Wednesday, December 13, 2017

Mencken on Liberty and the Inferior Man

Mencken on Liberty and the Inferior Man
Thomas Allen

    In 1926, H. L. Mencken (1880-1956) wrote Notes on Democracy in which he expressed his views on democracy and related issues. He was a journalist, satirist, and critic and a libertarian and one of the leaders of the Old Right. In his book, he describes liberty and the inferior man, pages 51-58. Below is an overview of his discussion on the liberty and the inferior man; my comments are in brackets.
    “All the revolutions in history have been started by hungry city mobs.” From this fact, some historians deduce “the doctrine that city life breeds a love of liberty.” To this notion, Mencken replies, “It may be so, but certainly that love is not visible in the lower orders. I can think of no city revolution that actually had liberty for its object, in any rational sense.” For example, freedom of speech “was actually given its first support in law by the most absolute monarch of modern times, to wit, Frederick the Great.” Mencken adds, “When it [the city] wins, its first act is to destroy every form of freedom that is not directed wholly to [satisfying hunger].” Its next objective “is to butcher all professional libertarians.”
    Mencken notes “that liberty, in any true sense, is a concept that lies quite beyond the reach of the inferior man’s mind. He can imagine, and even esteem, in his way, certain false forms of liberty — for example, the right to choose between two political mountebanks, and to yell for the more obviously dishonest — but the reality is incomprehensible to him.” “[G]enuine liberty demands of its votaries a quality he [the inferior man] lacks completely, and that is courage. The man who loves it must be willing to fight for it; blood, said Jefferson, is its natural manure. More, he must be able to endure it — an even more arduous business.” [Perhaps this explains the great clamor for the welfare state by people with a lower-class mentality.] Mencken continues, “Liberty means self-reliance, it means resolution, it means enterprise, it means the capacity for doing without.” [Sacrifices the inferior man is not willing to make — especially those in the Democratic party and many in the Republican party.]
    “The free man is one who has won a small and precarious territory from the great mob of his inferiors, and is prepared and ready to defend it and make it support him.” Having no friends, the free man “can hope for little help from other men of his own kind, for they have battles of their own to fight.”
    The inferior man has no talent for self-reliance. Furthermore, he cannot even “understanding that such a talent exists. Liberty is unfathomable to him.” Moreover, “[h]e can no more comprehend it than he can comprehend honour.” To the inferior man, liberty “is simply the banal right to empty hallelujahs upon his oppressors. He is an ox whose last proud, defiant gesture is to lick the butcher behind the ear.” He shrinks from the responsibility of standing and acting alone.
    Mencken explains that until the latter part of the eighteenth century, 80 percent “of the people of the world, white and black alike, were slaves, in reality if not in name.” Liberty to most people is a recent occurrence. “Thus the lower orders of men, however grandiloquently they may talk of liberty to-day, have actually had but a short and highly deceptive experience of it. It is not in their blood.” He adds, “The heritage of freedom belongs to a small minority of men, descended, whether legitimately or by adultery, from the old lords of the soil or from the patricians of the free towns.” Mencken contends “that such a heritage is necessary in order that the concept of liberty, with all its disturbing and unnatural implications, may be so much as grasped — that such ideas cannot be implanted in the mind of man at will, but must be bred in as all other basic ideas are bred in.” Consequently, most men are “still incapable of bearing the pangs of liberty.” Liberty makes them uncomfortable, alarms them, and fills them with great loneliness. Not only does the common man not long for liberty, “he is quite unable to stand it. What he longs for is something wholly different, to wit, security. He needs protection. He is afraid of getting hurt.” [The type of person whom Mencken is describing can be seen in the masses of people who were ready to abandon all liberties for security following 9-11. They all but shouted from the rooftops, “I will be your slave if you will protect me from the bogeyman.” And many did shout it. Of course, the elite who controlled President Bush was willing to oblige, and they brought forth the police state.]
    As a result, “[t]he great masses of men, though theoretically free, are seen to submit supinely to oppression and exploitation of a hundred abhorrent sorts.” Obviously, they can resist but do not. “The worst tyrant, even under democratic plutocracy, has but one throat to slit. The moment the majority decided to overthrow him he would be overthrown. But the majority lacks the resolution; it cannot imagine taking the risk. So it looks for leaders with the necessary courage, and when they appear it follows them slavishly, even after their courage is discovered to be mere bunkum and their altruism only a cloak for more and worse oppressions.” Consequently, “[p]olitics become the trade of playing upon its [the majority’s] natural poltroonery — of scaring it half to death, and then proposing to save it. There is in it no other quality of which a practical politician, taking one day with another, may be sure. Every theoretically free people wonders at the slavishness of all the others. But there is no actual difference between them.” [Democratic and Republican politicians have become highly skilled at making half the population fear the other half. Only Democrats can save the masses from the evil Republicans, and only the Republicans can save the masses from the evil Democrats. And that is why the country has one party with two names.]

Copyright © 2017 by Thomas Coley Allen.

More political articles.

Tuesday, December 5, 2017

America’s Adulteration of the Gold Standard

America’s Adulteration of the Gold Standard
Thomas Allen

    Between 1879, when the United States returned to the gold standard, and 1914, when World War I began, was the peak of the gold-coin standard. However, a pure gold-coin standard did not exist. Perhaps the United States had the most adulterated gold standard among the major countries. The United States adulterated the gold standard with various forms of fiat money.
    In 1789, Congress adopted a silver standard with a bimetallic silver-gold system. It defined the dollar as 371.25 grains of fine silver. It fixed the silver-to-gold exchange rate at 15 to 1 (the value of 15 ounces of silver equaled the value of 1 ounce of gold).  This ratio overvalued silver relative to gold. Thus, gold coins did not circulate.
    To encourage the circulation of gold coins, Congress changed the silver-to-gold ratio from 15 to 1 to 16 to 1 in 1834. It did so by reducing the weight of gold in a dollar to 23.20 grains of fine gold from 24.75 grains. Three years later it changed the weight of gold in the dollar to 23.22 grains of fine gold. (Thus, a $10 gold coin with 232.2 grains of fine gold was equivalent as legal tender to 10 silver-dollar coins with a total of 3721.5 grains of fine silver.) These changes placed the United States on a de facto gold standard. As the dollar continued to be defined as 371.25 grains of silver, the United States remained on a de jure silver standard. (They remained of a de jure silver standard until 1900 when Congress changed the definition of the dollar to 23.22 grains of fine gold.)
    In 1837, Congress changed the gold content of the dollar to 23.22 grains. It remained at this weight until 1933 when the United States abandoned the gold standard.
    In 1863, Congress enacted the National Banking Act. A key part of the Act was requiring banks charted under the Act to secure their bank notes with U.S. government bonds. (Later bank notes of State chartered banks were taxed out of existence.) Thus, the Act guaranteed a market for U.S. government bonds. As a result, bank notes represented U.S. government bonds instead of the gold value of goods on which real bills of exchange were drawn — the real bills doctrine. Bank notes did not increase or decrease in response to the market demand for them pursuant to the real bills doctrine. They increased and decreased in response to the expansion and contraction of U.S. government debt. (As hard as it is now to believe, there were times when the U.S. government’s debt actually decreased.)
    The first major adulteration came in 1862 when Congress authorized the issue of legal-tender government notes, called U.S. notes and nicknamed greenbacks. These notes immediately became undervalued relative to gold. Thus, the United States quickly converted to the U.S. note standard.  (The west coast remained on the gold-coin standard. In the East, gold traded at a premium to U.S. notes. In the west, U.S. notes were discounted against gold.)
    After reducing the quantity of U.S. notes during the late 1860s and early 1870s, Congress fixed the quantity of U.S. notes at $346,681,000. It required the Secretary of the Treasury to maintain this level.
    Pursuant to an 1875 law, U.S. notes became redeemable at par with gold on January 1, 1979. In anticipation of redemption, the U.S. government acquired enough gold to back about a third of the U.S. notes.
    After U.S. notes became redeemable in gold, U.S. notes remained a fiat currency for two reasons. First, the government instead of the markets determined the quantity issued. Second, they were never fully backed by gold.
    The next major adulteration came in the form of the silver dollar. With the Coinage Act of 1873, Congress ended the free coinage of silver. (This Act became known as the Crime of  ’73.) Ending the free coinage of silver ended bimetallism in the United States. However, under the Act, silver dollars continued to be full legal tender in unlimited amounts. (No rational person would have used silver dollars to pay a debt when this law was enacted. Then the silver content of a silver dollar was worth more than a dollar in gold, which was worth more than a U.S. note dollar.)
    Soon after the enactment of this law, the value of silver began to fall relative to gold. Thus, if the free coinage of silver had remained, the United States had returned to the silver standard.
    Because of the fall in the value of silver, the sliver mining interest, greenbackers (people who wanted the country to remain on the irredeemable U.S. note standard), populists (most of whom came out of the greenbackers), and debtors agitated for the free coinage of silver at the 16 to 1 ratio. In response Congress passed the Bland-Allison Act in 1878.
    The Bland-Allison Act ordered the Secretary of the Treasury to buy silver bullion and coin it into silver dollars. It declared the silver dollars legal tender. Moreover, they were not directly redeemable in gold. It required the Secretary to buy between $2 million and $4 million of silver bullion each month for coinage.
    Although each of these silver dollars contained 371.25 grains of silver, they were fiat money — albeit expensive fiat money. Instead of the markets deciding the quantity of silver dollars to issue, Congress and the Secretary of the Treasury decided. Furthermore, the monetary value of a silver dollar exceeded the value of its silver content. Unlike silver dollars coined under free coinage, these silver dollars were the property of the U.S. government. (Silver dollars coined under free coinage were the property of the person presenting the silver bullion for coinage.)
    In 1890, Congress revised the Bland-Allison Act with the Sherman Act, also called the Silver Purchasing Act of 1890. The Sherman Act created a new fiat money: legal-tender Treasury notes of 1890. It ordered the Secretary of the Treasury to buy 4.5 million ounces of silver bullion each month at the market price with Treasury notes until silver reached $1.29 per ounce. This was the price at which 16 ounces of silver had the same value as 1 ounce of gold, i.e., the 16 to 1 ratio. The purchased bullion was coined into silver dollars as necessary to redeem the Treasury notes. However, the Secretary had the discretion to redeem them in gold. In 1893, Congress repealed the silver purchasing provision of the Sherman Act and by that the issue of Treasury notes.
    With the enactment of the Gold Standard Act in 1900, Congress placed the United States formally and clearly on the gold standard. It defined the dollar as 23.22 grains of gold. It required the redemption of U.S. notes and Treasury notes of 1890 in gold only. Thus, it converted Treasury notes into government notes redeemable in gold. Treasury notes were to be replaced gradually with silver certificates. As silver dollars became convertible in gold on demand, the Act made the silver dollar a subsidiary coin like dimes, quarters, and half-dollars. However, silver dollars remained full legal tender. However, even with the enactment of the Gold Standard Act, the silver dollar because of its legal-tender status remained a fiat currency along with the U.S. note.
    The monetary system of the United States began as a bimetallic silver-gold system with the dollar defined as 371.25 grains of silver. Between 1862 and 1879, the United States were on the fiat U.S. note monetary standard. As long as the United States remained on the gold standard, the U.S. note and the silver dollar adulterated the gold standard. The United States never did operate on a pure gold-coin standard.

