Contemporary Cultural Ethics

Faith & Economics

Professor: Dr. R.J. Rushdoony

Subject: Culture

Lesson: Faith & Economics

Genre: Speech

Track: 08

Dictation Name: RR133A1

Location/Venue:

Year: 1960’s-1970’s

This afternoon is the relationship of our faith to the subject of economics. This is a very important area, a very central area of concern that should interest all of us as Christians. There is an old story that perhaps is known to you about the young prince who became king, and as a young man he wanted to understand something of the function of his office, and so he called in the economists of the realm and asked them to teach him economics, so that he might better fulfill the requirements of his office. The more they talked about economics, the more confused he became, until finally he silenced them and he said, “I know less about the subject now than when I called you in, and I forbid you to speak unless you can define economics for me in ten words. And they said, “Your majesty, it is impossible.” At this point, a courtier stepped forward and said, “Your majesty, I can do it for you in nine words. Here it is: There is no such thing as a free lunch.”

Now, in essence, that does define economics. There is no such thing as a free lunch. Someone pays for it. whoever gets a free lunch is getting it as somebody else’s expense. It has to be paid for. There was a time when, under the influence of the Christian faith and theologians, economics was a province of theology, and it was called moral economy. Theologians were also the economists. The economic theory that is basic to the U.S. Constitution was provided by a Reformed theologian, John Witherspoon. We can understand the moral foundations of economics not only in terms of this little illustration I used, but by citing two of the Ten Commandments. Thou shalt not steal, and the other, Remember the Sabbath Day to keep it holy. Now, too often we stop there with that commandment, and we forget that a part of that commandment is that Six days shalt thou labor. What that commandment tells us is that first, work is the means whereby we are to improve ourselves, institute progress, gain the things we want, but that we cannot put our hope in ourselves only, and that we must rest from our labors and put our confidence in the Lord. So that the commandment both speaks of the necessity of labor, our effort, and the necessity of taking our hands off our lives, our hopes, our plans, and resting in the Lord, knowing that in the ultimate framework of reference, it is God’s will that governs.

Now, if we understand these two commandments, then we see the heart of all capitalization. Without capitalization, there can be no progress in society. Capitalization is the accumulation of goods and materials, tools, productive land, productive equipment and so on, whereby there can be production, whereby there can be progress, trade, commerce. Whereby man can live. The basic in capitalization is labor and a freedom from theft, so that a man can work securely and rest from his labors in the confidence that what he does is not going to be destroyed, either by theft or by expropriation which is a form of theft.

Thus, the Bible gives us a program of capitalization. It is not surprising, therefore, that with the Reformation, not only was the book of Proverbs very popular, but because the book of Proverbs is the Bible’s own commentary on the law, it was very commonly printed separately and men, whether they were businessmen or farmers, or day-laborers, regularly memorized vast portions of it. We cannot understand the post-Reformation mentality unless we grasp this extensive memorization of the book of Proverbs, of the application of God’s law to every day life. Of the necessity, as they saw it in terms of scripture, of working lawfully under God in order to accumulate those things were are necessary.

Now, theft and debt constitute the two major forms of de-capitalization. There are people who regularly seek to capitalize by de-capitalizing others, either by theft which can be also by expropriation, or by outright seizure. Expropriation takes place when we say that it is wrong for somebody to keep more than so much of their income and we’re going to take it away from them. When I was in the plane, I was reading a statement by an actor who is English, who had left England, and he said he could only return there a few days a year, because otherwise he will be robbed of his income. He said the law full year he was in England, he made $100,000, and because of the very high income tax there, he was only allowed to keep $2,000, so he said, “I ended up in a worse situation than the ordinary day-laborer in England. So, he said, “I cannot live in my own country.”

