Neglected Lectures From the Sixties and Seventies

Money & Power – Q&A

Professor: Dr. R.J. Rushdoony

Subject: Conversations, Panels, & Sermons

Lesson: Money and Power – Q&A

Genre:

Track: 19

Dictation Name: RR258A1

Location/Venue:

Year: March 1, 1966

[Rushdoony] Tonight we shall analyze the moral foundations of money. Recently, I was reading a book by James Laver, entitled Women’s Dress in the Jazz Age, and Laver, in the course of a very interesting and amusing analysis of women’s dress, observed that whenever civilization due to man’s moral and religious favors, several things immediately followed. First, he said, there was a dance mania. Second, an inflated currency. Third, feminism, and fourth, promiscuity. I thought this was quite discerning for a man who was dealing with changing fashions, but he did forget one of the most important aspects of any crisis era: the rise of gambling. Whenever you have the moral and spiritual failure of an age, you have a tremendous rise of gambling to the point where gambling becomes a religious passion.

About a year or a year and a half ago, there was an interesting documentary film shown throughout the United States, and shown in this area also. The title of this documentary film, which dealt with gambling, was Everybody’s Got a System, and the narrator was Terry Thomas. What the documentary film did simply was to take the camera to Las Vegas and Reno, to various racetracks and gambling houses across the United States and Canada, in England, France, and elsewhere around the world, and they went up to the gamblers and asked them why they gambled, and over and over, the answer was almost identically the same. So much so, that when the asked the question, finally, we began to say as we listened, “There is comes again,” and the answer always was, “Well, life is a gamble. Anything can happen. You might walk out of here and you might be hit by a falling brick.” Just about everybody said the identical thing. It was amazing, and yet not so amazing when you analyze what these people believe. They are denying causality. They are denying the idea of law. For them, not God, but chance, is ultimate in the universe, and they know the odds are against them, but they believe that really the odds in all the law that people talk about, somehow aren’t true, and ultimately chance is going to assert itself, and law is going to be swept aside. This is the kind of world they believe in, the kind of world they expect, and if you believe that chance is ultimate, then you believe that you can get something for nothing and overrule all the odds, or all law. This is the alternative to a belief in God, a belief in chance, a belief that you can get something for nothing.

Now, whenever you have an age that departs from a real faith, you have, as many a scholar has asserted, the gambling mania, the desire of something from nothing, and then they create a state, a civil government, and a monetary policy to suit the new faith, and you have, as a result, what can be well termed the gambler state. The gambler state’s premise is you can create something out of nothing, and its entire monetary policy is based on this concept. It is possible to create something out of nothing.

Now, in order to create something out of nothing, every gambler state and every socialist, or interventionists, or communist state, or welfare economy is a gamble state. Every one exists and can only come into existence by manipulating money. Now, when it begins to manipulate money, it claims to have certain noble purposes in doing this, and these purposes are threefold.

First, I’ll use the language of the politicians, a more equitable distribution of purchasing power. Now you hear this continually from Washington and you have for forty years. What does it mean? Translate it into everyday language and it means share the wealth. It’s going to be taken from you who have and given to those who have not. That’s what they’re talking about when they talk about the more equitable distribution of purchasing power. It’s share the wealth.

Second, they talk about the relief of debtors; these poor people who are head over heels in debt. Of course, they got themselves into debt. They must get relief. Well, that sounds noble, it sounds as though you have a heart as big as all outdoors, but actually what you’re saying is you’re going to steal from the creditors, from the haves, and give to the have-not again. So, again, it is a rationale for theft.

And third, the stimulation of trade. How? By government spending, deficit spending. By taking from the haves and spending for the have-nots, so again, it’s share the wealth.

Now, money manipulation has this purpose always, and the minute you have any management of money, you have taken the first step towards communism, and neither interventionism, socialism, welfare economy, communism can exist without money management. We will come back to this repeatedly.

But what is money? Before we go further, we need to analyze the subject of money. What is it? The definition you get from most textbooks and in most colleges and schools is money is a medium of exchange, and others will say money is a representation of wealth. Both these definitions are not only wrong, but I believe very, very dangerous. The best definition of money I’ve ever encountered is in a book which came from the pen of one of the most important men in the shaping of our country, a man who, in Andrew Jackson’s day, charted Andrew Jackson’s monetary policy: William Googe{?}, from his book on money and banking, and writing in 1833, Googe wrote: “Paper money is the foundation of the American banking system but, as without a knowledge of what is genuine, it is impossible to have a clear conception of what is spurious. It will be necessary to give a statement of the qualities and functions of real money. Money is not, as was asserted by a late secretary of the treasury, merely the representation of property. Money of gold and silver is property, is wealth. A hundred dollars in silver can no more be considered as the representative of a hundred dollars worth of flour, than a hundred dollars worth of flour can be considered as the representative of a hundred dollars worth of iron. Each is the equivalent of the other, but each is real wealth, not a mere symbol of representative.”

Do you get the distinction there?

Let us assume that you have some real wealth: land, or some materials you have produced: goods. Are you going to trade that real wealth for something which is just a symbol of wealth? You want to swap it for wealth, so that when you surrender wealth, you want wealth in return. But if someone gives you something which he says, “Now I call this a symbol, or a representative of wealth,” you’re natural reaction is, “But I’m not going to give up something real for something that is spurious, or merely representative. I want real wealth in exchange for real wealth.”

Now gold and silver are real wealth. Paper money is not. It is a mere symbol. In other words, it is a substitute, a counterfeit, of wealth. Gold and silver are forms of wealth which serve as money because they are easily divisible, easily transportable, easily measurable, and easily reckoned with. Now, sensible people will not trade wealth for imitation wealth. They will only do so if the state forces them to, and this is the only way paper money and any kind of debased currency such as this new quarter, have ever circulated, because a state has compelled its citizens to accept it.

