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them. Of course, certain very big companies and corporations,
such as the railroads, may be willing to borrow even though
they see little prospect of profitable operation, simply to pre-
vent their equipment falling to bits. But still it is in general
true that the worse the depression gets the less possible is it
to distribute really substantial amounts of purchasing power
through the channel of lending at lower rates of interest than
are generally available to the employers.

, On the other hand this method of distribut-

How the . _ . . . .

. 7 . ing additional purchasing power has obvious

Capitalists . . . . ft

_ political advantages from the point of view

Feel About It. f .,. .f r , ... v 14

of avoiding capitalist opposition. You would

think, indeed, that the whole capitalist class would be strong-
ly in favor of the government providing it with cheaper



money than it could get in any other way. And some sections
of the capitalist class are in favor of this being done. It is
worth remembering, for instance, that this was the one method
of fighting depression which was adopted by Mr. Hoover's
Republican administration before he left office in the spring
of 1933. The Reconstruction Finance Corporation was started,
not by Mr. Roosevelt, but by Mr. Hoover.

On the other hand, the most important and influential sec-
tions of the capitalist class dislike even this form of distribu-
tion, and they dislike it because it involves governmental ac-
tivity in the economic field; it involves in particular the gov-
ernment entering into the sphere, hitherto reserved for the
private bankers, of lending out money capital at interest.
Therefore, it is with reluctance that a capitalist class toler-
ates even this method of distributing purchasing power. The
Reconstruction Finance Corporation was regarded, correctly
from their point of view, by the most f arseeing capitalists as
an undesirable innovation which made a breach in the nor-
mal workings of the capitalist system. Still, on the whole, the
capitalists will tolerate this form of distributing purchasing
power on the part of the government far more readily than
any other. For, after all, under it they still retain their direct
control of the wage-earning population. The money all passes
through their hands before the people can get it. Therefore
the people have to offer themselves as workers to the em-
ployers before they can get any of the money.

Finally, we must notice that this way of distributing pur-
chasing power only helps to solve the problem of purchasing



power today, at the expense of making it worse in the future.
It enables the capitalists to build all sorts of new means of
production. Thus the productive capacity of the community
grows rapidly. But as soon as the government ceases dis-
tributing new money in this way, the community's power of
consumption falls back to exactly what it was before. There-
fore, the problem itself, which arises precisely from the gap
between our power to produce and our power to consume, will
have got worse and the next depression will be still more
severe than the previous one.
9 p 77. The second method by which a government

^ ^ T'l 1 1 1 1

. , jj can distribute additional purchasing power is

/ , "7 to employ the additional workers itself, on

ful and y

jj -I schemes 01 public works.

Public works schemes can roughly be di-
vided into the useful and the useless types. For some public
works schemes are undoubtedly of the "made work" type, of
which "digging holes in the ground and then filling them up
again" is the classical example. This type of public works
scheme naturally offends against our whole conception of
common sense and reason. But before we condemn it outright,
we should remember what such schemes really are. They are
really excuses for distributing additional purchasing power.
If they accomplish this, they may actually increase the net
wealth of the community.

Look at an example. Say that in a particular community
there are twenty thousand unemployed workers. Say that the
government put ten thousand of these unemployed on to use-



less kinds of public works. These ten thousand men will now
be re-equipped with purchasing power. The work which they
will be doing will not add any wealth to the community. But
the fact that they can now buy food, clothing, and pay their
rent, etc., etc., will mean that a proportion at any rate, pos-
sibly the whole, of the other ten thousand unemployed will
now be reabsorbed into ordinary industry owing to the in-
creased demand for goods and services of the first ten thou-
sand. The repercussions, as it were, of the distribution of
increased purchasing power even by way of useless works
schemes will put other members of the unemployed on to use-
ful work.

But, needless to say, this is no reason for advocating use-
less works schemes. On the contrary, useless works schemes
are an unpardonable waste of human energy, of which, after
all, there is only a certain limited stock in the community.
And who can for a moment deny that there is an immense
amount of useful work which needs doing? Obviously, so
long as any single one of the 122 million American citizens
lacks either the necessities or for that matter the conveni-
ences of life, there is useful work waiting to be done in pro-
viding that citizen with necessities and conveniences.