Now, expropriation is rooted in envy, another one of the Ten Commandments. “Thou shalt not covet.” It’s a very sad fact that increasingly, in many churches today, because of the monastic ethics, there is a great deal of preaching against having material things and a sizable movement underway that says a man should have no possessions. Others, including a pastor of ostensible Reformed character in the Midwest, recently preached that no one who is a Christian should live in a house that costs more than $25,000. Now, of course, there is nothing in scripture that points to anything even remotely resembling this, and what such a man is saying that we must reduce our situation to the lowest common denominator. Well, of course, if he says, “under $25,000,” someone in India can say, “You are living like a king in comparison to me. I have an income of $200 a year, or $100 a year, and therefore, you must reduce yourself to the level of $500 a year in your capital goods as appearing in your home. You see the result.

Now, to give you an instance of de-capitalization through debt, theft and debt as a means of de-capitalization, there is a paperback book which has just appeared, and you can find it in the supermarkets, the authors are Robert Franklin and Kenneth Pepper, and the title is Your Check is in the Mail, How to Stay Legally and Profitably in Debt. Their thesis is that you should go into debt as heavily as you can and pay as little as you can, and defer payment as long as you can, and they say this is the way the federal government is operating, and this is the way the big corporations are operating, which is really true. A very fine man in California, an elder in the Orthodox Presbyterian Church was, a few years ago, virtually wiped out because he is in the steel business on a very small scale. He received a very large order from a big corporation which ran into the six figures, and very strongly in the six figures. Well, what the corporation did, and it was routine with all their suppliers, was to take advantage of his eagerness to fill that order, {?} of facilities since he was a small operator, of checking on them, and then proceeded to ignore payment. Their policy was to withhold the payment to all their suppliers, and to exploit little suppliers that way, and by that means, they had several million dollars that otherwise would have gone out in payment that they could use in other ways, or keep in the bank and draw interest on it. They knew full well that today, in all your major urban centers, the earliest date at which a civil suit can be tried before a judge is two years. So they could wait until the court proceedings began. Well, for this man to wait sixty days for his payment meant being wiped out, and it was only of the providence of God that he was not destroyed, and yet, what these authors in this paperback advocate is the application of this policy in our daily life, that we all follow this policy of being deadbeats. In fact, they begin by dealing in their very first chapter, on the opening page of Exodus 22:24, attacking the biblical view of debt, and saying, “In the year since then, mankind has made a tremendous moral progress to the point where usury is considered a virtue and only inability to pay a sin.” The book is dedicated to John Maynard Keynes, whom they titled “The Father of Deficit Spending.” I should tell you, by the way, the title of the first chapter is John Calvin Died in 1654, Unfortunately His Ethics Didn’t.

Now, they are aware in this book of the consequences of this kind of operation. They, in fact, document what it does. They point out that in 1972, 918 companies in the United States went out of business, not because they were not successful, but because they could not collect on accounts receivable because of this kind of strategy, but when they face the moral question, “But is it immoral, and won’t it create a ruin in society finally?” they fall back on Keynes, and they quote Keynes who, when asked the same question as what the consequences of his policy would be, and his answer was, “In the long run, we are all dead.” So it destroys society, but we’re all dead. Eat, drink, and be merry, in other words, for tomorrow we die. Let the future take care of its problems. We’re not responsible. Our business is to enjoy ourselves. What’s in it for me? This is Existentialism, applied to economics, and our economics today, of course, is the economics of Existentialism. This is why this book begins with an assault on John Calvin.