Copyright © 2015 by Thomas Coley Allen.

Saturday, November 25, 2017

Poor on McCulloch

Poor on McCulloch
Thomas Allen

    In 1877, Henry Varnum Poor (1812-1905) wrote Money and Its Laws: Embracing a History of Monetary Theories, and a History of the Currency of the United States. He was a financial analyst and founder of a company that evolved into Standard & Poor’s. Poor was a proponent of the real bills doctrine and the classical gold-coin standard and, thus, the quality theory of money. He gave little credence to the quantity theory of money — especially if credit money, such as bank notes, were convertible on demand in species. Also, he contended that the value of money depends on and is derived from the value of the material of which it is made and with paper money, its representation of such value.
    In the latter part of his book, he discusses leading monetary theorists from Aristotle (350 B.C.) to David A. Wells (1875). Most of the economists whom he discussed were proponents of the quantity theory of money. We will look at his discussion on John R. McCulloch. My comments are in brackets. Referenced page numbers enclosed in parentheses are to Poor’s book.
    John R. McCulloch (1789-1864) was a Scottish economist, author, and editor. He was a professor of political economy at the University of London. Among his works are Principles of Political Economy (1825), Principles, Practice and History of Commerce (1831), and A Description Statistical Accounts of the British Empire (1837). Poor reviews McCulloch’s notes to his edited work of Adam Smith’s Wealth of Nation (1828).
    Poor introduces his review of McCulloch with:
Fully accepting the doctrines of [Adam] Smith, and the wide distinction which he made between the qualities of the precious metals which fit them for money and those which determine their value in exchange, he proceeds to consider the laws by which their value is determined when their movement is perfectly free; and those by which they are affected when artificial restraint is imposed upon it (p. 318).
    McCulloch states that under free competition, the value of gold and silver depend on the cost of their production. The prices of commodities, i.e., their value measured in money, vary with their cost of production, supply and demand, and the cost of gold and silver to which they are compared (p. 318). When the supply of gold and silver is restricted, the supply of money is limited. He writes, “Whenever the supply of money is limited, its value varies in inverse ratio to its quantity as compared with the quantity of commodities brought to market, or with the business it has to perform” (p. 318). For that reason, if the supply of commodities doubles while the amount of currency remains the same, their price would be reduced by half. On the other hand, if the supply of commodities were reduced by half and the amount of currency remains constants, their price would double (pp. 318-319). Thus, money is merely a ticket or counter used to compute the value of property, and in transforming it from one to another. [McCulloch seems to confuse value with price. The two are different. Price measures value, but it is not value. Furthermore, some items, e.g., air, patriotism, and religious beliefs, have great value, but are not priced.] He claims “that a debased currency may, by first reducing, and then limiting its quantity, be made to circulate at the value it would bear were the power to supply it unrestricted, and were it of the legal weight and fineness; and, by still further limiting its quantity, it may be made to pass at any higher value” (p. 319). [History shows that when governments debase their currency, prices rise even if the supply is limited, which it seldom is.] He believes that nonconvertible paper money can be given a higher value than an equivalently denominated gold coin if its supply is sufficiently limited. A half-sovereign coin can be made to do the work (number of exchanges) as a one-sovereign coin if all one-sovereign coins were replaced by half-sovereign coins and no new coins were minted. [He means replacing each one-sovereign coin with a one-half-sovereign coin. He does not mean replacing each sovereign coin with two half- sovereign coins.] The same quantity of commodities would now be exchanged for the same number of coins. [This conclusion is highly unlikely. When exchanges were made under the gold standard, they were based on the gold content of the coin and not the number of coins. People compared the value of the product to the value of the gold content of the coin and not to the coin itself. Most likely, what would happen if half-sovereigns replaced all one-sovereigns, dealers who sold their products for one sovereign would now sell them for two half-sovereigns. Cutting the money supply in half as in McCulloch’s example would significantly hamper commerce and, by that, production.] He offers no example where what he suggests would happen has ever happened. McCulloch maintains that the value of inconvertible paper currency “depend[s] on the proportion which its amount bears to the commodities brought to market, or to the demand; and wherever a currency of this kind, or a limited gold currency, is in circulation, the common opinion that the price of commodities depends wholly on the proportion between them and the supply of money is quite correct” (pp. 319-320). However, “with a freely supplied currency consisting of gold and silver, . . . fluctuations in the supply and demand of such currency have no permanent influence over its value. This is determined by the cost of its production” (p. 320). [In The Value of Money, Anderson argues that the cost of production determining gold’s value is incorrect. He asserts that the “value of money is a quality of money, that quality which money shares with other forms of wealth, which lies behind, and causally explains, the exchange relations into which money enters.” “Value {of money} is prior to exchange. Value is not to be denned as ‘power in exchange.’” According to Anderson, the social value theory best explains the value of money: “the social value theory is the only way of giving a psychological explanation to the demand-curve, and a marginal value explanation of marginal demand-price.” Thus, the value of money derives from the value of the commodity of which it is made and from its services as money. The value of the commodity as money is combined with the value of the commodity in its non-monetary use. Like all other commodities, and everything else, the value of the monetary metal and of its use as money is psychological. Anderson concludes, “The physical weight in gold, which itself is an object of social value, is commonly the immediate basis of the value of the dollar to-day, but money may get its primary value from other sources than valuable bullion. Given this primary value, the dollar may get an enhancement in that value from the services which it performs in the social technology of adjustment.”]
    Poor retorts:
Mr. McCulloch might as well have assumed a particular county of England to be fenced off by a wall so high that only a small amount of vital air could get into it; and that, in such case, the right to breathe would sell at an enormous price; and have inferred, therefrom, that, should the amount of money be limited, its price would rise in like ratio. One illustration is as pertinent, or rather as impertinent, as the other (p. 320).
    Poor continues, “Whoever gets gold, gets it to spend. There may be quarrels between those who dig and those who rule as to who shall enjoy the product; but, whatever the result, it would immediately go into circulation” (p. 320). [Today, the rulers have resolved the quarrel by driving gold from the monetary system. They have given themselves absolute control of the monetary system. Contrary to the claims of most orthodox fiat money proponents and probably all fiat money reformers, the Federal Reserve is not an independent agency independent of the government and does as it pleases. It is just the junior partner in the scam to pillage the American people. The government is the senior partner. It created the Federal Reserve; the Federal Reserve did not create the government. It exists at the pleasure of the government, which may abolish the Federal Reserve anytime. Working together, the government and the Federal Reserve can confuse the people by blaming the other for the country’s economic problems although both are guilty.]
    Poor notes that in another work of McCulloch, McCulloch claims that controlling the movement of precious metals is impossible for governments (p. 320). Poor writes:
His illustrations, however, are in keeping with those of the school to which he belonged, which is always assuming impossible instances as a means of setting forth its conclusions and beliefs. It is the way of children, not the method of men of full stature. Neither the production nor possession of the precious metals can be monopolized. Their value everywhere, under all conditions (allowing for the influence of accidental circumstances), is measured by their cost (pp. 320-321).
[Governments may not be able to prevent the movement of gold, but they can greatly hamper its movement. For example, with few exceptions, the U.S. government prohibited Americans owning gold between 1933 and 1974.]
    Commenting on McCulloch’s belief that if the currency’s quantity is strictly limited, a debased currency can function as well as full-weight coin, Poor remarks that Locke had proven more than a century earlier, that a debased coin will not function as well as a full-weight coin. About the period of recoinage of English money in 1696 when Locke made his argument, Poor writes:
For a time, the amount of coin in circulation, or currency of all kinds, equaled hardly a tithe of that required for the exchanges of the country. These, for a considerable period, had to be made by means of credit or barter. Yet the necessity which then existed for a “circulating medium” did not exert the slightest influence in raising the value of the debased coins. The value of each was measured by the cost of the metal that each contained. Had their value risen greatly above their cost, supplies would immediately have flowed in from other countries. If tickets or counters were all that were wanted, these could easily have been provided, as McCulloch suggests, by cutting the pieces in circulation into a sufficient number of parts. It was capital, not counters, that was wanted, and relief came only when that was supplied (p. 320).
    Poor continues:
But even admitting that, by reducing the amount of metal in coins, their value might be maintained from the necessity of their use, there was still an important link wanting to connect his premise with his conclusion. Gold gets into circulation by means of its value. It circulates at its value. If its amount were permanently decreased, its value would increase. This is palpable enough; but how is that which is valueless in itself to get into the category of values (p. 322)?
[This is the question that others also ask: How can that which has no value itself and is not the representation of value measure value?]
    Poor asks how can something that has little or no value get into circulation in the first place? He answers that McCulloch would claim that some medium of exchange is needed and people agree that this worthless thing would be their medium of exchange. To this answer, Poor replies, “[I]t is useless to reply to such assumptions as these. They are the dreams or vagaries of persons bereft of all sense in reference to the subjects to which they relate, and who, unfortunately, are wholly impervious to reason” (p. 322).
    Commenting on bank notes, McCulloch writes:
Notes not legal tender, and payable on demand, or at some stipulated period, are not paper money, though they serve the same purposes during the time they continue to circulate. The value of such notes is wholly derived from the confidence placed in the ability of the issuers to retire them when presented for payment, or when they become due. Whenever, therefore, this confidence ceases, their circulation necessarily ceases also (p. 322).
    About paper money, i.e., government notes, McCulloch states that “confidence in the solvency of the issuers exercises the smallest influence over the value of paper money” (p. 322). Paper money is legal tender and not legally convertible into gold or anything else. “It circulates because it is made legal tender, and because the use of a circulating medium is indispensable; and its value, supposing the demand to be constant, is, in all cases, precisely as the quantity in circulation” (p. 322). He believes that the issuer of inconvertible paper money can maintain par with gold or silver without difficulty (pp. 322-321). To maintain a constant price of gold, all that the issuer needs to do is to decrease or increase the quantity of paper money. [This is the recommendation of some supply-side economist in recent years.]
    Poor questions McCulloch’s assumption that “an inconvertible government note of the nominal value of an ounce of gold, to be of equal value, and exchangeable therefor” (p. 323). Moreover, Poor comments that according to McCulloch, inconvertible government notes circulate “not from any value it possessed, but from the necessity for its use as a ticket or counter of exchange” (p. 324). Furthermore, according to McCulloch, such money need not be made legal tender (p. 324). Poor wonders how such money would ever get into circulation and who would accept it (p. 324). Also, how would the excess be retired? [The government can get its notes into circulation by printing them and paying them to its employees, welfare recipients, and suppliers. It can further encourage the circulation of its notes by requiring them in payment of taxes and making them legal tender at the debtor’s option for payment of debts. In theory, the excess could be removed by having tax receipts to exceed expenditures enough to retire the excess — when was the last time that happened?]
    McCulloch proposes eliminating precious metal, either as bullion or coin, as money because of the excessive cost. Paper should be substituted for metal. Thus, paper would replace gold as the reserves held by banks (pp. 324-325). [In the United States between 1862 and 1879, U.S. government notes replaced gold largely as reserves for banks. Today, all bank reserves are in paper and its electronic equivalent, which is even cheaper than paper.]
    If McCulloch’s proposals were implemented, Poor sarcastically remarks, “The monetary millennium would then dawn on the world” (p. 325). [If McCulloch had lived another hundred years, he could see the results of his monetary millennium. His monetary millennium arrived in 1971 when the world divorced itself completely from gold and substituted entirely a paper and electronic monetary system in its place.]
    In response to McCulloch’s proposal, Poor writes:
But what does every one seek in exchanging that which he possesses? To better his condition; to get something which will be more valuable to him than that with which he parts; in order to have that which, when he wishes to use it, will bring to him the greatest possible amount of values in other forms. Gold and silver, therefore, are always demanded in exchange, for the reason that they are values in their highest forms. The whole effort of mankind is to convert its industries and products into such values, or into that which shall produce them; and which, till its possession be demanded, is drawing interest in kind for the benefit of the party entitled to it. The whole effort of nature is in the same direction, — to convert lesser into greater values (p. 325).
Then Poor remarks that McCulloch “would invert all this order, by converting whatever a person has to sell, not into the most valuable, but into the least valuable form” (p. 325).
    In his concluding remarks on McCulloch, Poor writes, “Nothing can be more disgraceful in a man like him, — Professor of Political Economy in the university of a city which, commercially, is the very eye of the world, and standing at the very apex of his school, — than the ignorance and assurance he displayed” (p. 327).