We cannot, for example, get any foreign country to accept our paper money as the American citizens do. They don’t want paper. It’s worthless, and the only way this paper dollar will function outside of the territorial boundaries of the United States is because it is convertible into gold or silver. You cannot get gold or silver, because you are compelled to accept this and you have to live accordingly, but no foreigner in the world would accept it if it were not convertible. So that, when they get the paper, they present it to the U.S. Treasury and they take gold and silver in exchange. This is the only ground on which they’ll accept it, and this is why there is a continual drain of gold out of the United States, and this is the reason also why the Russian Ruble is not acceptable even among Russia’s friends. It is paper. They don’t want it. So that, when the Soviet ships go through the Suez Canal, Nasar, who is very friendly with the Soviet Union nonetheless says, “I want hard money. No Rubles. No worthless paper. That’s counterfeit. I want something that is either exchangeable for gold, American dollars, or I want your Russian gold, and so the Soviet ships pay with hard money, and when the Soviets are buying wheat, except when they can get credit, they are paying gold and silver for it, mostly gold, because paper is a counterfeit, and a state to make the people to accept it has to do it by force, and as a result, prices go up because the state continually prints more of this paper money and inflates the currency.

There is more money in circulation competing for a limited amount of goods, and so the goods rise in prices, and the cost of the goods go up as people are taxed more and more heavily as the government embarks on this spending program, and counterfeit money always drives out good money. This is Gresham’s law. Bad money drives out good money, because when bad money, debased currency, is put into circulation, people are not going to take their hard money, gold and silver, and trade it across the counter for change in debased money, and so they say, “Oh, I’m going to hang onto this,” and they hoard it, and hoarding is simply another word for saving.

As a result, Gresham’s law, which has always been operative, demonstrates over and over again that the entrance of any counterfeit money drives out good money because people want real wealth, not a substitute for wealth, in exchange for their wealth, their goods, their labor, because your labor is a part of your wealth.

The U.S. Treasury and the federal government was banking on the fact that they had been told by their economists that Gresham’s law was not necessarily operative, and only people who had been taught that it was believed that it was, and Americans didn’t know any different, and so it wouldn’t work. But, when the price of silver began to rise until it was equal to the face value of the silver dollar, the silver dollar, even before that, disappeared from circulation, and when it began to approach the content of the quarter, the dime and the fifty cent piece, and our coins were ninety percent silver, these coins began to disappear and are disappearing rapidly. They may be gone by summer. They certainly will be gone by the end of the year I would say, on the whole. Fifty cent pieces are already virtually gone.

And significantly, this coin costs less than three cents for the federal government to manufacture. Now, this means every time a car load of this is shipped out the banks, the federal government makes twenty-three cents out of the American people, because, instead of being real money, it’s a counterfeit. Moreover, every time you introduce counterfeit money, debased currency, either of paper or of baser metals, into a circulating media, you have counterfeiting, counterfeiting on a big scale. It’s hard to counterfeit gold and silver, is it not? You can easily spot it, but how are you going to identify a counterfeit of a counterfeit?

I was talking to a group of men once at a dinner, and one of the men sitting next to me, I don’t know his name, was discussing with the man across the table, the process whereby these coins are made, and he said, “It’s a very simple process,” and he went on to describe how it could be done very easily, and he said, “If it weren’t against the law, I’d make a few for you just to demonstrate how simple it is.” Now, if this man could do it so simply, do you think that criminals haven’t thought of it already? And criminals, by the way, are a variety of free enterprise, and if the government could put it out for three cents, I wouldn’t be surprised if they could put it out for two cents and make twenty-three cents profit out of every coin, and I will be very, very surprised if they are not circulating now.

We’ve been plagued for years since we went onto a paper money, with counterfeiters, but at least we had a process of making the paper that gave us a measure of immunity, but still, the amount of fraudulent paper circulating and circulating around the world is extensive. Now, it is tremendous, and the fact remains, how can you tell the difference between this, which is a counterfeit as far as real money is concerned, although it is legal tender, and a counterfeit if this?

I have a very modest coin collection, and I have, at home, a Roman coin. It’s virtually worthless. As a coin collector’s item. it’s interesting to me for what it represents. It’s lead. Whatever they washed it with, gold or silver, to make it pass for a time, quickly wore off and the lead appeared. Now, such coins were easily counterfeited. Here is a coin from Israel, 132-135 AD from Bar Kokhba’s era, and this note from a coin dealer says “authenticity questioned.” This was examined by an expert. They don’t know for sure, because again, this is just copper. It was supposed to have a higher denomination, but because it was just copper, it was widely counterfeited, and there’s no way of spotting which is counterfeit and which isn’t. It’s mostly guesswork, and so, authenticity questioned, but not provable. Both are the same material, both are baser metals, so that not only do you have the state itself inflating the economy with paper and baser metal money, but you immediately open the door to unlimited inflation by private counterfeiters, and you have them now.

Now, there are three methods, of course, not only this but including this, three methods used by any civil government to counterfeit money. First, there is a debasement or a devaluation of the basic metallic unit of the country, of the money. This is what has happened to this coin. It has been debased, it is a baser metal.

Second, you can issue paper or token money beyond your reserves. In other words, instead of having a dollar in gold and silver for every paper dollar, you’d have far more paper than you’d have gold.

And third, you can, by creating new bank credits on the basis of increasing the public debt.

We’ve used all three methods. We’ve taken this business of debasing the currency so seriously that we didn’t pass up the trick, and it is significant that today, not only have we debased our currency, but we have debased words in the process. Have you ever looked at and older dictionary to find out what the word credit meant? The word credit once mean, if you spoke of a man of credit, a trustworthy person, creditable, believable, trustworthy. What does credit mean now? Capacity to borrow money, to go into debt, so that we have also infected the very meaning of words.

