic, equity, and justice support.
It will surprise most readers to find the foregoing ideas supported by NATIONAL PENSIONS as herein proposed. Because they will
bring benefits to all parts of the population, we
are surprised to find them also just justified by the
logic of the old folks'* past contributions to society, and vice versa. That unity of interest and
justice, of selfishness and altruism, and of the
centrifugal and centripetal forces of the economic
universe, is the guarantee that the system will
move as smoothly, rapidly, and irresistibly as does
the earth in its orbit around the sun.
The first and immediate step is the wide distribution of full information. This pamphlet is
designed to act as the first vehicle in the caravan.
Will you keep it moving from hand to hand, as
rapidly as it is read? That is your opportunity.
(The End)
Books Recommended
v\
i
Alexis de Tocqueville. "Democracy in . America".
Although written in 1835, it is still indispensable
reading for Americans.
Carl Van Doren. "Benjamin Franklin". Book-oi
the-Month for October, 1938.
Marquis James. "The Life of Andrew Jackson".
Pulitzer Prize Award, 1938.
Walter Bagehot. "Lombard Street". 1874. The
invention of "cheque" money. The beginnings
of modern banking and currency.
E. C. Riegel. "The Meaning of Money".
1935.
The views of noted economists in question and
answer form, showing complete disagreement on
most questions.
Latzko. "Lafayette: A Life". 1937. Written in
German, by a Pole, and published simultaneously
in German, French, English.
Chas. A. and Mary R. Beard. "The Rise of American Civilization". 1930.
Thorwald Siegfried, of Los Angeles.
"The Answer to 'Profits' ", a reply to the "Profits" of Foster & Catchings. 1926.
"Questions & Answers on Monetary Administration". The same questions listed in Riegel's "The Meaning of Money" (see above),
with additional answers. These are re-printed, by permission, from the issues of The
Christian Science Monitor of Dec. 30, 193?"
Jan. 15, 1934, Jan. 16, 1934.
"The Siegfried Plan, For an Honest Exchange
of Values, By the Issue of a Sound Money".
1931. Speaking of this book, Dr. Virgil Jordan, now President of The National Industrial Conference Board, of New York, said:
"The idea of basing currency or credit control upon a labor-unit is not new, of course,
but I do not recall that I have seen any concrete proposal, except yours, whereby it
might be practically applied."
"A Necessary Addition to the Banking Act of
1935". 1935-6. Supplied to Members of
Congress, Committee members, and government executives, and re-printed on pages
12447-8-9 of the Congressional Record for
August 25, 1935, in the remarks of the Hon.
H. Jerry Voorhis.
"The Farmers'Dollars".
1926. A study of the
depletion of farm income, through financing
with dollars based on urban values. Reprinted in the Congressional Record of November 23, 1937, pages 507-8.
'TEAR OFF HERB)
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A Brief Outline
How NATIONAL PENSIONS Will Be Paid
In Cash.
Debt-less.
Tax-less.
(See details inside)
> !
1—All citizens, 50 years or older, register at any
bank of their own choosing or at any postal
savings bank. Falsification of age, or citizenship, or duplication, will disqualify culprit
from future benefits.
2—Tabulation of registered pensioners, out of
23,728,000 persons over 50 in the country,
will show where payments are to be made. If
all register, $50 per month or $600 per year,
would require $14,236,800,000.
3—U. S. Government will issue bonds, payable on
demand, callable at will, bearing no interest,
in large denominations inasmuch as they will
not be traded in for investment.
4—The bonds will be deposited in Federal Reserve
banks for government checking credit. The
Treasury will draw checks to each local bank
or postal savings bank to cover its NATIONAL
PENSION disbursements, month by month.
The bank will enter a credit to each pensioner
of $50 each month, and will supply him with a
check book to use in paying out the money.
Banks' charges at 2c per check, 6c per deposit,
etc., will be fixed by law and will be paid by
pensioners, in "brown" checks.
All bonds, currency, ledger cards, and checks
for NATIONAL PENSIONS will be printed in a
distinctive color, perhaps "brown", to distinguish them from present "white" business.
The purpose of the separation is to know the
proportion of business done on "white" and
on "brown" money, at the end of the year.
5—Currency (bills) in "brown" will be issued as
needed for pocket money and change, against
the bonds, as is now done, pension currency
reading like present "white" money and having all the privileges and virtues of present
Federal Reserve notes.
6—Pensioners will spend their currency and
checks for whatever they wish to buy. Merchants will deposit "brown" checks in
"brown" accounts and drawn "brown" checks
of their own for goods, for payrolls, for rent,
etc. Manufacturers will do the same. Payrolls paid in "brown" or in "white" money
will be spent for goods and make repeated
circuits of the market. At each circuit the
amount is reduced by the deduction of pure
cash profits, used for investment purposes.
These deductions from "brown" pension
funds are re-captured by the government at
income-tax time.
O
A Brief Outline
How NATIONAL PENSIONS Will Br Paid
In Cash. Debt-less. Tax-less.*
(See details inside)
(Continued)
If the government issued all "white" money,
by the same process here outlined for "brown"
pension money, it could equitably recapture
the portion not spent for goods or services,
inasmuch as the purpose of the advance was
to finance such basic production-exchangeconsumption.
With six circuits of the market each year,
each $1 will make sales of $2.9 and over 80c
will be recaptured, as shown in the following
table based on an aggregate cash profit of
30 %, taken by manufacturer, middleman,
merchant, financier—
Sale
Price
First . . . . $1000.00
Second .
700.00
Third . .
490.00
Fourth .
343.00
Fifth . .
240.10
Sixth . .
168.07
Costs Recaptured
Wages Cash Profits
$700.00 $300.00
490.00
210.00
343.00
147.00
240.10
102.90
168.07
72.03
117.65
50.42
Totals: $2941.17 $2058.82
$882.35
(recaptured)
7—Income tax statements will show totals
"white" and "brown" business. Net gai'
will be apportioned in the same raito
"white" to "brown". If "brown" money increased business 2 5 % , that part of pure
profits (with a ceiling on salaries paid in
"brown" money, of $10,000 a year each)
would be recaptured 100%, payable in
"brown" checks. Business would benefit by
reduced unit-costs of doing business, less risks
and losses, greater ease in paying adequate
salaries.
8—Savings will be in earned money, not in speculative profits; hence they will belong to vast
numbers of people, accumulated as unspent
checking credit, "brown".
9—"Brown" money can originate only in pensions; it cannot be created with a pen. Thus
accumulated savings, left in banks, will furnish lendable "brown" funds, with 100%reserves of permanently existing credit. This
will grow at the rate of about 2.8 billions a
year (20% of 14 billions), ultimately giving
the country the needed volume of stable, democratically owned bank-credit.
@FedFRASER