Endnotes
1. B.M. Anderson, The Value of Money (New York: The Macmillian Co., 1917), pp. 8-9).

2. Ibid., p. 9.

3. Ibid., p. 42.

4. Ibid., p. 591.


Copyright © 2017 by Thomas Coley Allen.

More articles on money.

Friday, November 17, 2017

Mencken on Politics under Democracy

Mencken on Politics under Democracy
Thomas Allen

    In 1926, H. L. Mencken (1880-1956) wrote Notes on Democracy in which he expressed his views on democracy and related issues. He was a journalist, satirist, and critic and a libertarian and one of the leaders of the Old Right. In his book, he describes politics under democracy, pages 29-35. Below is an overview of his discussion on politics under democracy; my comments are in brackets.
    Since fear controls politics under democracy, politicians use it to manipulate the mob. “The demagogues, i.e., the professors of mob psychology, who flourish in democratic states are well aware of the fact, and make it the corner-stone of their exact and puissant science.” Thus, “[P]olitics under democracy consists almost wholly of the discovery, chase and scotching of bugaboos. The statesman becomes, in the last analysis, a mere witch-hunter, a glorified smeller and snooper.” The whole history of the United States “has been a history of melodramatic pursuits of horrendous monsters, most of them imaginary: the red-coats, the Hessians, the monocrats, again the red-coats, the Bank, the Catholics, Simon Legree, the Slave Power, Jeff Davis, Mormonism, Wall Street, the rum demon, John Bull, the hell-hounds of plutocracy, the trusts, General Weyler, Pancho Villa, German spies, hyphenates, the Kaiser, Bolshevism.” [Many of these threats were real; however, politicians exaggerated them to terrorize the mob. Politicians used this tactic of fear to get the American people to beg for the police state following 9-11. Fear has been used to terrorize the people to demand just about every enslaving program that the US government have ever adopted.]
    Under democracy, the plain people “never vote for anything, but always against something.” Consequently, the democratic state tends “to pass over statesmen of genuine imagination and sound ability in favour of colourless mediocrities. The former are shining marks, and so it is easy for demagogues to bring them down; the latter are preferred because it is impossible to fear them.” [The demagogue is a democratic man and is, therefore, part of the mob. Thus, being one of them, the plain people understand him and do not fear him. Does this explain the rabid fear that the common Democrat and many Republicans have of President Trump and especially his supporters and their embracement of Hillary Clinton?] Mencken continues, “The demagogue himself, when he grows ambitious and tries to posture as a statesman, usually comes ignominiously to grief, as the cases of Bryan, [Theodore] Roosevelt, and Wilson dramatically demonstrate.”
    Using Bryan as an example, Mencken shows the rise and fall of a demagogue. “If Bryan had confined himself, in 1896, to the chase of the bugaboo of plutocracy, it is very probable that he would have been elected. But he committed the incredible folly of throwing most of his energies into advocating a so-called constructive programme, and it was thus easy for his opponents to alarm the mob against him. That programme had the capital defect of being highly technical, and hence almost wholly unintelligible to all save a small minority; so it took on a sinister look, and caused a shiver to go down the democratic spine.” [Consequently, most political campaigns consist almost entirely of slogans and mudslinging with little or no details about what the candidate plans to do if he wins.] Continuing, Mencken writes, “It was his cross-of-gold speech that nominated him; it was his cow State political economy that ruined him.”
    According to Mencken, “[g]overnment under democracy is thus government by orgy, almost by orgasm. Its processes are most beautifully displayed at times when they stand most naked — for example, in war days.” He uses World War I, which was then known as World War, to illustrate the use of fear to manipulate mob psychology. “[T]he World War is simply a record of conflicting fears, more than once amounting to frenzies. The mob, at the start of the uproar, showed a classical reaction: it was eager only to keep out of danger. . . . In 1916, on his fraudulent promise to preserve that boy from harm, Wilson was re-elected.” Then came the task of the demagogue to convert the people to warmongers. “The problem was to substitute a new and worse fear for the one that prevailed — a new fear so powerful that it would reconcile the mob to the thought of entering the war.” Right after the election, all agencies of the US government began clamoring for war. “No ship went down to a submarine’s torpedo anywhere on the seven seas that the State Department did not report that American citizens — nay, American infants in their mothers’ arms — were aboard. Diplomatic note followed diplomatic note, each new one surpassing all its predecessors in moral indignation. The Department of Justice ascribed all fires, floods and industrial accidents to German agents. The newspapers were filled with dreadful surmises, many of them officially inspired, about the probable effects upon the United States of the prospective German victory.” As a result, the mob became convinced “that a victorious Germany would unquestionably demand an accounting for the United States’ gross violations of neutrality.” Thus, the demagogue gave the mob a choice of fears. “The first was a fear of a Germany heavily beset, but making alarming progress against her foes. The second was a fear of a Germany delivered from them, and thirsting for revenge on a false and venal friend.” The second fear won. Soon the mob “was reconciled to entering the war — reconciled, but surely not eager.” Now the demagogues had the task “of converting reluctant acquiescence into enthusiasm.” A new fear was the solution. Thus, the government strove to throw “the plain people into a panic. All sense was heaved overboard, and there ensued a chase of bugaboos on a truly epic scale. Nothing like it had ever been seen in the world before, for no democratic state as populous as the United States had ever gone to war before.” By the end of 1917, the American people “were in such terror that they lived in what was substantially a state of siege, though the foe was 3,000 miles away and obviously unable to do them any damage.” Only the draft “gave them sufficient courage to attempt actual hostilities. That ingenious device, by relieving the overwhelming majority of them of any obligation to take up arms, made them bold.” Mencken continues, “Before it was adopted they were heavily in favour of contributing only munitions and money to the cause of democracy, with perhaps a few divisions of Regulars added for the moral effect. But once it became apparent that a given individual, John Doe, would not have to serve, he, John Doe, developed an altruistic eagerness for a frontal attack in force. For every Richard Roe in the conscript camps there were a dozen John Does thus safely at home, with wages high and the show growing enjoyable.” Mencken concludes, “So an heroic mood came upon the people, and their fear was concealed by a truculent front. But not from students of mob psychology.” [Today, the same use of fear is being used to manipulate psychology in the War on Terrorism with all agencies of the government and their collaborators in the media inciting war. President Bush’s inane remark that “if we do not fight them over there, we will have to fight them here” was an insult of the highest magnitude of the U.S. Air Force and U.S. Navy. How could anyone with no air force and no navy attack the United States, unless the Bush regime let them into the country?]