Now, money manipulation and inflation become possible when two facts prevail. First, the desire to falsify the true economic picture of the nature, or to relieve the debtors at the expense of the creditors, and second, inflation involves a larcenous purpose and requires larceny in the heart of the people to succeed. What does this mean? Well, whenever you inflate the currency, what you are doing is to rob the thrifty, industrious, hard-working, saving people in the population.

When I was a boy in the twenties, I recall the magazines that my father used to get had full-page ads, about retirement funds. You put away so much a month and you retired on $100 a month and traveled a man of luxury, and one month the picture would be one of this elderly couple taking a Mediterranean cruise, living a life of luxury on their $100 a month, another they would be seeing the sights in Paris, another they would be traveling in the Orient on $100 a month. They were living the life of a gentleman. Well, in terms of the monetary values of that day, if you retired on $100 a month, a couple could live indeed very well. What happened to these people who, back in the tens, and teens, and twenties, were planning to retire and live a glorious life of luxury and see the world, and live like a lady and gentleman at $100 a month. Well, they’re out trying to work on the side, to make money. I encountered several such women who were working in a shirt factory. Their husbands were invalids now, and they were working in a shirt factory, at sweat shop wages to supplement that meager income. They had been robbed.

Not too long ago, a working man in this area indicated that he was very favorable in inflation. He thought it was a wonderful thing. He’d cashed in on it. He’d bought a home that was now worth easily two and a half times what he paid for it at the end of the forties, and his payments then were $80 a month, and he was making $300 a month, and now he was making better than twice that, so he’d really profited by inflation, he felt. Well, he had on a short-term basis, because inflation, in the long run, devours everyone, but what he was doing was to rob the person from whom he bought the house, because he was paying off a good debt with bad money, and this is the appeal of inflation. It appeals to everyone who has larceny in his or her heart. You go into debt because you are going to pay off people with constantly inflating money, and wipe out your debts with cheap money, and the gambler state offers this appeal, it cultivates this larceny in the hearts of people, but ultimately, it makes the middle classes and the lower classes poor. Every form of interventionism or socialism, every form of the welfare state ultimately makes the rich richer and the poor poorer, because when you have monetary management by the state, the civil government, you give them a tremendous power.

Now the state says, “We are using this power for the welfare of the poor,” but power always allies itself with power, never with weakness, so that you have the merging of big business, big labor, big banking, big government, against the people. Power allies itself with power, and it victimizes the people. Supposedly, we are interested today in the welfare of people, but do you know that, according to the congressional record, cities, counties, states, and the federal government spent $200 billion for welfare, which would amount to $2,000 for every family in the United States? Well, nothing like that kind of money ever reached the people. Good question to ask yourself is where did it go? And I think the answer is that it didn’t go very far below the top. It stayed in the top in all these circles, because power allies itself with power, and because socialism is a cannibalistic kind of economy, as all gambler states are, it is suicidal, not creative. It will end always in ultimate self-destruction. Every state that has ever begun money management has ended up in destruction. It cannot survive. The minute it gets away from hard money, it ends up with a hard dictator and this is your choice: hard money, gold and silver, or hard dictator, ultimately.

Now, our money today no longer represents wealth. They tell us in the textbooks money is a representation of wealth, but the minute you have money management, you destroy wealth because you are steadily confiscating wealth with counterfeit money, and the federal government, or the country, whichever it is that is doing this, has the most money, and it is the biggest buyer. Today the biggest buyer in the United States, the one who is buying the most goods is the federal government. It is confiscating more and more of the wealth of the country with bad money, taking good wealth and giving bad money in exchange, and that money has not wealth behind it, but debt.

The money in your billfold reads “Federal Reserve Note.” Now, that federal reserve note represents a bond, a debt. So that it would take that federal reserve note to retire itself plus interest, so that a few years ago, a federal reserve board governor admitted on the stand that if there were no debt in the United States, there would be no money. That’s a startling fact. The money represents debt now, entirely, and what real wealth there is just goes to back our foreign dollars, dollars that are circulating abroad. Now, some people say, “The answer to debt money is to go to Lincoln’s greenbacks, the U.S. banknotes, just paper money.” This is going from 50% socialism, the federal reserve, into 100% socialism or communism, because then you put total power into the hands of the state. At least now, with these federal reserve notes, when the federal government wants to issue paper money, it has to borrow against your bank accounts, and that’s where the money comes from. It takes the money from the banks as you deposit it, and puts in there some U.S. Bonds and federal reserve notes. So it is constantly borrowing from your production and replacing it with bonds. Now, at least when it goes into the lending market it has to pay interest, just like we do. If we want money, we have to buy it, at interest. But if you take away that requirement, with purely paper money, then you are saying that the federal government can do what we cannot do, and you’ve immediately put total power in their hands, the power to manufacture money via the printing press, to buy you out, to destroy you, and the books that advocate this without realizing it or advocating simply communism. One of the books that is very popular in this field is Gertrude Coogan, Money Creators.

One of the things that Gertrude Coogan says in her book, and she’s not aware of what it involves, how is she going to make this paper money, pure fiat money, work. It’s going to be a demand note. This will make it acceptable, but what’s demand note? It’s a claim on you, and supposing someone comes, supposing a negro out of Watts, or out of Oakland, or out of the Fillmore District, and says, “I want your house and the federal government is giving me so much paper money, they’re proposing $300 billion to relieve them of the heartaches of slavery,” you’ll read this in the current U.S. News & Report, the federal government is planning to do this, a marshal plan for the negroes of the Unites States, all of them to receive this. If it is a demand note, he can come to you and say, “I’m taking your house,” and you cannot refuse him. Now, is this liberty or is it totalitarianism? And yet these paper money advocates like Coogan tell us this is a glorious thing in our heritage. Well, their history is wrong and their economics are even worse. And every kind of paper money gives the federal government or the state producing it a position of special privilege. They are given the unlimited power to counterfeit and you can’t, which I don’t think is fair. If they have the right to counterfeit, we should have the right to counterfeit, too.

