On War Finance 1917

Fighting Now and Payment Later: Mythology Up-to-Date

The United States is financing itself in this war by loans and taxes. It obtains funds from the people, some by taxation and some by the sale of bonds, and then it goes into the markets and buys from the people what it needs. The people supply the government with money and the government with this money buys from the people what it needs for the war.

There are three sources from which the United States can draw the sinews of war. First is the fixed property of the nation. This represents our farms, factories, mines, railways, and all other property including accumulated savings. From the corpus or body of none of these, except the accumulated savings, will the government obtain war funds, and even from the accumulated savings it will draw a relatively small portion. These accumulated savings are invested in industries and business which are necessary to the country’s welfare and prosperity and it is only that portion of these savings which are seeking investment that the government will receive in exchange for bonds.

The second and the great source from which the government is to derive its war fund is the wealth produced during the war. Part of this it will obtain by taxation and part in exchange for bonds. The annual production of the United States, from its farms, mines, factories, and other sources, amounts to fifty billion dollars a year and out of this fifty billion dollars will come the funds, part from taxes and part from sale of bonds, with which the United States will finance itself during this war.

By taxation this generation will pay its portion of the cost of the war. By the sale of bonds the next generation is called upon to pay its portion, and this last portion will be paid from the wealth production after the war.

By this method the capital of the country, its sources of income and wealth, are unimpaired. It is only the yearly increment of this property that is called upon to bear a portion of the cost of the war. What the government receives it receives from the people without impairing the sources of wealth of the country, and passes it back to the people in exchange for the productions of the country. It is in a way only a shifting of credits.

The government collects the current taxes and by means of bonds anticipates taxes of the years to come, and all the money thus acquired passes back into the hands of the taxpayers. This is why governments which follow sound economic methods not only are not impoverished by wars but sometimes emerge the stronger as England did after the Napoleonic wars and the United States after the Civil War.

If sound information is required about a shoemaker it would be well to consult a shoemaker; if about house-building a carpenter; if about drugs a druggist, and if about finance a financier, no doubt. The Federationist is in more ways than one interested in matters of finance and whenever any apparent valuable information comes within reach, touching upon the art of financial jugglery and legerdemain, it is eagerly seized upon by this office and put to immediate use in the daily battle of attempting to make a theoretical penny perform a task that has evidently been cut out for a million dollars of real money. The above illuminating treatise on finance is clipped from the U.S. Official Bulletin, published daily at the City of Washington D.C. The matter appeared as an editorial in the Bulletin of August 16 and bears earmarks of being the production of the secretary of the treasury, Mr. McAdoo—who, by the way, is a son-in-law of President Wilson. We know of no better authority on finance than one whose qualifications to speak are predicated upon these two important facts.

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But there is something extremely perplexing about this matter of finance. The more lucid the explanation the greater the perplexity. The more it is explained by those who by either birth, training or marriage are well qualified to do so, the more involved and confused it all becomes, until the lay mind is almost driven to distraction in attempting to grasp it. McAdoo’s explanation is, however, so lucid and easily understandable as to bring it easily within range of the assimilative mental powers of the dullest Henry Dubb in the land.1 The government merely taxes or borrows money from the “people” and with that money “buys from the people what it needs for the war.” Could anything be simpler than that? Of course some captious and ill-mannered critic might suggest that what the government has borrowed was nothing but evidences of credit which had been given for things that had been previously produced by labor and for which labor had received nothing in return, and which the despoilers of labor could only dispose of on credit for the simple reason that there was nothing either on earth or in the waters under the earth with which payment could be made. This, however, is scarce worth making a note of, for it is not for a moment to be supposed that great authorities on finance would so far forget the duty they owe to the greatest flimflam of the ages, as to belittle themselves and their sacred calling by wasting time over such senseless and petty objections.

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Coming down to brass tacks, however, we can not get away from the fact that the only payment that is or that can be made, is that which is made daily by the wealth producers, and that payment is made solely in the energy they expend in the processes of either capitalist industry or capitalist war and slaughter. In fact, these are but one and the same thing, for war itself is but a part, and a logical part at that, of ruling class industry. And the cost of both is paid and paid in full by those slaves of industry and of war. There is no payment that can be sloughed off upon the future for the lives that are ground up into profit and aggrandizement for masters in days of peace and into profit and glory for those masters in time of war. All that is or can be passed on to the future for payment is the misery of unending and unpaid labor in times of peace, and the agony and horrors of war added thereto in times of war. But future generations will pay for their own miseries and agonies that are being visited upon those who are now living. They will pay for their own enslavement and torture, even as the present generation is paying in blood, gore and untold agony for its stupid tolerance of class rule and dull submission to its horrors and atrocities. That is all that enslaved labor ever did pay for, and it must continue to pay so long as it will remain enslaved. And all of the twaddle of financiers will not alter the fact.