Copyright © 2017 by Thomas Coley Allen.

More political articles.

Wednesday, November 8, 2017

Usury

Usury
Thomas Allen

    Usury as used in this article means interest or fees charged on loans or loans on which interest or fees are charged and not just exorbitant interest or fees. Loans may be of money or other goods. Anti-usurers are opponents of usury.
    During the Middle Ages, moralists, the scholastics, claimed that charging interest on loans, usury, was immoral and, therefore, unlawful, although people devised convoluted ways to circumvent this prohibition against charging interest. Even today, some moralists maintain that charging interest on loans is immoral and should be prohibited. They based their argument against usury in part on the teachings of Aristotle and in part on the laws of Moses.
    Since the Reformation, primarily since Calvin, most moralists have ceased believing that charging interest on loans is immoral. (Some have accused Calvin of being a crypto-Jew or an agent of the Jews for justifying usury.)
    Moralists of the Middle Ages claim that if a lender charges interest on a loan, exacting hire for money lent, he is guilty of the sin of extortion. Modern moralists, as Dabney calls them, disagree. They hold that reasonable interest is as just as a reasonable hire for any work or instrument of work.
    Aristotle argued that usury was against nature, unnatural, and beneath the dignity of citizenship. To Aristotle, even the use of money, though necessary, was tainted and not worthy of study. Money, gold and silver, was sterile. (If money is sterile, why are people willing to pay to use it?) If one planted seed in a chest of gold or silver coins, nothing would grow. (Planting seeds in a box of nebulous electronic money, which is what most of today’s money is, would prove even less fruitful. Nevertheless, if properly watered, seeds planted in a chest of coins will sprout, and these sprouts are eatable.) Moreover, a bag of coins stored for years does not increase by a single coin — thus, proving the barrenness of money. (Food stored for years will not increase in amount either, but unlike gold coins, the stored food will deteriorate and become worthless. Does this mean that food is barren?) Because the use of money was unnatural, usury was unnatural since it is an increase based on money. Only an increase from herds, farming, hunting, and war were natural. Thus, even trade and mechanical arts were unnatural. Money was something used by those involved in trade, and, therefore, its use was base and beneath the dignity of a citizen. Since trade for money was contrary to nature, so was usury on its use. To Aristotle, money was a mere medium of exchange and did not increase by passing from one person to another, so he saw no justification for interest. He never sought to discover why people paid interest and never developed a theory of interest.
    In Exodus 22:25, Moses declares, “If thou lend money to any of my people that is poor by thee, thou shalt not be to him as an usurer, neither shalt thou lay upon him usury.” In Deuteronomy 23:19, he declares, “Thou shalt not lend upon usury to thy brother; usury of money, usury of victuals, usury of any thing that is lent upon usury.” Most who condemn usury today overlook Deuteronomy 23:20, which reads, “Unto a stranger thou mayest lend upon usury; but unto thy brother thou shalt not lend upon usury: that the Lord thy God may bless thee in all that thou settest thine hand to in the land whither thou goest to possess it.” Thus, the laws of Moses allowed charging interest on loans to strangers. The scholastics interpreted “stranger” to be anyone who was not a Christian. Consequently, a Christian could not charge interest on loans to another Christian.
    As the Church forbade Christians lending Christians money at interest, it drove borrowers to the Jews for loans. As a result, the Church gave the Jews a virtual monopoly on lending money, which largely explains why today Jews dominate banking. (Hypocrite that it was [is], while condemning usury as a venal sin, the Papacy lent and borrowed at interest, although it called the interest “fees,” “gratuities,” etc. — anything but “interest” or “usury.” By the Reformation, the Papacy was allowing charitable loans, called contracts, to pay interest while it continued its prohibition against interest-bearing business loans. Businesses often used “insurance contracts,” which guaranteed the lender a fixed rate of return, otherwise known as interest, instead of a percentage of the profit.) When Christian lending to Christians at interest became acceptable, Christians no longer had to borrow from Jews.
    As Dabney explains, the modern moralists and the Middle Age moralists, the scholastics, do not disagree on morals, but they do disagree on a merely economic question. They disagree on money being an effective force or influence in the production or creation of new value. Whereas, the modern moralists argue that money is an effective force in the production or creation of new value, the scholastics argue that it is not. To the modernist, money is an exchangeable form of capital, and capital is the agent that creates new value. Thus, charging interest is not a moral issue; it is an economic issue.
    The modern moralists and the scholastics agree on the major premise, but they disagree on the minor premise. Both agree that if a person takes something from another for nothing, he is guilty of extortion — the major premise. For the scholastics, the minor premise is that money lent yields nothing in the creation of new value. Therefore, the inference is that charging interest is extortion. For the modern moralists, the minor premise is that money lent is the capital that the borrower uses to create new values. Therefore, the inference is that when the lender receives interest on the money lent, he does not extort. As shown, the disagreement between the Middle Age moralists and the modern moralists is with the minor premise, which is an economic issue and not a moral issue. Much of the opposition to usury, then and now, comes from confusing interest with physical production and associating interest with money. Interest does not have to be in money; it can be in other goods.
    Today, nearly all monetary loans are exchanges of credit. The borrower exchanges his credit for the lender’s credit, which is usually more readily acceptable by the public than is the borrower’s credit. The borrower gives the lender a note, usually written, but occasionally oral, promising to repay the lender the money or credit borrowed. In exchange for this promise, the lender gives the borrower the lender’s credit, although occasionally the lender will give his cash, which today is another form of credit, to the borrower. Today, the credit is lent as checkable deposits where the lender promises to pay all valid checks present against these deposits. (In the past, bank notes were commonly used. The lender promised to pay his notes, which were his credit instruments, when presented for payment.) For the use of the lender’s credit or cash, the lender charged a fee called interest.
    Meyer defines interest “as the price paid for the use of loanable funds. Loanable funds may be used either for purchase of consumer goods or as capital in the process of production.” Mund defines interest as “the price paid for the use of loanable funds (money or credit) which are to be repaid at a later date.”
    According to Menger, interest is the payment for “the exchange of one economic good (the use of capital) for another (money, for instance).” By opposing the charging of interest, anti-usurers hold that money either is not an economic good or, if it is, not worthy of payment. As interest is the payment for the use of capital, the opponents of usury must assume that the use of capital has no value. If it does have value, then why is paying for this value immoral? If it does have value, then the anti-usurers believe that the user of capital is entitled to steal that value. Why is not such theft immoral?
    According to Ely, “[i]nterest represents the difference in value between present and future goods.”  In effect, people who oppose usury are claiming that the future value of a good is the same as its present value. However, by charging interest, the claim is that a good today is worth more than the same good in the future. That is, an ounce of gold or a loaf of bread is worth more to its holder today than it will be ten years later. Interest represents that difference in value. According to the anti-usurers, an ounce of gold or a loaf of bread ten years from now is worth the same to the holder as it is today. Usury assumes risk over time; zero interest assumes no risk over time. Usury assumes that present enjoyment and satisfaction is greater than future enjoyment and satisfaction; zero interest assumes that future enjoyment and satisfaction is greater in the future than they are in the present. That is, usury assumes that most people prefer to have an automobile today than ten years later. However, anti-usurers believe that people have no time preference and have no more desire for an automobile today than ten years later. If they do and are willing to pay a premium, interest, for an automobile today rather than waiting ten years, they are sinning — just as viewers of pornography are as guilty, as the producers and dealers are, of sin. Likewise, anti-usurers believe that given a choice between receiving a $100 today and a $100 a year later, people will be indifferent to when they receive the $100. (Most people would probably prefer the $100 today to a $101 a year later. However, a majority probably would prefer $200 a year later than $100 today. The $1 and $100 are interest paid for delayed satisfaction.) To the anti-usurers, present value and future value are equal, and, therefore, interest is not only immoral, it is not even needed.
    According, Alchian and Allen, “Interest is the price of earlier availability, rather than later availability, of rights to use goods.” Whenever people evaluate and exchange present goods or money for future goods or money, interest is involved whether they realize it or not. Moreover, contrary to the implied, if not expressly stated, claim of the anti-usurers, present goods or money are more valuable than the same goods or money in the future. Interest represents that difference in the present and future value.
    Interest is merely a result of people preferring something sooner rather than later. Why is paying for the expression and consideration of this preference a sin? It must be a sin because the moralist anti-usurers want to prohibit usury in the name of morality.
    Rothbard states that “present money is worth more than present expectation of the same amount of future money” — the law of time preference. That is, the future always exchanges at a discount to present. This discount is the interest that bridges the time preference. Anti-usurers reject the law of time preference, and if it does exist, it is a sin.