Now, I’ve said theft and debt are cardinal means of de-capitalization, of destroying a society. There is a third means whereby society is de-capitalized, and this is inflation. We are now in an era of inflation. In 1974, we moved from single-digit inflation, that is 1 to 9%, to 10-99% double-digit inflation. Last year, the federal government’s statistics, if they are to be believed, and that’s always a question mark, we went back to 8-9%. The prognostications of some competent economists for this year are that we will have an inflation of 18%, because it is an election year and they will spend heavily in order to gain votes. That we cannot say, but certainly we are in an era of inflation, a means of de-capitalization. Incidentally, the matter of government statistics, I always took them very literally, and once when I was visiting the late Jay Howard Pew at his winter residence in Arizona, I quoted some government statistics to him on inflation, and he stopped me short and said, “Do you believe that?” and I said, “It didn’t occur to me to doubt it,” and he said, “Well, if those statistics are true, they will be the first set of statistics that the federal government has put out that are honest. Self-interest motivates their statistics,” and he said, “I maintain my own statisticians and go on the basis of my own statistics. Otherwise, my business would be in trouble.”

Now, historically, there have been three means of de-capitalization by means of inflation. The first of this in ancient times and up to, and well into, the modern area, was de-basing the coinage. Taking gold or silver coinage and replacing it with copper, or baser metal coinage. Usually, of course, the governments did this by a thin wash of gold or silver so that it would look like a good coin, and this kind of thing sometimes fooled the people very briefly, but very quickly, the gold wash or silver wash would wear out and the people would know they were being cheated, and the coin would depreciate. Henry VIII, incidentally, was a great debaser of coinage, and he gained a nickname. Because his coinage, ostensibly gold, had a thin wash of gold which quickly wore off, the most prominent aspect of that coin was his nose, and the gold wash wore off first of all, on his nose. So that he gained the nickname of Old Coppernose.

The course of empires has been decided by debasing of coinage. Actually, in the battle between Mark Anthony and Octavian, there was no question who was the more brilliant general: Mark Anthony. Octavian was a young man without any experience in government, but he came from a family of goldsmiths. Now, he sat back and waited, and postponed action as long as possible while Mark Anthony lived it up, and taxed everybody, and had a grand time, controlling the most important part of the Empire: Asia Minor and North Africa, the areas of the greatest wealth, and Mark Anthony, not understanding economics, began to debase the coinage and that really hurt him when he began to pay his troops in debased coinage. You can’t command the loyalty of the troops that way. Octavian meanwhile, not only stayed with hard money, gold and silver, but he let it be advertised that he paid his troops in gold and silver. Now, the Battle of Actium{?} was not much of a battle. Mark Anthony’s navy had the word and his troops had the word. The real fighting was very limited. It involved the crossing of lines. Mark Anthony’s troops knew that if they crossed the line, because that was the word that had been put out, they were going to be paid in gold. So, the navy deserted and the army deserted. There was nothing much to do but to commit suicide, which he promptly did. That was the end of Mark Anthony, a far superior general, but he had no one who wanted to fight for him, and of course, this is how the Romans defeated Bar Kokhba.

One of the things I prize is a coin of Bar Kokhba’s. Now, there’s no way of knowing the authenticity of that coin. If its authenticity could be determined, its value would greatly be increased, but short of finding a coin on the person of a soldier of Bar Kokhba in an excavation, the likelihood of having that greatly-enhanced value is slight, and even then you wouldn’t be sure. Why? Because Bar Kokhba issued a copper coinage, the Johnson slugs of his day, and paid them out, giving them a value equivalent to gold. Well, the Romans had a very easy answer. They flooded the areas that he governed with counterfeits. The same amount of copper, and they destroyed his ability to function. After all, how were you going to use that coinage when it had no value, when anyone could duplicate it cheaply and counterfeit it?

As a result, Bar Kokhba was defeated before the military engagement which overthrew him simply because of his debased coinage. The basis of his power, which originally was tremendous, collapsed because he disobeyed the biblical law which said, “Just weights,” and it means weights of shekels of gold and shekels of silver, “shall ye have,” and it is ironic that the Romans, who used that so ably against Bar Kokhba and Mark Anthony should themselves, beginning with Nero, proceed to debase their coinage, and it led to the destruction of Roman society, Roman civilization. Their coinage disintegrated so rapidly that it ceased to have value. The Roman government could not function, and as William Carroll Bark, the Roman historian has said, the millions of Rome were defeated by a few ten thousands of Barbarians.