Logically, the unemployed, instead of being set to digging
holes in the ground and filling them up again, ought to be
set to satisfying the most urgent wants of the mass of the
population. Nor is there any doubt as to what these most
urgent wants are. As we have seen, large sections of the
American people want additional food, shelter, clothing,



furniture, with extreme urgency. Why is it then that there
should be any question of the Government, when it wishes to
distribute purchasing power by this method, putting workers
on anything other than the production of food stuffs, clothing,
houses and the like?

It I Th ' r ^ ie answer is a perfectly simple one. So

"R ' ht " ^ on ^ as *k e ca P* ta l* st s Y stem is m existence, so

long, that is to say, as the means of production
remain in the hands of the small class who owns them today,
the production of these standard necessities of the population
is a monopoly right of that class. It is a right of those who
own the clothing factories that they alone should produce
clothes for the whole nation. It is a right of those who own
the land that they, and they alone, should produce food stuffs
for the nation. It is the right of those who own the furniture
factories that they, and they alone, should produce furniture
for the nation. And so on through the production of all stand-
ard articles of consumption.

Hence, for the government to set workers to producing
these things would be a direct infringement of the property
rights of the owners of the means of production in these par-
ticular fields, and would be fought only a little less violently
by these property owners than would be the direct confisca-
tion of their means of production by the government.

If you doubt this, remember what has happened in the case
of the biggest and best of Mr. Roosevelt's public works
schemes, the Tennessee Valley Authority. The Tennessee Val-
ley Authority began to produce, if not one of the necessities,



at least one of the important conveniences of modern life,
electric light and power. At once the companies which had
hitherto supplied the citizens of that part of the Union with
electric light and power at a profit rose up in the most vigor-
ous protest and claimed that they, and they alone, had a
statutory right to supply electricity in that area. As I under-
stand it, the Supreme Court of the United States has not sup-
ported the claims of these private companies. But it appears
that the struggle as to whether the government, through the
Tennessee Valley Authority, should be allowed to put work-
ers onto the really useful work of supplying electricity is still
being fought out at the moment.

rri /^ j Here we see the general principle illus-
p . . ] trated. It is the pressure of the entire capital-

owning class which is continually pushing off
public works schemes from the useful into the useless field.
For the production of all really useful things is the jealously
guarded monopoly of those who own the means of produc-

In fact, of course, public works schemes are mostly neither
entirely useless, such as digging holes in the ground and fill-
ing them up again, nor yet, on the other hand, designed to
satisfy the most urgent wants of the population. For instance,
it is obviously useful that thousands of miles of fine new roads
have been built throughout the United States during recent
years as public works. On the other hand, additional roads
were not, I should have thought, by any means the things
which the American people needed most. I know, at any rate,



that if I were undernourished and ill-housed, I would rather
have some more food and a better house than a new road
along which I could drive at eighty miles an hour the car
which I should certainly have sold months before.

. , However, it was much better for the gov-

Housmg, the .... . .

n n IT ernment to build roads than to do nothing. For

Best Public ... ill*,

TV i it did mean that many hundreds of thousands

of workers were re-equipped with purchasing
power. By far the best and most useful form of public works
which any government, which is not willing directly to in-
fringe the monopoly of the owners of the means of produc-
tion, can undertake is housing schemes. There will, it is true,
be intense capitalist opposition to a large-scale government
initiative in this sphere also. As I understand it, this opposi-
tion has hitherto held up any very substantial progress being
made with Mr. Roosevelt's large-scale housing project.

But here is a channel through which enormous sums of
money can be usefully distributed and a double benefit be
given to the community. In the first place, the money paid out
to the workers who will build the new houses will create a
demand for every kind of commodity and so keep the wheels
of industry turning. Secondly, the ill-housed masses of the
population will, for the first time, get decent shelter. The
obstacle which stands in the way is, of course, a complex
ganglion of property rights. The property right of the slum
landlords, who own the only available sites for the houses, to
rack-rent the people would be infringed. The right of the
private enterprise land speculator to buy up sites and to build



new houses on them for a profit, would be infringed. It is
such rights as these which stand in the way. But is there any-
thing behind which a greater mass of public opinion could be
mobolized than behind a program of rehousing the vast ill-
housed section of the population?

Here surely is the ideal scheme for the large-scale distri-
bution of purchasing power through the channel of the em-
ployment of workers, directly or indirectly, by the govern-
ment itself. Here, surely, is the field in which popular support
for public works can overcome the private hates which stand
in the way.