    North gives a similar definition: Interest “is the discount we apply to future goods as against present goods.” Moreover, “[i]t is not a uniquely monetary phenomenon.”
    Anti-usurers argue that the future and future goods do not need to be discounted. Thus, they imply that the future is known; people do not live in an uncertain world. Furthermore, they assume that all people will live long enough to enjoy the future; therefore, people do not have to discount the future, i.e., charge interest.
    As interest gives time economic value, the anti-usurers must maintain that time has, or should have, no economic value. An item will have the same value a year or a century from now as it has today. In spite of the assertions of the anti-usurers, time is a scarce economic resource that needs to be economized. (People are not God, who exists outside time; they are prisoners of time.)
    As North notes, “Time is mankind’s only absolutely irreplaceable environmental resource.” Time is the foundation of all economic planning, and interest is the expression of this foundation. Anti-usurers must maintain that either time is irrelevant to economic planning or, if it is relevant, it has no value.
    In the name of morality, anti-usurers would deny compensation, interest, to anyone who saves his money, a present good, and makes it available to entrepreneurs to produce future goods. According to the anti-usurers, this service of capital, saving, to provide an advance in time, as Rothbard calls it, should be without charge; it should be free. To charge for this service is extortion.
    Usury rewards the farsighted and prudent — people who anticipate their future wants and needs and saves for it. Anti-usurers want to reward the spendthrift — the impulsive who must have immediate gasification. The anti-usurers would have the prudent to lend to the spendthrift at no charge.
    Interest is payment for the use of capital. Anti-usurers have no problem with paying wages to managers and workers for their labor. Few would even deprive the entrepreneur or owner his profit for organizing and superintending, either directly or indirectly through managers, the operation of his business. However, they would deprive the capitalist, who may even be a lowly worker via his meager savings or retirement account, any return on the use of his capital. Thus, the entrepreneur deserves a return on his entrepreneurship; the manager deserves a return on his management; the worker deserves a return on his labor; yet the capitalist does not deserve a return on his capital.
    Besides covering the cost of time-preference, part of the interest covers the cost of administrative expenses of transferring money from one person to another. Opponents of usury assume that this cost is either negligible or at least not worthy of compensation. Another part of the interest covers the cost of risk. Most anti-usurers assume that all loans are risk free. The few who realize that loans do involve risk to the lender believe that such risk should not be compensated. Why would anyone want to risk his money at no cost, zero interest, and give up the present enjoyment and satisfaction that it can bring so that another can satisfy his desires, either in consumption or production, today?
    As Mises notes, when the natural or ordinary interest is zero, no consumption occurs even into eternity. High interest rates show that people want to consume in the present and near term. Low interest rates show that people are willing to wait longer to enjoy consumption. At zero interest, which is what the anti-usurers demand, present consumption ceases, and everyone’s labor and resources go toward future consumption. Thus, people would starve as they invest all their labor and resources in capital goods. Do anti-usurers expect lenders to be so future oriented that they will choose death over usury?
    Hunger prevents the natural rate of interest from becoming zero. If food is available, people will eventually eat it before they starve. Thus, the present value of food will eventually exceed its future value, which means people start applying an interest rate to saving their food for future use, and consuming it in the present.
    Therefore, anti-usurers have to resort to the coercive power of government to suppress interest to zero. As contradictory as it seems, if the government forces interest to zero, as the anti-usurers want it to do, people will consume their capital. As a result, future goods will become more scarce and eventually cease to exist. Again, people will starve because they have consumed their “seed corn.” The few who survive would return to the hunter-gatherer stage of humanity. Thus, when the government outlaws usury, it forces people to become extremely present oriented.
    Is starvation what the anti-usurers want? If they succeed in outlawing all interest, starvation is what they will get.
    High interest rates occur when people are present oriented; they have a high time preference. Low interest rates occur when people are future oriented; they have a low time preference. Future oriented people value future income and satisfaction more than present oriented people value them. Generally, future oriented people and societies are much wealthier and more advance than are present oriented people and societies. The burden of time is much higher for present oriented people and societies than it is for future oriented people and societies.
    Anti-usurers seem to prefer present orientation to future orientation. They seem to prefer people consuming everything as quickly as possible to prevent delaying satisfaction, for that implies interest. However, as they demand zero interest, they seem to want to convert everyone to an extremely future-oriented person, who consume nothing in the present.
    Everything, and every action, carries an interest rate whether noticed or not. Interest guides people in their consumption. Even the farmer uses interest when he decides how much of his crop to consume now and how much to save for planting next season.
    Likewise, when a shipwrecked sailor rations his water consumption, he is employing time preference, interest. By weighing immediately quenching his thirst against quenching his thirst in the future, he is employing time preference, which interest represents.
    Today, many opponents of usury oppose charging interest on loans for immoral reasons rather than moral reasons. They merely want to use other people’s capital, money, to satisfy immediately their consumptive desires without any cost to themselves. With a forced zero-interest loan, the borrower is taking something, the use of another’s capital to save time, from another, the lender, for nothing, which the moralists consider extortion.
    Morally, one may be obliged to lend to a destitute Christian in dire need of the necessities of life at no interest (Exodus 22:25) and perhaps without the thought of repayment. (Actually, today with governments stealing the wealth of the productive and giving it to the poor to provide not only the necessities of life, but also many luxuries, no need really exists to lend to the poor and needy.) However, he should ensure that money lent goes for necessities and not for frivolous consumption or pleasure. (Perhaps a better solution is to give the person in need the necessities needed and allow the recipient to pay for them later when he can. [One should never lend any more money to any friend, relative, or acquaintance than he is willing to give them as a gift because he is not likely to be repaid.]) Nevertheless, no one is morally obliged to lend money interest free to invest in a business, to speculate, or to satisfy consumptive desires.
    Likewise, loans to Christian churches, Christian schools, and Christian charities should be interest free. But, then, why not just donate the funds?
    In a highly Christianized society, interest rates will be low, but not zero. They are low because Christians are, or should be, future oriented. As noted above, future orientation causes interest rates to be low.
    Anti-usurers need to decide if they want a future oriented society in which the wealth of mankind will continue to climb, or a present oriented society in which wealth declines toward the hunter-gatherer level. If they want a future oriented society with increasing wealth, they need to cease insisting on zero interest, outlawing usury. If they insist on zero interest, outlawing usury, they will create a present oriented society with declining wealth for all. As Christianity is future oriented and outlawing usury is present oriented, the anti-usurers are promoting an unchristian society.
    As the above discussion shows, usury, the payment for time, is essential to life. Without usury, civilization would not and could not exist. Without usury, mankind would only exist in a hunter-gatherer society. Moreover, anti-usurers promote a highly contradictory and impossible society: They want people to be extremely present oriented, have a high time preference, and extremely future oriented, have a low time preference, simultaneously. Anti-usurers are nothing more than promoters of “something for nothing.” In short, anti-usurers prefer lower-class living, present orientation, to higher-class living, future orientation.

References
Alchian, Armen A. and William R. Allen. University Economics: Elements of Inquiry. 3rd edition. Belmont, California: Wadsworth Publishing Co., Inc., 1972.

Allen, Thomas. “Questions for the Anti-Usurers.” Franklinton, North Carolina: TC Allen Company, 2010.

Dabney, R.L. The Practical Philosophy. Harrisonburg, Virginia: Sprinkle Publications, 1897.

Elliott, Calvin. Usury: A Scriptural, Ethnical and Economic View. Frankston, Texas: TGS Publishers, 1902, 2008.

Ely, Richard T. An Introduction to Political Economy. New and revised edition. New York, New York: Eaton & Mains, 1901.

Jordan, James B. The Law of the Covenant: An Exposition of Exodus 21-23. Tyler, Texas: Institute for Christian Economics, 1984.

Laughlin, J. Laurence. The Elements of Political Economy. New York, New York: American Book Co., 1882.

Menger, Carl. Principles of Economics. Translators James Dingwall and Bert F. Hoselitz. New York, New York: New York University Press, 1976.

Meyers, Albert L. Elements of Modern Economics. 4th edition. Englewood Ciffs, New Jersey: Prentice-Hall, Inc., 1956.

Mises, Ludwig von. Human Action: A Treatise on Economics. 3rd revised edition. Chicago, Illinois: Henry Regnery Co., 1963.

Mund, Earl E. “Interest.” In Economic Principles and Problems. Editor Walter E. Spahr. Fourth edition. Vol. II. New York, New York: Rinehart & Co., Inc.: 1940.

Nicholson, J. Shield. “Usury.” Encyclopedia Britannica. 9th edition. The R. S. Peale Reprint. Chicago, Illinois: R.S. Peale & Co. XXIV, 17-19.