Moreover, any departure from hard money, gold and silver, is a step into the planned society. All money manipulation is a form of planning and a state has to be able to manipulate its money in order to have the continually increasing funds with which to finance its venture into socialism. It is planning for larceny and for an avoidance of economic law and consequences.

Now of course, these central planners and money managers tell us that they have noble purposes in mind, and whether it’s the pseudo-conservatives, a la Coogan, and Wickland Venard, a well-meaning man, but very dangerous in his thinking, or whether it’s the left, Lenin and the others, Jerry Vorhees and there isn’t a nickel’s worth of difference between Vorhees and Lenin and Coogan, and Venard in their monetary ideas. They say it is for very sound economic purposes, and they’ll list these purposes: the adjustment of supply and demand, that’s a good purpose; the creation of incentives to produce and to produce usefully; and third, the production of honest standards, and we can agree with them. These are excellent economics goals, and these are the goals of the planners, but are these not the things that only a free economy can produce, because in a free economy, you don’t have one committee or one man doing all your central planning and no one man can know everything.

When industry grows, what does it do? It decentralizes, does it not? What was it that made Coca Cola the biggest name in soft drinks in the United States? Why simply because it created independent units everywhere. It sold a franchise to somebody and said, “You’re in business. You’re on your own, sink or swim,” so that there wasn’t management at the top controlling everything. They were simply selling independent businesses to people across the country, and before the other companies caught onto this and got into the act, Coca Cola was so far out in front that it was almost no competition for years and years. Decentralization. More and more independence for all the units, so that each of them plans for himself in terms of profit and loss.

Now, you are a planner. What does your planning involve? Well, these same things. You’re going to produce in terms of supply and demand. I have many relatives who are farmers, and every year they are thinking in terms of supply and demand. If they assess the market right and decide we’re going to go into tomatoes this year, or we’re going to go into watermelons, and they planned wrong, they take a beating, but it doesn’t hurt anyone but themselves, but if they planned right and it’s a big year of watermelons, and it’s a big year if they hit a hot year, that’s what make watermelons sell, then they’re way out in front. Now, this is meeting supply and demand, and when you have every individual farmer, and every businessman, and every manufacturer doing this, you’re going to have some that are going to succeed and some that are going to fail, but you’re not killing off the country with one man’s or one committee’s mistake, at the top, planning for everybody, so the only kind of planning that works effectively is totally decentralized planning by every individual and every group, and every one of you here is a successful planner. You’re not bankrupt. You’re making ends meet. You’re surviving from one year to the other paying your debts, getting by. This is successful planning.

Then, the creation of incentives to produce and to produce usefully, again, how is this best done? You do it because you know if you don’t produce the goods that are going to sell, and sell the most cheaply, you’re going to be out of business. So, you work to produce the best goods you can for the lowest amount of money and the result is, you are planning continually, and you are planning in terms of survival. If you make a mistake, you’re out of business. You’ve had it.

And third, production of honest standards. If you don’t have honest standards, you won’t last. You might cash in for awhile, but you’re not going to last, and some people immediately start in about “well, this or that company has shoddy goods, and so on and so forth, but will they last?”

I recall some years ago when I was speaking about the free market creating increasingly the necessity for honesty of standards, someone told me, “Well, you’re out of luck. I just moved into the community. We’ve got a prize example to the contrary. Here is an industry manufacturing a certain type of clothing and it’s a sweatshop. They are violating every kind of law on the books because he has an ‘in’ with the politicians in the city. It is as crooked a thing from start to finish in its treatment of labor, and the kind of materials it uses, the kind of sewing that’s involved. Look how well they’re doing,” and I said, “Give them time.” Within five years, they were out business, because you may manage the politicians and you may work around the laws, but when the buyer finds that your material is shoddy, after awhile, he isn’t going to take it, and I knew the end was coming when I visited my parents and went into a store in that local community to visit an old friend, someone I used to run around with some years ago. He had a Model T and the two of us used to spend every spare moment together, chasing around the countryside, fishing, everything, and I walked into his store, a very prosperous, successful man. I happened to notice certain items of good, and I asked him about this man’s products, this company’s products, and Bob said, “We had ‘em for awhile but we’re not carrying them. They were shoddy, we got kick-backs on them, and I wouldn’t have them in the store,” and I knew then and there he was finished, and he was, this manufacturer.

The free market creates honest standards and it does it without destroying the country when anyone makes a mistake, so central planning, which is the reason why they manage, “we’re going to take care of everything,” does not work, because every mistake it makes sinks the country. Whereas, when planning depends on every individual worker, every individual head of a household, every manufacturer, every storekeeper, then the economy thrives because everyone has an incentive to make his work profit and loss survival, and if it loses, it hurts him alone and teaches him a lesson. Thus, the free market has planning, planning by millions of producers, while central planning substitutes a single producer: the state.

Central planning, moreover, says that personal planning is no longer necessary and it says it will assure security by stealing from one to give to another, so that one of the first things central planning does is to forget economics. Now how can you plan economically if you bypass economics? And you’re doing it ostensibly with a charitable motive, and so it gets into the gambler’s economics. It’s the gambler’s state, it manages money for supposedly charitable purposes, but it destroys those whom it manages and itself, and everything it produces rests on faulty economic, a gambler’s economics.