Taxation had become so exorbitant, and law and order had broken down so much that Salvian the Presbyter tells us that people began to cross the boundaries into Barbarian territory, figuring “Well, our women folk will be raped once. We will be robbed once, and then we will have at least a freer way of life than we do here in Rome,” and the consequences for civilization were devastating. Rome was not overthrown. It collapsed, and an empire which controlled only half of Europe and the Mediterranean world, but had a population of 100 million, disintegrated to the point where Rome, a city of millions, finally wound up with 500 people living amidst the ruins, and Europe, in 1800, had still not recovered population-wise, so that the whole of Europe had only a population of 40 million in 1800. You see what they had done was to destroy wealth. They had done it by debasing the coinage.

Now, a second means of de-capitalization through inflating of money is increasing the money supply with a paper currency. Jean Law was the one who began this sort of thing in the Western world. The Chinese had tried it earlier to their own destruction, and by this means, what you do is simply to create more paper money. You create more and more, so that money becomes cheap. Ludwig von Mises has said that civil governments are the only agencies in the world that can take perfectly good paper and make it worthless through the printing press and by calling it money. There is an amusing story which is true, and I wish I had an example of it. I have quite a collection of debased paper money, but when inflation hits Czarist Russia during the war, one counterfeiter who was printing counterfeit paper money, began to find that his money was reaching the point where it didn’t pay. He was putting more labor into it than he was getting out of it, so the last batch he made with a very fine pen, in lettering that could only be read microscopically, he put the words along the picture of the czar in the design, “My money is worth more than yours.”

Debasing a monetary system by increasing the money supply has occurred repeatedly, and after World War 2, there were some very critical examples of that in Germany and in Hungary, especially. As a matter of fact, the U.S. Army made it a matter of policy to outlaw all currencies, including gold and silver, when it occupied the various countries in order to destroy them. It issued a paper script which was the only legal tender in order to break the back of all established wealth, all established power, and it was a very ruthless policy which had far-reaching and ugly consequences.

Now, a third means of inflation since World War 2 has come into being, which again has the function of de-capitalization. First, debasing the coinage. Second, increasing the paper money supply, and third, credit expansion. Now, we have had an increase in the paper money supply since World War 2, but the basic means of expanding the money supply is through credit. If I go to the bank and get a loan for $60,000, the bank creates that money out of nothing by ostensible assets that it has. Now, every time I deposit some money in the bank, supposing (an ideal supposition but it’s a nice thought) I had $10,000 to put into a savings account. Now, the bank immediately could loan out a certain percentage, about $7,000, against that. However, that $7,000, if I went there to borrow it, or if you went there, you would get it in the form of a check which you would almost certainly deposit there, since you would be banking there and you would get that loan, and they could loan out money against that $7,000. So, their assets would be increased, ostensibly, by another $7,000, and you see what can happen. As against that $7,000, they could loan more. So, against an actual $10,000 deposit, they can loan out maybe $50,000 or more. It depends on how that money is recirculated into their accounts.

So that, in terms of their actual assets, they can pyramid a vast amount of loans which create credit money out of nothing. Now, a credit inflation, ultimately leads to a radical deflation when suddenly, everybody calls in their loans, and throughout the past, whenever you have had a credit inflation in the United States, you have had a deflation resulting as a consequence. All the classic depressions in American history which, throughout the last century and to 1907, were short-term things of just a few weeks or months, or slightly longer, where, as a result of credit inflations by the banks. The federal government was on a hard money program, and gold and silver alone were legal tender there.