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Now as to the “three sources from which the United States can draw the sinews of war.” First comes the “fixed property of the nation.” This is referred to as “our farms, factories, mines, railways and all other property, including accumulated savings.” There is no property, either fixed or loose, outside of the wealth producers of the country. The producers of the food, clothing, shelter and other things requisite to human comfort and sustenance, constitute all there is or ever was to property. All values in exchange are brought forth by these workers alone. There is nothing else that enters into exchange value. All articles that go forth upon their mission as commodities carrying exchange value into the market, carry only that with which they have been endowed by their creator, the labor of human hands. They could not otherwise exist. That which calls them forth and endows them with the precious virtue and value in exchange, being the creator of all such value, must be the only thing on earth that can possess the peculiar attribute of property, in the sense that property means a something that can and does ring to its possessor the comforts of life, the things necessary to his existence and welfare, without expenditure or effort upon his part. And there is no other test of property, in the modern acceptance of the term, than that it can and does bring to its owner something for nothing. As the labor of enslaved workers is the only power on earth that can and does do that, it logically follows that such laborers constitute all the property there is.

The control of resources and means of production enables those who hold such control to exercise the rights and powers of ownership over the laborers themselves. That is all there is to ruling class property, the type of property that rules the world today and which is worshipped like unto a golden calf by the ruling pagans of our time. That is all there is to the “fixed property” of nations. And the slaves appear to be more sublimely and completely oblivious of it than any one else.

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“Accumulated savings!” That’s a real joke. As though there could be any such a thing when it comes down to real wealth. One would think from the way the phrase is mouthed that food, clothing and other useful things were in some miraculous manner saved up as against the rainy day that is sure to come. But the contrary is the fact. Everything in the line of necessary and useful things, besides many things that are neither, is produced and reproduced each day and year with ceaseless regularity. And in the same manner and with the same persistence it is used up with the same certainty and regularity. Credit tokens and other paper evidences of debt are accumulated, and the rapidity of the accumulation is increased from day to day in ratio corresponding to the increase of the productivity of labor owing to the improvement of the mechanism and technique of industry. In other words, just as the power to produce wealth is increased by the development and higher perfection of the tools of industry, so is the sum total of the debt of the world likewise increased. The wider the margin between the amount paid to the workers as their wages and the amount of wealth brought into existence by their labor, the greater the amount of such wealth that must be disposed of on credit and the greater the sum of world indebtedness becomes. Borrowing or taxing does not wipe it out. It only transfers credits to other hands, for the time being. If the government borrows credit from certain of the people and utilizes that credit to make purchases from those same people, or from others who in turn must purchase from them, it is easy to be seen that not only has no debt been wiped out, but an addition has been made to the total by the amount thus borrowed, and for which new securities (bonds) have been issued. If it is taxed out of the people it does not in any manner alter the case, because that which is taken by taxes must be taken from those who own property, and it will flow back to their coffers by the same process that brought it there in the first instance. It is like a dog chasing its own tail, no matter from what point you view it.

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According to our authority, the sale of bonds is to place upon the next generation the burden of paying “its portion” of the war’s cost, and such “portion will be paid from the wealth production after the war.” It seems almost an unnecessary reflection upon human intelligence to be called upon to suggest that no payment for the things produced by the labor of human hands could be paid for except payment be made in kind; i.e. in the products of human hands. If these products are at any time to be sold upon credit, and they are always so sold as if they are sold at all, how in the name of commonsense could payment therefor ever be made, except by the incurring of a debt of similar magnitude in order to obtain the means of payment? And it is manifest that no payment would result. As products must first be taken from the workers without payment, before they become available for the delectation of the trading fraternity, no payment can be considered in our calculations unless it covers the case of the workers from whom this wealth has been taken, without payment therefor. Whatever deals may subsequently take place between individual buyers and sellers, has nothing to do with the case, for in them is to be found nothing of a financial character except a transfer of credits, and there is nothing in the nature of final payment in that. No part of the cost of this war can be paid by after-the-war production. It can only be paid for now, and it is being paid for, as it is fought, by the useful class in human society; the ignorant working class. Blissfully ignorant of everything except how to produce wealth and allow the ruling class to get away with it.

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Nations are neither richer nor poorer as a result of war. Rulers still rule and rob after the smoke of battle clears away, just as they did before. Slaves (property) still sweats profit for masters and get nothing better than a narrow and meagre existence for themselves, and an extremely uncertain one at that. While individual masters may here and there have lost their all by war, just as is often the case even in times of peace, others come into possession of the property the losers formerly held and the sum total of the world’s paper wealth has not been diminished. It has even been greatly increased as a result of the intensified speeding up of industry to meet war requirements. True, some property has been killed or damaged, but it is the sort of property that happily costs its owners nothing, so no loss has really occurred. If loss has occurred, however, it will be recouped, through the breeding propensities of the slaves, in due course of time, and without cost to the masters and owners. The slaves are neither richer nor poorer after the war than before. They had nothing before and they have it still. Though a considerable number of them may have been sooner hustled over the “great divide” than would have perhaps been the case had peace not been broken, they have possibly been the gainers by thus having their lives of misery shortened. If enough of them have been killed to sufficiently deplete the supply of labor in the market, those who have escaped may get a few more cents per month wages pending the time when the conditions of the labor market are again brought to the normal by means of the birth rate of slaves. The government expert sums the whole thing up by saying, of this war financing business: “It is in a way only a shifting of credits.” There are ten-year-old schoolboys in Vancouver who know that “a shifting of credits” has nothing to do with payment. It is merely a game of “passing the buck.” The Federationist opines that the entire financial scheme is one of pure and unadulterated bunk, not only mathematically impossible but so childishly ridiculous as to be calculated to befool only those who really belong in the home for the feeble-minded.

E. T. Kingsley