One of the best examples of that is the social security. The Social Security Act can be compared to one thing only, economically. It’s simply the chain letter scheme applied to pensions. Now, what is the chain letter scheme? You receive a letter and it tells you to mail $1 or $5 or $10 to everyone on the list and put your name of the list, and mail it to so many persons, and in so many days you will get so much money. Now, the people who are in on the chain letter scheme at the beginning will cash in on it, but it ultimately breaks down, because if a chain letter were mailed faithfully by everybody who received it, in so many days, a month or two, or three months, I’ve forgotten, if everyone receiving it followed instruction, mailed it promptly, it would cover the whole face of the earth and exhaust all of the money and collapse. Now, social security is basically the same thing. It is not based on economics. Every penny collected goes into the federal pot and is used to pay current expenses. Social security is already deeply in the red, because it is already paying out far more every year than it is receiving, and they haven’t begun to hit the full force of it yet, so that each year, the demands on social security are increasing. I’m not under it, fortunately, but by the time my age bracket is ready to receive it, it will be gone. It will be another chain letter scheme that has gone down the drain. The people who are in on it first, will cash in on it, no one else. It is not sound economics.

Central planning, as I indicated, requires larceny, and it denies the validity of economic law in the name of charity and substitutes welfare politics for economics. It defies economics actually and says it is going to create something out of nothing, money just out of the printing press, wealth for everybody with no necessity for personal planning and work and survival in terms of profit and loss, and the result ultimately is hunger.

Some few years ago, E. Parmalee Prentice wrote a book, Hunger and History, in which he surveyed every case of famine on a large scale or any appreciable scale, in any area throughout history, and he found that the causes of famine were fourfold: 1) prevention by the civil government of the cultivation of crops or the destruction of crops; 2) defective agriculture caused by communistic control of land; 3) government interference by regulation or taxation; and 4) currency restrictions including debasing the coin. In other words, the weather had nothing to do with famine nor drought, because drought is never total. You may have drought in one part of the state, but you don’t have it everywhere. You may have it in one part of the country, but not everywhere, and when you have it there, you only increase the demand for production elsewhere and it comes in, very speedily, and people dip into their savings and take care of it, and there is no famine. It means that their savings are depleted to a measure, but they ride it out, and the next year or the year after, they’re back into the market producing. But, you have famine in history every time you have money management and control of the people. Until 1917, the bread basket of Europe was the Ukraine. Russia was one of the richest agricultural countries in the world, and they have had nothing but one famine after another since then. They had a desperate famine in the twenties. They had a desperate famine in the thirties, in which the mildest estimates, the Soviet government admitted finally that six million died. Some people say thirteen million. They have had a famine again from Central Europe to the China Sea in the last couple of years, and hence, the necessity for wheat. So much of the livestock have been killed and eaten, or have died as a result of famine conditions, that they do not have the same amount of livestock now that they did in 1917. Instead of a population explosion, the communist countries are facing depopulation. Not too long before he died, Stalin had a census taken, and the results were so shocking, he not only destroyed the returns, but killed all the census takers, and very, very reliable reports out of Red China say that famine has had a fearful effect there and two or three years ago, people were not only dropping dead of hunger, but desperately hungry men were gnawing the bark off of trees, so desperately hungry were they.

This is the result of money management, whose child is socialism, and communism, and famine. It is destructive of everything.

It is interesting that in the mid-thirties, Tilden wrote, “Primarily public death is a device intended to beguile the taxpayer into thinking he is getting something for nothing.” We were warned. Every form of money management is a form of larceny, and Tilden went on to say, “A nation lacking saving individuals would have no surplus. Without a surplus there would be no creditors. Without creditors there would be nobody for government and private debtors to plunder. In order for anyone to be prodigal, someone must be thrifty.” Do you understand the meaning of that? Only because you, the middle class of America, are a thrifty, saving people, is the federal government able to continue its course into socialism. It has to rob, it has to borrow from someone, it has to tax from someone and it’s doing it to you, and by the way, don’t ever believe the story about big business being taxed. No industry is ever taxed. No manufacturing corporation ever pays taxes. You do, the consumer, because what is the tax, say, on General Motors? It’s an addition to the price on the gas which you pay. It’s simply passed on to you. Individuals always pay taxes.

Socialism, money management, any unsound money is a parasitic economy. Now, whenever you have a parasitic situation, the parasite has to have a healthy body to feed on. Now, the healthy body in the world today is America, the American middle class, that’s us. When the parasite kills the healthy body it is living on, it kills itself, because a parasite can only live when it has a healthy body to live on, and today the whole world is living on the United States, and its healthy middle class. We are, through foreign aid directly and indirectly, we have been for a generation, keeping alive every socialist state in the world, including the Soviet Union. We are the healthy body and the parasites are feeding on us. Somebody must be plundered, and we are that somebody.

When they gut the United States, the whole thing throughout the world will collapse so you can be sure of this: this present world order, this present world communism, socialism, interventionism, welfare economy is finished. Its days are numbered. I do not think too many years will pass before it is all over, perhaps ten years, perhaps fifteen. Who knows? But not too long so that we must assume that the enemy we are fighting is finished. There will be a time of anarchy, but I believe we will come out of it and see the rebirth of real liberty, such as we have not known in our time, and we need to begin to prepare for that date, but meanwhile, the politicians of the gambler state continue blindly.

Last month, or rather in January, House Majority Leader Carl Albert was asked, “Mr. Albert, do you see any signs of inflation today?”

“Well, I hope not. I think our real dollars have remained pretty stable. I think one of the concerns the president had in the aluminum and copper matters was that this might point to the inflationary trends if the companies went through with what they had suggested they might do. I’m not an economist. (that’s the understatement of the year) I really don’t want to try to give a definitive answer of the subject.”

Now, LBJ’s answer to aluminum and copper was controls. He did not impose any controls on the real inflator, the federal government, but control has to come into the situation whenever you have money management and inflation. On whom did he place the controls on industry? On whom is he placing the controls every person who leaves the United States to travel abroad? There are severe restrictions and duties imposed upon him. On whom will he continue to place the controls one every one of us. It will get steadily worse before it breaks down and falls apart. The tragic part of it was that there was no real resistance from industry or the people. They’re all involved in trying to get rich on counterfeit money, and it’s a silly business. You cannot get rich on counterfeit money. It’s going to go down the drain. Hans & Holz has remarked that the poorest investment today is in money, paper money. It’s worthless.