However, this is the first time the government, through its control of banking via the Federal Reserve system, has engineered a tremendous nation and worldwide, through the Euro dollars, credit inflation. Now, there is a critical point in the history of this inflationary cycle. If that credit inflation is suddenly halted, you will have the granddaddy of all depressions, a worldwide collapse such as has never been witnessed in history, one that will make anything that happened with the collapse of Rome look very slight by comparison. On the other hand, if they now say, “Well, we cannot allow this to happen, we will take the route of money expansion, paper money expansion,” you will have a massive inflation that will make the inflation of 1974 look very trifling by contrast. This problem is known in Washington. They are aware that they are on the horns of a dilemma. They do recognize that the only healthy alternative, and Secretary of the Treasury Simon is one of the most intelligent and knowledgeable men in this field of anyone in the United States, that the answer would be a return to a gold standard. However, this in itself would create a radical deflation even though it would quickly put us on the road to recovery, and there are complicating problems. How can you have a deflation when you have built-in guarantees against deflation? Union contracts for wages?

Now, the basic cause of inflation is the policy of the federal government. However, unionism is now so strong that it has such guarantees and floors against deflation that industry cannot function, you see. How can it move with a deflation of money by deflating its prices, if it has to pay a certain wage to labor? You can see the problem, and we are thus, in a major crisis.

Now, the ability of the people in Washington to postpone the inevitable is really remarkable. As Existentialists, they think in terms of the short-range. They do not think in terms of long-term consequences, and as a result, they are capable of bringing an enormous intelligence to bear on postponing the inevitable. Twice in recent years, Gary North and myself have b3een asked to speak to state senators in California on the economic situation, and last year, February, was the most recent time we spoke and it was a most interesting experience because I would say, except for one, all of those present were very definitely in the liberal or radical camp, and in talking to them individually, I was startled to see how far out their personal solutions were. I thought I was in the midst of a group of Birchers, because they had cabins in the mountains, they had retreats, they were stockpiling food and guns. They were expecting the bottom to drop out, and here they were voting more inflation, more appropriations, voting to the left. Their only real concern, and this is the question that they asked, “When will it happen?” Well, when they were told, ”Well, perhaps by 1985, it’s not going to happen this year or the next, or a few years,” they all relaxed. Good, it wasn’t going to happen in this term of office so let the next man who wins worry about it, and if I’m re-elected it still may happen in the next term, and that’s too far away to worry about, and the state senator who extended the invitation told us, he said, “These men will be as intelligent as any you have ever talked to, but they do not think more than thirty or sixty days ahead.” Now, that’s Existentialism, you see, and as against Existentialism, as Christians, we think about the generations yet to come. Our thinking is family-oriented. It is God-oriented. We have a responsibility to our children, and our children’s children, and today, that attitude is lacking. We have Existentialism, and as a result, there is the progressive deterioration of money and with it, a corresponding contempt for the future and a contempt of consequences.

We can see what has happened to money by a very simple illustration. In 1930, you could buy a good car, one of the better models of say Ford, Chevrolet, or Plymouth for $600. Now, don’t tell me I’m putting the price high, I know it, but I’m just taking it as a convenient figure. The price varied in those years from 26-36, between $300-$600, so I’m taking $600 as an arbitrary figure. In other words, you could buy a new car for $600, and at that time, in paper or in gold, because your money in 1930 was convertible to gold or silver. Today, if you have $600, you can’t buy much of a car, but if you have $600 in gold today, in other words, thirty double eagles, $20 gold pieces, you can go out and sell those double eagles and buy a Continental. What has happened?

It isn’t that the car has gone up in its value. It’s that the paper money has progressively depreciated, and gold, meanwhile, has depreciated. Things are not more expensive today, than they were. It’s that money, paper money is cheaper, and as a result, it has made real money, gold and silver, more expensive, and as a result, it makes gold and silver very good hedges in a time of inflation. When the silver certificates were declared to be irredeemable after a certain date a few years ago, I had, of course, been saving them for some time, and I was going and getting as many $10 and $20 bills changed at the bank as possible so I could gets ones and fives and sort through them for silver certificates, and I was turning around and redeeming them for prices from $1.50 and to the last to $1.94. It was a very profitable transaction. One dollar bill, $1.94 in return? Beautiful, but of course, at the same time I had been, for a long time, working to transfer all my Johnson slugs into silver coins, and also using my paper money to buy gold coins, which have, in the intervening time, the silver about four-fold and the paper about five-fold, and I think it’s just the beginning of what will happen in their increase in value.