Chapter VII

Giving People the Money

Wh Ha we come to t ^ ie third? simplest, but

P <-> most startling of the methods by which a gov-


ernment can distribute purchasing power. It
can simply give the money away. This is, as we have seen,
what the American government has done, by way of unem-
ployment relief, farm relief, and the veterans' bonus, on a
considerable scale already.

Now before we dismiss this method we must consider the
arguments which can be advanced for it. If public works of
even a more or less useless kind are beneficial because they
are, as I expressed it, an excuse for distributing purchasing
power to the population, why not do the job frankly and di-
rectly without the excuse? There is no answer to this question,
except this: The direct distribution of money on a scale really
adequate to give the population enough purchasing power to
buy the final product of American industry, and so prevent
unemployment, would be a measure which would cut into the
very vitals of the capitalist system. Say, for example, that
the Federal Government decided to pay five dollars a week to
every adult American citizen, raising the money to do so by



the three methods enumerated above, but mainly by simply
creating it. Such a distribution of purchasing power would
undoubtedly provide a market for which American industry
could work. (I do not know whether five dollars paid as an
addition to the present sources of income to every adult
citizen would be too large or too small a sum to provide pur-
chasing power adequate to clear the American market of the
entire possible output of consumers' goods at current prices.*
It would be by no means impossible to work out what the
appropriate figure would be. But, in any case, that is not im-
portant. Let us take five dollars for the sake of argument.)

mi. JT7 u But think what an effect such a distribution
W hat would .

9 would nave on the social system. Think of the

Happens . . /

vast increase 01 bargaining power which it

would give to the whole wage-earning population of America.
It would mean that, at a pinch, nobody actually had to take a
job. Most families could just about keep alive whether they
worked or not!

No doubt a certain number of physically or mentally sick
people would simply refuse to go to work any more; but I do
not think myself that this would be a very serious matter.
What would be a very serious matter for the employers would
be that all the other wage earners, who would certainly still

* In practice of course there would be some increase of prices even if idle
means of production were available to increase production in every field, and
if the increase in effective demand were applied steadily and gradually. The
clutch would be bound to slip a little no matter how steadily you let it in, before
the huge bus of the American economic system would accelerate. This would
have to be allowed for in any calculation. But it is not really material to the
principle of the thing.



prefer to work if work would bring them in a good wage,
would insist that they would not work unless their work did
bring them in a good wage! Think of the immense stiffening
of the front which labor, whether organized or unorganized,
would at once present to its employers ! The ultimate sanction
by which the employers get people to work for them is that
the workers will starve if they refuse. Remove that ultimate
sanction and you have pretty well knocked the bottom out of
the capitalist system.

Unquestionably, the employers and their friends are per-
fectly correct, from their point of view, in passionately oppos-
ing any approach even to a direct, universal distribution of
money to the entire population by the government. They are
perfectly correct when they say that it would mean that people
would get out of control. They would get out of their control,
that is to say out of the control of their present rulers, the
capitalist employers.

But just as unquestionably all this is no reason whatever
why the people of America should oppose such a scheme. On
the contrary, from the point of view of everybody except the
capitalist employers, there is a very great deal to be said for
it. But we ought to recognize one thing. And it is this: that
just because this scheme would ultimately make the working
of the capitalist system impossible, it cannot be adopted unless
we are prepared to substitute some other economic system for
capitalism. You cannot, in a word, do something which will
make the working of your present system impossible unless



you are prepared to start putting a new system in its place.
For otherwise you will produce chaos.

We can now see that the whole of the pres-
ent furious opposition of the American capi-
PP talist class to Mr. Roosevelt and his policy of

distributing purchasing power was entirely inevitable. It has
nothing to do with the soundness or unsoundness of Mr.
Roosevelt's schemes. The opposition was bound to arise be-
cause these schemes infringe upon, or at any rate lead toward
an infringement upon, the property rights of that section of
the American people which owns the capital of the country.
And that is just why the American people should certainly
give Mr. Roosevelt's plans their strongest support!

Or rather, they should urge Mr. Roosevelt and his adminis-
tration to push their schemes for fighting the depression by
the distribution of purchasing power to the people even more
vigorously than they have yet attempted.

TT T 7 Let us have no illusions upon this score. Mr.