I referred earlier and I will close by referring again to William Googe{?} who wrote in 1833, concerning the United States, and he said, “If the United States some day goes onto paper money, to embark on a dangerous course, it will be a controlled country progressively, and it will see the countryside steadily debauched and ruined, in favor of the town and the city, and the town and the small city suffering at the expense of the big city, and the cities will boom and skyrocket, and be tremendously prosperous, but on credit. It will be on a shakier and shakier foundation progressively.” And he concluded, “So long therefore, as there are any persons wanting capital, we may expect that there will not be wanting applicants for the power to create capital, that evil will be cured by itself as a natural disease is ended by terminating in death.”

The present order is doomed to die. The wise will prepare for the liberty which shall come, meanwhile, for survival. Thank you.

[Audience] I wish to remind you again that hearing the tape of what was said this evening, may be as early as tomorrow if you have a copy, may reveal a good deal that you may have missed this evening. I had that experience January 6th. I played the tape with my son, who was here that evening, and we two together heard it and drove home together, discussed the address, and then I asked Bill to come over to my house and hear it in the morning, and we were amazed. I was embarrassed to find out how much I found within that tape that I hadn’t heard the night before, and so with embarrassment, I called some friends who I didn’t mind confessing what I had missed, and they encouraged me by saying, “Yes, that often happens.” I even made an inquiry about it this evening and I learned from our expert tape recorder that I have many friends who are in the same boat. We listen and we hear something that interests us, and we may stop along the way to pick a few daisies in our memory, and then we rush fast to catch up again, and we’ve skipped over something. But these tapes are, I believe, on money, are going to be a most worthwhile collect. Will there be three?

[Rushdoony] I think I will have a third one of money also. Yes.

[Audience] Then I suggest that the one of January 25th, the one of this evening, and the next one in the series would be something that we all could share with those we happen to know would profit from the kind of information that is coming as straight as any of you ever had it, such as this evening.

And then I heard the speaker this evening speaking of counterfeiting in gold and silver, and it reminded me of an incident that some of you may have remembered. It was in the early thirties when we were flooded with good, silver quarters, and the West Coast was just overflowing with quarters, and the government was wondering where were they coming from. They were perfectly good quarters. They had the right amount of silver in them, but it so happened that we were off the gold basis, and silver was selling for .25 an ounce in the Orient, and the Japs were buying it for .25, minting a very good quarter, bringing it over here, and getting paper money, taking it home, cashing it in for gold, going back into the .25 silver at that time, and coming again. That kind of counterfeiting was getting by, and it was good money. Now, I again wish that you would take my advice on these tapes. They’re very interesting the next day and the day after, and I thank you again.

Yes, and I’m going to, as a tax-free agent, to make a collection of defrayment of expenses as I explained earlier. Thank you.

[Rushdoony] I want to correct a statement I made last time I was here. I told the story about the American businessman who went to Berlin and gave a waiter a $20 gold piece, I said, and the waiter bought this luxury restaurant with the $20. I went home and checked the story. It had been some time since I had read it, and it is from a book by Frank Parker Stockbridge, written in the thirties, Hedging Against Inflation, and it was put out by Berens Weekly, and I was wrong in some of the details. The man was Edward A. Filene of Boston, and he gave the waiter not a $20 gold piece, but $10, and the waiter bought, for that $10, when runaway inflation hit, $10 in gold, not just that luxury restaurant, but the whole hotel. So, I very definitely understated that fact. Yes?

[Audience] I’d like to ask one question if I may. If I bring up the issue, especially amongst businessmen, this paper currency is worthless, this counterfeit coin, whatever term you want to use, the answer I inevitably get is a tremendous sneer is, “Well, I only wish I had one million of those worthless pieces of paper.” What is the answer to that {?}

[Rushdoony] The answer to that is, how long will that last? And yes, it would be nice to have it right now, because it still has some purchasing power, but you can also get a million by going out and robbing a bank. It’s not an honest way to get a million, and this is not honest money we have. So if you want dishonest money as a circulating media, fine but this is dishonest money. It’s based on robbing those who are saving, and today, you do not find business corporations, increasingly, you do not find them living in terms of savings and thrift. They are living in terms of ever-increasing debt. They’re in on this larceny, so that they will buy up, partially for tax reasons, but this tax dodge is to encourage, on their part, this kind of economics the government employs, but they will buy up companies that have no debt, or very little debt, in order to increase their debt capacity, because they are borrowing still relatively good money that they expect to pay off with worthless money in a few years. So they have larceny in their hearts, and they are borrowing up to the hilt for this reason. I know someone who is the retiring president of a corporation which, in its field, is the biggest in the country, but as compared to the big companies, is a modest one. They don’t owe anyone a nickel. It’s one of the few corporations in the country in that status, and they’re facing a crisis because on every hand, the big outfits are trying to take them over because they can borrow untold millions against them, for no other purpose than to increase their ability to get goods that they’re going to pay off with bad money. So, they’re involved in larceny. Now, since the businessmen are involved in this, they are not speaking against what Washington is doing. The big money today is with the Administration, and the big money in both parties wants more of the same thing that we’re getting. More of the same. Their only caution occasionally is “we’ll go a little slow occasionally.” In other words, what these moderates are saying is, don’t race off the edge of the cliff at ninety miles an hour, do it at sixty with reasonable precaution, as you go off the cliff,” but it’s a course of disaster all the same. Yes?

[Audience] What are you suggesting to hedge against this runaway inflation that you’re predicting?