Now, you might say, Well, the car that you got in 1930 was a lot simpler, and the car today is a lot more complicated, and that’s why the value has gone up. No, because while the car today is more complex, modern technology has made it simpler to produce than the car in 1930. Now, if you, in the thirties, had bought a Duesenberg, anyone ever see a Duesenberg? Yes. A Duesenberg then, when you could buy a Ford, or a Plymouth, or a Chevy for $538, and the same year you had to pay $14,000 for a Duesenberg which, in today’s money would be closer to say, $100,000, but today, you can get what the Duesenberg gave you for a couple thousand dollars, so that technology undercuts the effect of inflation to a great extent, because the rate of inflation would be far more rapid if free enterprise were not continually cutting the impact of inflation by its ability to produce better for less, but after a point, this becomes so destructive that free enterprise can only cut quality in order to be able to give you something comparable to what you had before.

For example, if you buy an Almond Joy bar today, it’s half the size of what it was six years ago, or five years ago, you see, and it costs about .15 whereas it was .05 then. So you’re still buying an Almond Joy bar but you’re paying more for it, and you’re getting half as much. That’s inflation.

Now, when I began, I pointed out that basic to all of this was the moral premise. “Six days shalt thou labor and do all thy work,” and “Thou shalt not steal,” but what has happened, you see, in recent years is that the law doesn’t mean much to us, the law of God. Christian and non-Christian alike, we’ve become antinomians, and we believe in something for nothing. We believe that man is God, that man can create something out of nothing, and of course, this is the premise of paper money. Paper money is fiat money, and where does that term come from, fiat money? Why, from the Vulgate of Genesis. Fiat lux. “Let there be light.” God said the create word, “Fiat,” let there be, and there was. Now, fiat money is man’s attempt to play God, and all you have in the world today is fiat money, man saying, “I will create value at will. I will say and it shall be,” and what we have today in politics is fiat law.

What relationship is there in all the laws that are passed every day to morality as we know it, right and wrong? It used to be when you had biblical law as the foundation of our country, when judges and juries went, not in terms of statute law, but common law, which was the word of God, that’s what common law is, ignorance of the law was no excuse, but you and I are ignorant of the law today, you see. Unless we sit down with the statute books, how are we to know what is the law, and there are so many regulations that every one of us, I know, somewhere or other, are breaking one regulation or another, federal or state. I’m sure of that, and the laws are arbitrary.

For example, in 1930, if you walked down the street of New York, or Boston, or Chicago, or any major city, carrying a sack of gold, or some gold bullion rather, and a bottle of whiskey or wine, the gold would have been legal and the whiskey or wine would have been illegal. In 1960, the whiskey or wine would have been legal, and the gold would have been illegal. Now, which of these prohibitions is in any way related to the word of God? Neither of them. They’re arbitrary. They have no relationship to reality, and that’s why they are basically unenforceable. Only God’s law is enforceable, because it speaks to the image of God in man, and man has a sense of guilt, whether he will admit it or not, when he violates God’s law, but today, we have a multitude of rules and regulations governing our daily lives, our properties, our money, everything, which have no relationship to the word of God, which are fiat laws, and the scripture says, “Except the Lord build the house, they labor in vain that build it,” and only God’s fiat stands, and this is why the economics of Existentialism, which is the economics of our day, is doomed, and we had better move in terms of that knowledge and recognize that the economic order today, we don’t know when, or how, or what for it will take, because what the politicians may do tomorrow may give another course to the economic situation, but we know that short of a return to a biblical economics which is premised on the fact that capitalization is in obedience to law’s God{?}, “Six days shalt thou labor,” and “Thou shalt not steal.” Unless we return to that kind of society, our society will collapse. Either that or God’s word is not true, and that’s not possible.