North, Gary. The Dominion Covenant: Genesis. An Economic Commentary on the Bible. Volume 1. Tyler, Texas: Institute for Christian Economics, 1982.

North, Gary. Moses and Pharaoh: Dominion Religion Versus Power Religion. Tyler, Texas: Institute for Christian Economics, 1985.

North, Gary. Tools of Dominion: The Case Laws of Exodus. Tyler, Texas: Institute for Christian Economics, 1990.

Polleit, Thorsten. “The ‘Natural Interest Rate’ Is Always Positive and Cannot Be Negative.” March 21, 2015. https://mises.org/library/natural-interest-rate-always-positive-and-cannot-be-negative. May 14, 2017,

Poor, Henry Varnum. Money and Its Laws: Embracing a History of Monetary Theories, and a History of the Currencies of the United States. Reprint. New York, New York: H.V. and H.W. Poor, 1877.

Rothbard, Murray N. Man, Economy and State: A Treatise on Economic Principles. 2 volumes. Los Angeles, California: Nash Publishing, 1970.

Tenebrarum, Pater. “The Consequences of Imposing Negative Interest Rates.” November 21, 2014. http://www.acting-man.com/?p=34365.  May 14, 2017.

Copyright © 2017 by Thomas Coley Allen.

More articles on economics.

Saturday, October 28, 2017

Poor and Rist on Tooke

Poor and Rist on Tooke
Thomas Allen

    This article presents two views, Poor's and Rist's, on Thomas Tooke. Thomas Tooke (1774-1858) was an English merchant, economist, and historian of prices. He wrote History of Prices and of the State of the Circulation during the Years 1793–1856 (1838-1857) in six volumes and Enquiry into the Currency Principle (1844). Unlike most of the people whom Poor reviews, Tooke is not an ardent supporter of the Quantity Theory of Money. He considers the quantity of money, i.e.,  circulating purchasing media, to be mostly irrelevant.

Poor on Tooke

    In 1877, Henry Varnum Poor (1812-1905) wrote Money and Its Laws: Embracing a History of Monetary Theories, and a History of the Currency of the United States. He was a financial analyst and founder of a company that evolved into Standard & Poor’s. Poor was a proponent of the real bills doctrine and the classical gold-coin standard and, thus, the quality theory of money. He gave little credence to the quantity theory of money — especially if credit money, such as bank notes, were convertible on demand in species. Also, he contended that the value of money depends on and is derived from the value of the material of which it is made and with paper money, its representation of such value.
    In the latter part of his book, he discusses leading monetary theorists from Aristotle (350 B.C.) to David A. Wells (1875). Most of the economists whom he discussed were proponents of the quantity theory of money. My comments are in brackets. Referenced page numbers enclosed in parentheses are to Poor’s book.
    Tooke sought to prove “that a rise in prices always precedes, and causes an increase of money, in whatever form” (p. 313). Poor states that Tooke’s claim is like saying “that a rise of water in rivers always precedes and is the cause of rainfall.” [In other words, Poor asserts, to the extent that changes in the money supply relate to prices, that a rise in general prices follows an increase in money supply while Tooke asserts that it precedes an increase money supply. Both include all forms of credit money as part of the money supply.]
    Tooke believes that no variation in the quantity of the circulating medium affects prices. He believes “that the amount of the circulating medium, is the effect, and not the cause, of variations in prices” (p. 314). Because people have more money to spend does not mean that they will spend it. He maintains that as long as paper money is convertible to gold on demand, increasing the quantity of paper money will not affect the prices of commodities. Thus, convertible paper money cannot affect prices under any condition (pp. 314-316). [Tooke appears not to distinguish between paper money issued to discount real bills and paper money issued to discount fictitious bills like accommodation bills or financial bills like government bills. The former has little or no affect on prices whereas the latter often cause prices to rise, i.e., causes the currency to depreciate.]
    Following Adam Smith, Tooke believes that paper money is merely a substitute for gold coin. For each unit of paper money in circulation, a unit of gold coin is removed from circulation. Any excess paper money would be redeemed in gold coin. Thus, paper money is a substitute for coin and is not in addition to gold coin. [Under the real bills doctrine, paper money is not a substitute for gold coin, but is in addition to gold coin. However, if excessive paper money is issued, the excess is quickly redeemed for coin. As shown below, Rist disagrees with Poor on this interpretation of Tooke.]
    According to Tooke’s argument, convertible paper money cannot affect prices. Moreover, “[n]either could a government inconvertible paper currency affect prices, so long as it was not in excess of the wants of those using it in their exchanges” (p. 216). Also, Tooke maintains that “[v]alue was no necessary attribute of [paper money or gold coin]” (p. 316).
    Poor objects to Tooke’s claim that money, i.e., gold coin, has no value per se. Poor states, “Whatever is to serve as money, in the last resort, must always possess uniformity of value, not only for months and years, but for ages” (p. 316). [Whatever serves as money needs to be able to transport value not only through space but also through time. Before a material becomes money, it must be able to transport value through time and space or represent something that can transport value through time and space. To do that, it has to have value in itself.]
    According to Tooke, prices “depend upon cost, and the ability, not the will, of the public to consume” (p. 317). Poor remarks, “The public are able to consume a thousand things they will not” (p. 317). [As value is subjective and price reflects value, a person must have the will to consume before he consumes. Also, once he decides to consume, he must have the ability to consume. Poor is much closer to the truth on this issue than Tooke.]
    According to Poor, Tooke fails to understand “that it is possible for prices to fall enormously, even when it [money] is greatly inflated” (p. 317). Poor continues:
The effect of an inflation is to advance prices, from an increase of the instruments of expenditure, and from its tendency to excite speculation, which may be carried to such a pitch as to seize and attempt to hold all the food, for example, upon the market. In such case, it not unfrequently happens that the public can be supplied from other sources, or that, from the excessive rates charged by holders, consumption will be so much reduced that those who attempted to control prices find themselves unable to carry their purchases, and are forced to throw them upon the market; in consequence of which, prices may for a time be far below what they would have been under a metallic currency (p. 317).
    [In the United States, the decades following Lincoln’s war to prevent Southern independence, general prices trended downward although the money supply was inflated. First, it was inflated with U.S. notes; then it was inflated with silver dollars. Although this inflation did not result in a rise in general prices, it did distort the economy and lead to the depression of the 1870s and the depression of the 1890s. Moreover, technological advances were driving prices down faster than the inflation could push them up.]
    Tooke’s notion that prices are “wholly independent of the quantity of the circulating medium” (p. 317) comes from observations of events occurring when the Bank of England had suspended redemption of its notes. About Tooke’s notion, Poor writes in his concluding remarks on Tooke:
He might as well have attempted to prove that indulgence in liquor had no tendency to elevate one, from the exhaustion or syncope resulting from its excessive use. So, under an inflation of the currency, prices may fall in much greater ratio than the inflation, from the decreased cost of production, or from the falling off, from any cause, of the demand. None of these causes or influences were properly considered by him. He sought to erect a science from an observation of certain phenomena, without sufficient reference to their cause or law. It is as useless, however, to attempt to reason with him as it was with the philosopher in the tale of “Rasselas.” It was, probably, from an examination or an attempted examination of his works, that Mr. Gladstone declared the study of money to be a fruitful cause of insanity (p. 317).
    [In recent decades, the money supply in the United States, Japan, Europe, and other countries have been highly inflated. Yet none of the developed countries have experienced a rise in general prices of the magnitude that one would expect if the Quantity Theory of Money were correct.
    Whereas Poor is more focused on the real bills doctrine than on the Law of Reflux, Tooke focuses on the Law of Reflux and mostly ignores the real bills doctrine. {The Law of Reflux claims that banks cannot overissue bank credit money, bank notes and checkbook money, because any over issued currency quickly returns to the issuing bank for redemption. The Law of Reflux pertains to the liability side of a bank’s balance sheet while the real bills doctrine pertains to its asset side. Although the real bills doctrine depends on the Law of Reflux, the Law of Reflux does not depend on the real bills doctrine. That is, the Law of Reflux can operate when financial papers like government bills and commercial papers other than real bills of exchanges like accommodation bills are discounted. The Law of Reflux functions under the gold standard where excess credit money can be exchanged for gold, which extinguishes the credit money. However, it does not function under today’s fiat money standard where one form of credit money can only be exchanged for another form of credit money.} As shown below, Rist is more in agreement with Tooke than is Poor. However, Rist places more importance on the real bills doctrine than does Tooke.]