[Rushdoony] Well, it could be controls, to check inflation. In other words, all out dictatorship, but ultimately the money will collapse, but you’re more likely to get first, before a total breakdown of money, more and more controls and a dictatorship. Now, there are hedges against this, whether it’s the runaway inflation or whether it’s the controls. There have been edges in the past, but we have two roadblocks to keep us from having a successful hedge now. One is the income tax and the other is the federal reserve. Now, in the past, gold and silver, and land, and goods have been the most common hedges used by people, and today people are buying land as a hedge, because they’re afraid of the anarchy that’s going to come and they want a piece of land they can live on. This is forcing the price of land way, way up all over the country, and it’s way out of line in many areas, but it’s because people want land as a hedge. Then, people are hoarding their silver, they’re saving it, because that’s what hoarding it. It’s commonsense to prepare for the future and these people figure, “I’ve got to have some silver when money breaks down,” and during the runaway German inflation, many a family, millionaires whose money was now worthless, whose millions wouldn’t buy a loaf of bread, survived simply because their children had piggybanks with some silver in them. So, what you have today, well, suddenly, in fifteen year’s time, coin collecting, which was a minor hobby, is now the major hobby. There are nine million coin collectors, identifiable in clubs and organizations, and so on, I understand. Nine million, and the number is increasing every day. They’ve gotten interest in this as people do in every age of crisis, for survival, and they are buying all the silver and gold coins they can, and of course, they go into it because the economics appeals to them to begin with, and then they get hooked because it is such an interesting and exciting hobby, a very instructive one, but this is one hedge many people are employing.

Then, other people are figuring that their skills will always be useful, so that they have that hedge. A dentist told me, “My hedge is that I’m a dentist. People are always gong to come to me with their toothaches, and they’ll swap anything they have; food or anything else,” and so he said, “I don’t think I’ll ever suffer too much in a time of crisis because when people have a toothache, they can think of one thing: a dentist. Quick!”

Now, other people are accumulating goods. One of the things, for example, that people in Europe used over and over again in inflation, that they found served as money: cigarettes, and canned cigarettes were especially popular because they kept their flavor, but cigarettes were as good as money anywhere, and liquor was good, too, because there were always people who were ready to swap their food, or something else, that was useful to you, for a drink, and these are a few of the many, many hedges that people are using, but another important thing in a condition of crisis, the people who survive are those who have a faith to live by, who believe there’s a purpose in live, and who believe the government is not in the hands, the universe, the government of the universe, and that the world is not in the hands of wicked, but in God’s hands, and they move in that confidence. Yes?

[Audience] {?} dollars, {?}

[Rushdoony] I don’t recall that fact. I don’t know. Yes?

[Audience] Is there a hard, legal definition of a dollar? I’ve never really seen it explained in the way I expected, as a technologist, in terms of {?}. I think important to this is what we hear frequently about the increase in the price of gold. Well, isn’t this putting it backwards, really? Wouldn’t it just be lowering {?} the value of the dollar if the real basis is {?} gold?

[Rushdoony] Yes. You see, we are controlling the market on gold and also on silver, right now, but it’s getting away from us, but since we have controlled the price on gold, and kept it on 35, a depression price, this means now, if we increased the price of gold, we would make the paper dollar worth, if we say made it worth $70 an ounce, the gold. Each paper dollar would suddenly be worth half of what it was before. So this is the dilemma you get in. When you begin to manage something, you reach a point where you are so far out of line as far as reality is concerned, you face the need for a readjustment, but you don’t dare readjust because if you do, you create such a great deal of economic havoc. Now, this is their dilemma. What are they going to do?

Then, you asked also about the definition of a dollar and so on. The best kind of money has always been the money that has had a fixed weight as far as gold and silver is concerned. In the early years of this Republic, we had what was known as the trade dollar. Maybe some of you have seen them. They are very rare. They are worth a great deal of money, but the trade dollars originally, they were silver dollars and they carried on one side, the exact number of grams of silver, the exact weight, so that anyone in the Orient who looked at it, or in the South Pacific, or in Africa, wherever the Yankee ships went, would look at that (this is a Harris Club slug, not a dollar), and he knew immediately from the numbers, he could read that, how much silver there was in it, and so he took it in terms of the weight. Now one of the most popular coins that the United States ever put out was the Double Eagle, twenty dollar gold piece. Why? It weighed exactly an ounce, and it had almost an ounce of gold in it, so that in terms of 35-point something per ounce of gold, the $20 gold piece today has $33.80 worth of gold in it, which is a very interesting fact if you saved one. It’s got that much gold value in terms of the depression price, on gold, because when those were minted before World War 1, the price of gold at that time was something like $19 an ounce. So that the coins that have best circulated are always the coins that have had a denomination on them, or some identification. For example, I have here in my pocket, a Peruvian coin, and one of the things that makes this coin a good one and is circulated widely, is the fact that it says nine decimos fino. Nine-tenths fine, or ninety percent silver, so wherever this circulates, they know immediately ninety percent silver. Of course, our silver coins have been ninety percent silver until now. But this always commends a coin when it is identifiable in terms of weight rather than denomination, and the original dollar, the Maria Teresa thaler, t-h-a-l-e-r from whence we get our word “dollar,” and it’s the world’s most popular coin. It was produced in 1780 and it’s still being minted by five mints around the world. If you were to go Arabia, or Ethiopia, or many countries throughout the world, the kind of money they want is the old lady, Maria Theresa, and although it’s called a thaler, and that’s where we get our word, it doesn’t say “thaler” on it. It’s just a round hunk of silver, with so much weight to it, and that’s what carried it. So that money has always functioned best in terms of the weight of silver in it, and the value of the silver, rather than by the name you call it.

[Audience] Right now there is a legal definition of a dollar.

[Rushdoony] I couldn’t tell you that, because we’ve monkeyed around so much with it, we’re not on the gold standard for our people, so I don’t know what definition it would have as far as the American people are concerned. Yes?