Are there any questions now? We have just a few minutes for a few questions. Yes?

[Audience] With the state senators in California, that you had the opportunity speak to, were you able to have any influence on them {?} light on {?} Existential {?}, or was it simply the kind of thing where you presented the biblical position on it, they decided {?} what was going to happen soon {?} yours. What was the result of that?

[Rushdoony] Well, I cannot entirely say, because of course, I flew up there and we left immediately after, so it would be difficult to say what went on in the hearts of these men. I do know that, on both occasions, they played and replayed the tapes of the meeting. I do know that we made it clear what the basis of any sound economy is. It rests in the word of God. I spoke to them about as I’ve spoken to you. So, at least we made our witness. Now, I think with a few of them, it shook them up enough so that they’re re-examining their positions, and one or two of them asked to be on our mailing list. One of them became very upset after reading a few things and asked to be taken off. He’d had enough of North, Bahnsen, and Rushdoony, but we are having our impact. I’ve spoken incidentally, along these lines, to congressmen in Washington. I know there, because I’ve spoken more often, a very good result, a very fine one, and some of them have taken to heart what we are saying and are reading our books, and making contributions. In fact, we had a very generous check from one congressman of several hundred dollars in January. We had a very interesting letter just this past week from a member of Parliament in South Africa, who said he was in Washington on some kind of diplomatic negotiation and met with some senators, and he told them they would not be in the mess they were if they read more of Chalcedon’s literature. Yes, Greg?

[Audience] Most of the gentlemen who {?} pastors {?} their future, and you spoke at the end of your talk of the necessity of restoring a godly approach to economics moral point of view, which I personal know. Maybe I shouldn’t ask you to throw out {?} necessity of regeneration of society if this is not even possible, but using that as a springboard, I wonder if it might be well for you to give them some outlook as what a pastor is able to do in this regard, maybe the relationship with a cult,{?} which is the evangelical mandate, how their evangelism itself has some relationship to the moral situation in the country, including economics, and then {?} engage in {?} in their own pastorate.

[Rushdoony] Yes. Well, one of the problems that the average man in a community today faces is that the church is so irrelevant. Now, that’s a very harsh thing to say, but it’s true. Sunday afternoon I had lunch with an attorney who dropped his practice for a time. He’s lecturing at various schools and to various groups right now, but it’s a long story. He’s a southern man, incidentally, and he’s there in Southern California doing some research, and he’s going to come up to Vallecito next month and spend a week there, doing some studying and research, and he said, as a result of some experiences in his own practice, he was suddenly forced to recognize the total bankruptcy of our world today, and on his own, from a totally agnostic to atheistic position, he became a Christian, so he started on a search for something of relevance to what he, as a lawyer, had to do, and went from church to church, and he said, “All they did was to put me to sleep,” and he said, “None of them preached to the problems that confront me as a lawyer,” and he said, “I was dealing in my community,” and it was in the state capitol of a southern state, “with men every day who had important decisions that involved things that, as a Christian, they should know something about and none of them could take anything from their church and apply it to their area.” So, he said, “Preaching has to be relevant. It has to begin with regeneration and then it has to develop. What God has to say to the lawyer. What God has to say to the man who is in business. To the man in every area of life. To man as a husband. To man as a steward,” and he said, “What the churches are doing is to preach salvation and then you’re in a limbo until you die,” so he said, “I’m not going back until, as a lawyer, I know what I have to say.” So, he’s busy reading biblical law and he’s busy working out a study, doing some writing on the side just to satisfy himself, he says, at this point. On a number of Supreme Court decision, how to analyze them as a Christian. What can a Christian do in the face of these things? What is the mandate for Christian lawyers?

