The Natural Economic Order/Part IV/Chapter 5 J

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J. The Debtor

Unless we agrarians[1] belonged to the genus of pachyderms we could not be insensible to the abuse showered upon us in Parliament, in the Press and in daily intercourse; we are called bread-usurers, beggars and scoundrels.

That the working class should have attacked us for making their bread dearer was pardonable. Towards them we played the part of the aggressor. They had done us no injury that could justify our inroads upon their lean purses. But that the other parties which had so often injured us by legislation in order to enrich themselves should have joined in the chorus of abuse, I find simply ridiculous. It shows that these parties have not yet learned the meaning of politics. Politics mean power, and those who have the power exploit politics to their own advantage. Formerly the liberal parties held the power, which they exploited, now it is our turn. So why abuse us? The abuse rebounds on those who have been in power and those who will be in power in the future.

In this quarrel our political opponents were decidedly the aggressors. They attacked us by introducing the gold standard, and to protect ourselves we tried to restore bimetallism. As we did not succeed, we had recourse to protective-duties. Why did our opponents deprive us of the double standard on which our mortgages were based? Why did they force us to repay more than we had received ? Why did they alter the terms of our mortgages by depriving us of the choice between gold and silver? Why did they deprive us of the possibility of paying our debts with the cheaper of the two metals? It obviously makes a great difference whether I am free to pay my debts with 1000 kilograms of potatoes or 100 kilograms of cotton, or whether I am bound to pay in potatoes a one. We were of the advantages of this clause in our contracts without receiving compensation of any kind. If I had been allowed to choose I could have paid either with 160 pounds of silver or with 10 pounds of gold, and I should have paid, of course, with the cheaper of these two metals, just as, when I borrowed the money, I was paid in the cheaper metal. The chances of profit from this advantage became apparent later when we compared the price of silver with that of gold. The price of gold increased 50 % compared with silver, so instead of 100,000 marks ray debts now amount to 200,000 marks — not nominally, but what is worse, in actual fact. I have to sacrifice double the quantity of produce annually to pay the interest on my debt. Instead of 50 tons of wheat, the bank now claims 100 tons annually. Had the silver currency not been abolished I could have employed the fifty additional tons to pay off my debts, and I should by now be clear.

Is not this treatment of debtors, approved of by our political opponents, simply swindling?

If debtors did not protest in a body, if the protest was confined to landowners and other mortgage debtors, the explanation is that most of the remaining debtors, who had borrowed money without giving real estate as security, went bankrupt and so got rid of their debts in the general collapse that followed the introduction of the gold standard. The matter therefore no longer concerned them.

When we supported our demand for a return to the silver standard by pointing out that after the introduction of the gold standard the price of wheat had fallen from 265 marks to 140 marks, and that we had received silver, not gold, for our mortgages, we were laughed at and told that we did not know anything about the currency or the needs of commerce. The gold standard had proved a great success (proof: a great commercial crisis and fall of prices) and could not be tampered with without unsettling the notion of property and risking a collapse of the whole economic structure. If, in spite of the blessings of the gold standard, we fared badly, our antiquated methods were to blame; why did we not adopt modern machinery, why did we not use chemical fertilisers, why did we not grow the crops needed for industrial purposes, why did we not produce more at a reduced cost, and so carry on in spite of lower prices? Our argument was all wrong; the "value of gold was fixed, and the value of commodities had declined in consequence of the reduced cost of production ! As gold has a fixed intrinsic value", price fluctuations are always due to the commodities.

We tried to put this good advice into practice and to reduce our costs of production. The State came to our aid with reduced freights and reduced fares for the Polish labourers. And we did obtain better crops with the same amount of labour. But we did not obtain the expected advantage, for although our crops increased, prices fell from 265 marks to 140 marks, so that we actually obtained less money for the larger crops. Money was the thing we needed for it was money that our creditors claimed, not potatoes or sugar beet! They held us to our bond which had been falsified by legislation in their favour; they demanded gold.

The silver standard would have given us money - more money and cheaper money, that being denied us, we tried by other expedients to obtain more money from our produce, and in this way we hit on protective-duties. If we had not been cheated out of the silver standard, protective-duties would have been unnecessary. The whole responsibility for the wheat-duties therefore rests on those who have been calling us bread-usurers, beggars and scoundrels, with those who robbed us through the introduction of the gold standard. An odious episode in our economic and political history, which has caused endless strife and bitterness, could have been avoided by the elementary precaution of including a legal definition of the terms "thaler" and "mark" in the proposed currency reform, and by a clear statement of the circumstances under which the State was entitled to demonetise either silver or gold.

Considering the enormous importance of the matter, it was criminal of both sides to use the thaler, and afterwards the mark, as a basis of their bid for power, and to make the answer to the question: "What is a mark, German Standard ?" a matter of party politics. But now I feel safe. The National Currency Office is on the watch and Free-Money enables it to maintain an equitable balance between the conflicting interests of debtors and creditors.


  1. Agrarian: a debt-ridden German landowner who endeavours to get rid of his debts through legislation.