Rist on Tooke
    In 1938, Charles Rist  (1874-1955) wrote History of Monetary and Credit Theory from John Law to the Present Day (translated by Jane Degras, New York: Augustus M. Kelly Publishers: 1966) in which he reviews several economists including Tooke. Rist was a French economist, who was of the Banking School as opposed to the Currency School. [Under the gold standard, banking philosophies generally fell into either the banking school or the currency school. The banking school “holds that as long as a bank maintains the convertibility of its bank notes into specie (gold), for which it should keep ‘adequate’ reserves, it is impossible for it to over issue its bank notes against sound commercial paper with fixed short term (90 days or less) maturities.”[1] Its position is also called the “Banking Principle” or “Principle of Fullerton.” To the banking school, bank notes are merely circulating credit instruments. Although they can be exchanged for gold, they are not intended to be warehouse receipts for gold. The currency school “maintains that all . . . changes in the nation’s quantity of money should correspond precisely with changes in the nation’s holdings of monetary metal. . . .”[2] Its position is also called the “currency doctrine.” To the currency school, bank notes are merely warehouse receipts and, therefore, should be backed 100 percent by specie. To the banking school, bank notes are claims for new merchandise offered for sale in the markets. Under the currency school, bank notes are claims for gold. Under the currency school philosophy, an elastic currency does not exist; under the banking school, it does.] Rist’s opinion of Tooke differs somewhat from Poor’s. My comments are in brackets. Referenced page numbers enclosed in parentheses are to Rist’s book.
    As an opponent of devaluation, Tooke supports making bank notes convertible to gold at the same rate that existed before suspension during the Napoleonic wars. Devaluation hurts the working class (pp. 184-185). [However, devaluation benefits debtors, most of whom are speculators, governments, and people living beyond their means, as it allows them to pay their debts with less gold.]
    Tooke does not believe that the fall of prices and the concomitant economic sluggishness resulted from returning to the gold standard at prewar parity (p. 185). About the fall in prices, Rist notes:
In all probability, the output of the gold and silver mines being what it was, the increase in the volume of goods produced would in itself have been enough, once the war was over, to bring prices down. . . . [T]he very high level to which prices in England and on the continent had been raised by the war and by paper money could not be maintained once the increase in the quantity of paper issued, which had been continuous up till then, was interrupted by the return to gold. The normal lowering of prices which would in any case have followed from a greater output of goods while the volume of currency remained the same, was intensified in England by the rise in the gold value of the pound sterling. . . . [T]he scarcity of gold was made responsible for what was in fact the obvious result of war and inflation (pp. 185-186).
    Tooke distinguishes between paper money and bank notes. Paper money is money in the proper sense of the word. Bank notes are instruments of bank credit. Moreover, bank notes should not be treated differently from checks and bills of exchange. All three are credit instruments and have the same character. Also, in the full meaning of the word, none are money (p. 187).
    Whereas Ricardo considers only the supply of paper money to explain the rise in prices when bank notes are not convertible to gold, Tooke considers both the supply of and the demand for currency (p. 187). Demand depends on the conditions of the markets and fluctuates accordingly (pp. 188-189). Fluctuation in foreign demand for the British pound has an immediate effect on domestic prices. Thus, the rise in prices is affected by “expansion of the home demand for goods due to successive increases in the amount of paper money put into circulation, and a rise in the price of goods imported due to the depreciation of the paper money on the foreign exchange market” (p. 189).
    Rist compares Tooke with Ricardo on the rise in prices under a paper money standard: “Tooke contends that the rise in English prices during the Napoleonic wars was to a large extent the effect of the depreciation of sterling on the exchange, whereas Ricardo regards that depreciation merely as a repercussion of the preceding rise in the prices of English goods” (p. 190).
    Tooke contends “that in fact that part of the rise in English prices above the rise due to exchange depreciation was the result of an excessive issue of paper money” (p. 190). However, he also believes that exchange depreciation is closely connected with the increased quantity of paper money (p. 191).
    Ricardo argues that “the only way to bring the pound back to par was to reduce the note circulation” (p. 193). However, the pound was brought back to parity with gold not by reducing the quantity of notes in circulation, but through improvements on foreign exchanges, which Tooke noted (pp. 193-194).
    Whereas Ricardo treats convertible bank notes as equivalent to paper money, Tooke notices a great deal of difference between the two. Also, Ricardo distinguishes bank notes from other credit instruments (checkable deposits and bills of exchange) while Tooke considers them the same (p. 196).
    To Tooke forced paper currency, such as the pound during the Napoleonic wars and the U.S. note until 1879, is money. Legal-tender paper money “is issued to meet the requirements and cover the expenditure of the State, it represents a final income (that is to say, not subject to repayment) for those individuals who come into possession of it, increasing their purchasing power, thus increasing their demand for goods and making prices rise. In brief, paper money acts on prices in the same way as metallic money does” (p. 197). [Examples are the U.S. note between 1862 and 1879 and the federal reserve note after 1933 domestically and after 1971 on foreign exchanges.]
    On the other hand, convertible bank notes “are credit instruments. They are only issued as advances. Far from being incorporated in the currency, they are bound to return to the bank which has issued them when the advances are repaid” (p. 197).
    Bank notes can “affect prices only provisionally, for in order to repay the advances a sum exactly equal to those advances has to be taken from the final income. An advance from the bank enables the borrower to spend to-day an income which he will in fact receive only later, but he will not spend that income since it will be used to repay the advance” (p. 198). Thus, “[b]ank-notes are claims on a defined quantity of gold. Paper money is a means of payment whose purchasing power over goods (or gold) is fixed on the market according to variations in supply and demand. It is a legal claim, and it is only the law which gives it the power to settle debts” (p. 199). [Legal-tender paper money settles a debt by passing that debt to another. However, being an obligation of the issuer, it can never extinguish debt. On the other hand, gold coin is no one’s obligation and can, therefore, extinguish debt.]
    Not only does convertibility limit the quantity of notes issued [and checkbook money], it also “gives notes legal and economic qualities which paper money does not possess, and which are independent of quantity” (p. 200).
    Unlike Ricardo, Tooke does not consider bank notes identical to metallic money, gold or silver coin. To Tooke, money is more than a medium of exchange or a common denomination of value; “it is the ‘subject of contracts for future payment,’ and ‘it is in this latter capacity that the fixity of a standard is most essential’” (pp. 200-201). “[T]the value of the convertible bank-note is derived precisely from its connexion with the metallic standard” (p. 201). Although a paper money standard is a standard, it is, however, a poor standard because it has nothing to guarantee stability (p. 201).
    Rist summarizes Tooke’s conclusion on the identity of bank notes and checkable deposits:
        1.  Since all credit instruments are essentially the same, it is absurd to put bank-notes in a class apart. If credit has been granted in excessive quantities, the situation cannot be remedied merely by limiting the number of bank-notes issued, as the Currency School argued, it is necessary to deal with credit as a whole.
        2.  The banks’ creation of credit, in all its forms, and particularly in the form of bank-notes, takes place only because the public demand credit. Banks cannot create notes at will, any more than they can create deposits. They are only created if the public demand them. That is why it is impossible to get out of a crisis by creating paper. Whereas paper money is created by the government at will in order to meet expenditure which cannot be covered by its ordinary revenue, credit instruments are created only in response to public demand. The State creates paper money at will but cannot withdraw it from circulation, the banks do not create credit instruments at will, but can withdraw them by ceasing to renew credits (p 213.).
    According to Tooke, financial crises result from the abuse of credit (p. 214). Preventing the abuse of credit is necessary to prevent financial crises. “[T]he abuse of credit is the result of the ‘spirit of speculation’” (p. 214). Moreover, “[c]redit does not give rise to speculation, but follows it; credit is always the response to a demand, and this demand is itself the result of a given economic situation” (p. 214). [The beginning of the twenty-first century bears witness to speculation abusing credit — the housing bubble for example.]
    Tooke identifies two primary price movements: (1) speculative price movements and (2) permanent or fundamental price movements (p. 215). Speculative price movements “originate not in an expansion of credit, but in a favourable price situation in certain commodity markets” (p. 215). As a result, credit expands in response to the demand for speculation. Thus, the boom begins.
    According to Tooke, “1, . . . speculation originates in the situation of the commercial or industrial market, and not in an increase in the note circulation; 2, that the steady expansion of credit is an effect, and not a cause of this speculation, for there is no expansion of credit without the demand for it; 3, that the contraction in the currency which follows a crisis is the consequence and not the cause of the slump” (p. 215).
    An economic slump (panic, depression, or recession) occurs when the income (wages, interest, dividends, profits, etc.) of consumers fails to keep up with rising prices of commodities. As a result, commodity prices must drop, which leads to an economic crisis. Prices decline to the level of the income of consumers, i.e., consumers can again afford to buy (pp. 216-217). [The world has been witnessing such an event with the collapse of the prices of real estate and commodities beginning in 2008.] Thus, according to Tooke, the aggregate of money income devoted to consumption limits the aggregate of money prices. [The Social Credits advocates hold a similar view. They believe that economic slumps result from the people lacking the money to buy the goods that have been produced. Their solution is to have the government or its central bank to print enough money, either physically or electronically, for the people to buy the excess goods and give it directly to the people.]
    Tooke does not deny that the influx of gold or the creation of paper money affects prices. However, other things also affect prices (pp. 219-220). For example, speculation can lead to an increase in the velocity of money, which can affect prices (p. 220). Also, affecting prices are the balance of trade, the capital markets, and the state of credit (p. 222).
    Rist summaries Tooke’s observation on interest:
    1.    A low discount rate cannot by itself stimulate the price level;
    2.    A low discount rate can affect prices on the stock exchange without having any effect on commodity markets.   
[Tooke’s observation is seen in lowering of interest rate following the 2008 crisis. Stock markets have trended upward while commodity prices have trended downward.]
    For a fall in interest to stimulate the economy, it has to “‘coincide with a tendency from other causes, to a speculative rise of prices, and with the opening of new fields for enterprise’” (p. 223). Otherwise, any action undertaking by the central bank to stimulate the circulation of money will not affect prices (p. 223). Nevertheless, “a low rate of interest may foster and support a rise which began from other causes. ‘If there exist grounds for speculation in goods, a coincident facility of credit may, but will not necessarily, extend the range of it.’ . . .[A] low rate of interest is at the bottom of all cases of ‘overtrading’ and ‘overbanking’” (p. 223). (“Overbanking” means “advances, either on insufficient or inconvertible securities, or in too large a proportion to the liabilities” [p. 214, fn].)
    “Tooke maintained that the raising of the discount rate, coupled with a strong cash position, would enable the Bank of England to mitigate the effects of a crisis and to prevent it from developing. Mere limitation of notes will only make the crisis more acute, for it is the function of notes to provide additional temporary currency in times of crisis, which will make it possible to avoid bankruptcies and collapses” (p. 228).
    [Poor is a proponent of elasticity in the credit system. There seems to be less difference between Poor and Tooke than Poor claims. Tooke’s explanations are closer to the truth than Poor credits him.
    As shown above, Poor’s view of Tooke’s works differs significantly from Rist’s. Poor’s views Tooke unfavorably while Rist views him favorably.]