Now, this is the kind of thinking we are trying to stimulate, and this is the kind of thing a church can do that will make itself relevant. In fact, we have been able to bring a number of people to Christ as a result of an emphasis we made which made a person suddenly see the relevance of the faith to his area, and to feel the sovereignty of God and his imperative for himself in a very real way.

[Audience] So you think the cultural mandate and interest analysis and so forth. Is that antagonistic to evangelism, a simple Gospel about the salvation {?} and so forth?

[Rushdoony] Not at all. In fact, we have two people now who are prisoners in a state penitentiary who came to salvation as a result of precisely this emphasis we are making. It hit them so squarely that they felt they had to reckon with a God who confronted them wherever they turned. One of them, incidentally, is having serious problems because he was undergoing psychiatric therapy because all the prisoners were being put through this, and he said, “I feel that my answer is not psychological reconditioning, but Jesus Christ, and he is my Lord and Savior,” and it enraged the psychiatrist. So he’s really undergoing persecution now in prison. Yes?

[Audience] In relation to the economic facts of the day, I pick up a newspaper, I think it was last{?}, and it was an article {?}. It just floored me what was in it, the reasons for the recent rash of bank failures it said, and my first conclusion was, well, the fact of the failures has been withheld from me. I know that a few years ago, the prophets of doom, so to speak, economically were talking of bank failures. I know there were some reporting the press. I wondered if you had any statistics on that, if there had been a rash or goodly number recently, and if it has been more or less not publicized. Any comments in that area?

[Rushdoony] Yes, we are having a great many bank failures. The Federal Reserve was ostensibly created to prevent bank failures, but since its creation there have been more bank failures than ever before.

[Audience] Do you know how many there were, perhaps, in the last year?

[Rushdoony] No, but it did involve a number of very important banks, and at present, you have most of your banks in New York City involved in the prospect of failure, because they’re holding New York City bonds. Chase Manhattan, the Rockefeller’s bank, is skating on thin ice. It’s quite likely to go under, because the picture in New York, as a result of this vast credit expansion, is a catastrophic one, very catastrophic. Now, it’s aggravated by the fact that the state constitution requires that there is a deficit, or a financial crisis, that the taxes be raised, but to raise the taxes will aggravate the situation. Until 1974, 30,000 units, not just apartment units, but buildings were reverting to the city for non-payment of taxes. In other words, the owners were not making enough because they had rent controls to pay the taxes, and they were reverting to the city. Last year it hit 50,000. There are whole blocks of apartment buildings that are vacant. Now they’re talking about making them available to welfare people on a homesteading basis, that they can have a kind of a condominium ownership of an apartment if they will improve it. Well, how are they going to improve it? Well, they will provide the funds through taxation and give them the money so they can improve it.

Now, the biggest owner of the buildings in New York City, I forget the name of the corporation, they own close to 600 buildings, including the Empire State Building. They are delinquent on one-third of their buildings, huge office complexes. They can’t pay the taxes on them, and they’ve told the banks, “Look, if you want the buildings, take them, but if you don’t, cut down the interest rate on our payments and cut down the payments, or scale down the debt or they’re yours. We’ll walk out and leave them to you, because the taxes of them are destroying us.” Well, the banks don’t want the buildings. The banks right now are holding so many notes on buildings that have reverted to the city for back-taxes, which they don’t want to pick up and collect themselves either. They don’t want to pay the city the taxes. So, the banks are on the verge of bankruptcy.

Now, this is one reason why some economists say we are going to have massive inflation, because either that or the New York banks will crumble, you see? You dilute their debt by pumping so much new paper into the economy that you save those banks. They may let New York go under but they won’t let the banks. Why? Because the New York banks are so important to the economy. Apart from two California banks and one Chicago bank, they control the economy, and yet, they are on the ragged edge, and this is true of thousands of banks across country. They’re loaded with worthless favor.

Well, our time is up.

End of tape