[Audience] Back in your speech, can you make a comment on, you referred several times to the {?} anarchy. Can you comment briefly on how long he expects this condition to last? Would the economy be at a standstill, for example, and what sort of things {?}

[Rushdoony] Oh yes, the economy would be at a standstill because money would collapse. In Germany, for example, what farmer wanted to take food to the market for worthless paper? Because as the inflation there finally ran away, people went to work and were paid before they did the day’s work each day, and their wives went with them with a suitcase and took the money out to spend it before it was worthless, and finally, no farmer wanted to bring his food into town, or ship it into town for worthless paper. He kept it. No company was going to ship gasoline into the city, or sell it, for worthless paper. So finally, everything came to a standstill and the cities began to starve to death, and people began to forage in the countryside round about and pillage in the city to get food. This is what happens when money breaks down. It produces anarchy. Now, how long will this period of anarchy last, and I think we will come to it, because I definitely believe that politically we have a great deal of hope and are making progress, but economically, we’ve passed the point of no return and have to go through the ringer. How long it lasts will depend on how well prepared the American people are to reestablish a truly constitutional and free order again, a truly Christian order. And I believe it is important to begin now, not only to prepare for survival but to prepare for victory, to create institutions for liberty, and I believe Christian schools are an important part of this, to train up children in every area with a sound knowledge, to have Christian high schools, to have Christian college which is what interests me tremendously, to create new institutions in every area, even though for awhile, things may go under, but they are going to train people and all you need is a minority to be prepared for the future, and I may talk on that the next time, or the time after that.

[Audience] Thanks. This is not {?} but since you feel it is inevitable, might we not help the whole thing happen by accelerating it and getting over with it. It’s like going to a dentist and you know you {?} you know you to go, you might as well go and get it over with. {?}

[Rushdoony] Yes, but until you have people prepared, you’re only going to create more and more of a period of anarchy. In other words, people have to know what the answers are before they can create something to replace that anarchy. One of the things, for example, ninety-nine out of a hundred, or nine hundred and ninety-nine out of a thousand conservatives don’t know is money, and most of them fall overboard for this paper money nonsense, which is Leninism, pure and simple, even though some of the propagators don’t realize it. So that, you have to get across then, some elementary things like “either hard money or hard dictator, that’s your choice,” and you have to get a number of other simple economic principles across to them so that they will be prepared, and they won’t be demanding the government should do something about it. No, the government’s been doing too much about everything. So, you’re only going to have a prolonged period of anarchy if people don’t know the answers when they hit it, and all we need is a minority that knows the answer and provides the leadership. The communist presupposition is we need only one percent to dominate, if that one percent is informed and knows how to operate, with another nine percent sympathetic, and the only thing that can prevent them then, they believe, is another ten percent at the other end of the scale, and that’s what’s preventing them now. That exists, or partially exists in this country yet.

So, I can see your point, and there is a lot of merit in it except we’re not prepared. We’ve got to do a lot of educating and a lot of preparing so that we can take it and come through with it, with a truly Christian constitutional order again. Yes?

[Audience] Do you feel like this complete breakdown of our monetary system might be used as a means of taking over of this country by say, Russia or communism, or if we go down will the rest of the world go down with us?

[Rushdoony] They will go down with us because we’re supporting them now anyway, and nothing will be more discredited than welfare economics and socialism when this crash comes, and all the people who have been feeding at the trough will turn on them and tear them apart, because there is nothing more hateful than a person who has been disillusioned and is without principle. Yes?

[Audience] You mentioned Christian colleges as being one of your main interests. I wonder if you could tell us what progress is being made in that direction now?

[Rushdoony] Well, we have had a number of meetings of several groups, and we are negotiating, hoping to get a donation of a parcel of land in the central part of the state, and if we can’t get that maybe buy another one, although we hate to pay money for it if we can get it for nothing, and we do want to get funds towards creating such an institution. We have some of the scholars already. Then, we want also to have not just the one, but a couple of others across country, and there is one that I think, in a couple years or so, will be in existence in the East. There will be something perhaps something in the South, and I hope something here. Yes?

[Audience]The Federal Reserve, that is not a government institution. Isn’t that a private outfit, and if the government goes through the Federal Reserve to borrow money, then doesn’t that group of individuals then now control the government? {?}

[Rushdoony] No, that is a common impression, but the Federal Reserve has less and less power through the years. The federal government controls the appointments, and the Federal Reserve used to have some independence because the federal government did not control it to closely, but this is no longer true, and today, and I think the Federal Reserve is fifty percent socialism. I am against it. I’d like to see us go back to the situation we had before the Civil War and the U.S. Banking Act, but the Federal Reserve today is the scared outfit. They want to brakes applied. They are at least money men, and they know what’s happening and they’re afraid it’s going to wipe them out and everybody else, and it is the Administration that is impatient with them and pressuring them, and I expect within not too many years, the laws will be changed by act of congress so that each president, as he goes in, will have the right to appoint the entire board himself so that it will reflect his opinion and not FDR’s, or Truman’s, or Eisenhower’s, or Kennedy’s, and Johnson is very unhappy because some of these who are appointed ten and fifteen years or more ago, and have been reappointed, were liberal for their day but are a little too conservative for the Great Society, and when Martin, last year, spoke out and said we are in danger if we continue our present inflationary policies, you remember how every Administration official clobbered him. So that, it’s the Federal Reserve that’s talking like a conservative now because they’re scared to death, and it’s the Administration that is going to beat them into submission, and it is going to, I think ultimately, make the Federal Reserve Board a puppet completely, either through pressure or change of legislation, so that it is actually the Administration controlling it, and with the International Monetary Fund, the control is directly by the various governments of the world, so that the politicians have taken over, and there is no restraint on them. They are out to gain power through spending as fast as they can.

End of tape.