End Notes

1. Percy L. Greaves, Jr.,Understanding the Dollar Crisis (Belmont, Massachusetts: Western Islands, 1973), p. 8.

2. Ibid., p. 28.

Copyright © 2016 by Thomas Coley Allen. 

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Saturday, October 21, 2017

Mencken on the Inferior Man

Mencken on the Inferior Man
Thomas Allen

    In 1926, H. L. Mencken (1880-1956) wrote Notes on Democracy in which he expressed his views on democracy and related issues. He was a journalist, satirist, and critic and a libertarian and one of the leaders of the Old Right. In his book, he describes the inferior man, pages 15-21, 31-32, 38-39. Below is an overview of his discussion on the inferior man; my comments are in brackets.
    About the inferior man, Mencken notes “that there is actually no more evidence for the wisdom of the inferior man, nor for his virtue, than there is for the notion that Friday is an unlucky day.” In the early days, testing this notion of superiority of the inferior man was difficult. “[W]hat cannot be tried and disproved has always had a lascivious lure for illogical man.” Recent knowledge about “the content and character of the human mind,” has disposed of “the old belief in its congenital intuitions and inherent benevolences.” [Studies during the past several decades show that genetics has a much greater influence on the human mind than suspected in Mencken’s day.] The functions of the mind are mostly “purely physical and chemical phenomena, and its development and operation are subject to precisely the same natural laws which govern the development and operation, say, of the human nose or lungs.” Thus, some “minds . . . start out with a superior equipment, and proceed to high and arduous deeds; there are minds which never get any farther than a sort of insensate sweating, like that of a kidney.” [Mencken is correct in that some minds are genetically superior to others. However, he ignores the spiritual or soul aspects of the mind, i.e., the mind is more than physical and chemical phenomena, a notion that he, most likely, would reject. In the last two chapters of Darwinism Refuted, Harun Yahya discusses this aspect of the mind. Being an evolutionist, Mencken would have rejected Yahya’s book as so much superstition.]
    Open-minded people can easily observe the difference between a superior mind and an inferior mind. When exposed to suitable training, a superior mind “acquires the largest body of knowledge and the highest skill.” On the other hand, “no conceivable training can move” the inferior mind beyond a certain point. “In other words, men differ inside their heads as they differ outside. There are men who are naturally intelligent and can learn, and there are men who are naturally stupid and cannot.” [Mencken is writing about intelligence, and what he writes is true. However, a person with high intelligence may be weak in wisdom, common sense, morality, and ethics. A person of low intelligence may be more endowed with these traits than many highly intelligent people. That is, a high I.Q. makes a superior mind, but it does not necessarily make a superior person. For example, university heads and professors have high I.Q. Most likely, Mencken would consider most of them “betters” and “superiors.” Yet, most of them show no more love for liberty than the typical inferior of the mob. For the most part, they are Puritans, cultural Marxists, who want to micromanage everyone’s thoughts and actions and mold everybody into their ideal. Thus, the relationship between intelligence and the desire for liberty seems weak.]
    “Liberals, whatever their defects otherwise, are themselves capable of learning, and so they quickly mastered the fact that MM. Simon and Binet offered the most dangerous menace to their vapourings ever heard of since the collapse of the Holy Alliance.” [Simon and Binet were pioneers in intelligence testing.] Liberals despise intelligence tests for two reasons.  “First, they provide a more or less scientific means of demonstrating the difference in natural intelligence between man and man — a difference noted ages ago by common observation, and held to be real by all men save democrats, at all times and everywhere. Second, they provide a rational scale for measuring it and a rational explanation of it.”
    Mencken continues, “An intelligent man is one who is capable of taking in knowledge until the natural limits of the species are reached. A stupid man is one whose progress is arrested at some specific time and place before then. . . . Some men can learn almost indefinitely; their capacity goes on increasing until their bodies begin to wear out. Others stop in childhood, even in infancy. They reach, say, the mental age of ten or twelve, and then they develop no more.” [This later group dominates Social Justice, Black Live Matter and Antifa. They are also predominant among the anti-Confederate crowd.]
    Naturally, the democrats [egalitarians] strongly object to this conclusion of the naturally inferior man. “Their objection to it is rather of a metaphysical character, and involves gratuitous, transcendental assumptions as to what ought and what ought not to be true.” [Not only do democrats dominate the Democratic party, they also dominate the Republican party and even the Libertarian party.] They claim that “believing such things would be in contempt of the dignity of man, made in God’s image.” [But God made people the way that they are.]
    Alas, democracy is “a form of theology, and shows all the immemorial stigmata. Confronted by uncomfortable facts, it invariably tries to dispose of them by appeals to the highest sentiments of the human heart.” Furthermore, the “anti-democrat is not merely mistaken; he is also wicked; and the more plausible he is the more wicked he becomes.”
    Mencken adds, “that man on the lower levels, though he quickly reaches the limit of his capacity for taking in actual knowledge, remains capable for a long time thereafter of absorbing delusions. What is true daunts him, but what is not true finds lodgment in his cranium with so little resistance that there is only a trifling emission of heat.” [The anti-Confederates support Mencken’s observation. They lack the ability to acquire knowledge, but they easily absorb delusion. The same type of person is also seen supporting Hillary Clinton and Barrack Obama and to a slightly lesser degree George Bush.] Moreover, the inferior man “has a dreadful capacity for embracing and cherishing impostures.” Since the beginning of recorded history, priests, politicians, and all sorts of quacks have victimized him. “His heroes are always frauds. In all ages he has hated bitterly the men who were labouring most honestly and effectively for the progress of the race. What such men teach is beyond his grasp. He believes in consequence that it is unsound, immoral and of the devil.”
    Fear guides and controls the inferior man. “[E]ducation is largely a process of getting rid of such fears.” [Today, what passes for education teaches the inferior man to fear even more and tries to teach the superior man also to fear. One can see the operation of the inferior man in public education, which is nothing more than indoctrination in politically correct thinking. Parents who send their children to private schools are often looked down upon, even by the super rich who send their children to private schools. The worst heretics are parents who homeschool. They are accused of being pariahs who abuse their children and often have their children take from them.] “The ideal educated man is simply one who has put away as foolish the immemorial fears of the race — of strange men and strange ideas, of the powers and principalities of the air. He is sure of himself in the world; no dread of the dark rides him; he is serene.” Unfortunately, “the vast majority of men are congenitally incapable of any such intellectual progress. They cannot take in new ideas, and they cannot get rid of old fears.” Moreover, lacking logical sense, he is “unable to reason from a set of facts before [him], free from emotional distraction.” Furthermore, the inferior man is “incompetent to take in the bald facts” himself. Except at the most elemental level, words convey nothing to the inferior man. His mind “cannot grasp even the simplest abstractions.” [Perhaps, more than anything else, the ability to think in abstract terms is what separates the superior man from the inferior man.] All his thinking “is done on the level of a few primitive appetites and emotions.” [Although Mencken avoids mentioning race, some races seem to have more difficulty thinking abstractly and seem to “think” more on the primitive level of appetites and emotions.] Thus, ideas leave him unscathed; he is “responsive only to emotions,” and his “emotions are all elemental — the emotions, indeed, of  tabby-cats rather than of men.” Therefore, educating the inferior man is impossible.
    “[I]n all departments and on all planes the inferior man reduces it [love, which “runs from the erotic to the philanthropic,”] to terms of his own elemental yearnings. Of all his stupidities there is none more stupid than that which makes it impossible for him to see beyond them, even as an act of the imagination.” Moreover, he “cannot formulate the concept of a good that is not his own good.” From time immemorial, he has hated both sacred and secular heretics. “His first thought and his last thought, contemplating them, is to stand them up against a wall and have at them with musketry.” No record is found of him ever opening “his mouth for fairness, for justice, for decency between man and man. Such concepts, like the concepts of honour and of liberty, are eternally beyond him, and belong only to his superiors.” The inferior man is a natural coward. His “congenital fear is easily translated into cruelty.” His “deficiency in imagination” makes him incapable of projecting “himself into the place of the other.” When the inferior man’s “ betters stand before [him], asking for something that [he] may withhold — when [he is] thus confronted, though the thing asked for be only fair dealing, elemental justice, common decency,” he is a wolf.
    [Examples of the inferior man include supporters and members of the Southern Poverty Law Center, Social Justice, Antifa, and Black Lives Matter. Another example is the people who seek to remove and destroy Confederate monuments. They do not understand why the South fought for its independence, the purpose of the monuments memorializing the Confederate soldier, or the reason for erecting them. Moreover, they can never understand because they are incapable of understanding. It is beyond the capacity of their minds. Therefore, they fear them and want to destroy them. Still, another example is the supporters of Hillary Clinton. They do not understand Donald Trump’s supporters, and they will never understand them. Therefore, they fear them and want to bring Trump, who represents them, down. Blindly, they support Clinton because she is one of them; therefore, they understand her, although she despises them and spits on them.]

Copyright © 2017 by Thomas Coley Allen.

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