He Is the . .. .

p f Koosevelt met the last depression by distribut-

ing billions of dollars throughout the popula-
tion; and he did succeed in producing a very considerable
revival. But it was suggested, both by Mr. Roosevelt and by
other spokesmen of his administration, that his distribution
of purchasing power was merely designed to revive the nor-
mal workings of the capitalist system. We were told that he
was merely "priming the pump" which, once primed, would
go on working of its own accord. I do not know whether the
Administration spokesmen are still saying the same thing to-



day. But if they are, they are failing to face the facts. The
truth is that a distribution of purchasing power to the mass
of the population in supplement to the wages they get from
capitalist industry is in contemporary American conditions an
indispensable and permanent necessity 9 if industry is to be
kept going on anything like a full-time basis.

There is no question of priming the pump. The American
government has got to be the pump. It has got to pump a
steady and substantial stream of purchasing power to the
mass of the population. Only so can it prevent major crises
of unemployment and depression sweeping down upon the
American people. If the American people put sufficient pres-
sure upon both Mr. Roosevelt and upon Congress to ensure
that his present five-billion-dollar program is pushed through
rapidly, and that the money actually gets into the hands of
the population, industry will revive; but not unless. And it
may well be that this program will need to be extended and
supplemented in order to meet the situation.

TL An For what is the alternative? The alternative


is to allow Mr. Roosevelt s attempt to answer
the fundamental question of who is to buy the
goods to be defeated. And defeated this attempt will be unless
it is pushed through with great courage and resolution in the
face of the furious opposition which it has excited and will
excite. If this attempt is defeated, if Mr. Roosevelt is pre-
vented by the reactionary pressure which will be put upon
him and upon Congress from distributing really adequate
amounts of purchasing power to the American people during



the coming months, the depression will deepen into a crisis
more severe even than that of 1932.

In that case Mr. Roosevelt and his administration may well
be discredited. The reactionary forces will be enabled to
throw the blame for the depression on Mr. Roosevelt and his
policies. They will endeavor (and so short is human memory,
that they may succeed) to make the American people forget
that the last depression broke out under the severely conserva-
tive Republican administration of Mr. Hoover. They will
claim that the only way by which the American people can
get their jobs back is to throw out Mr. Roosevelt's supporters
at the coming Congressional election in November, 1938, and
to restore the Republican party to power in the Presidential
election of 1940. They will no doubt hint, if they do not say
it quite openly, that until and unless they and their friends
are restored to power, the American capitalists "will not
play"; but that once the Republicans are put back in office,
big business will feel happy again, the stock market will
boom, vast private investments in new factories, mines, rail-
roads, etc., will be made by private enterprise, and everybody
will find himself in employment again.

Such propaganda is, of course, sheer blackmail. It amounts
to telling the American people that they must vote for the
candidates selected by the employers, or else they will not be
given jobs. But unless Mr. Roosevelt's administration has
dealt resolutely with this counterattack, unless it has itself
produced jobs for the American people, this may well be a
very formidable attack. Wage earners have got to have jobs,



and if they cannot get them one way, through a progressive
administration, they are almost forced to turn back to reaction
in the hope of getting employment at any cost.

A ?u D o But this is not to say that the American
A New Boom? J
7 >y people would be likely to recover either pros-

s* 7 perity or security if they turned back to the

Republican party because they felt that Mr.
Roosevelt's administration had failed them. Let us think for
a moment of what would happen if Mr. Roosevelt's attempt
to solve the problem in the progressive way were to be

It seems to me possible, though by no means certain, that
the return of a Republican administration and congress in the
coming elections of 1938 and 1940 might so please the
American capitalist class that they would feel confident of
their ability to make huge profits again. It might be, there-
fore, that they would decide to re-equip their factories, and
generally to undertake vast new investments. If they did so,
a boom would no doubt begin to develop. And while it was
developing, there would be, no doubt, an increase in employ-
ment. A certain proportion of the American unemployed
would get their jobs back. While the new factories were being
built, the new mines were being sunk, the railroads were be-
ing equipped, and vast new office buildings and luxury apart-
ments were going up, employment might be quite good. And
while employment was good, enough money would be dis-
tributed by way of wages to provide a fair market even for
consumers' goods.



But what would happen as soon as the new factories, mines,
etc., came into production? Can anyone possibly doubt that
what would happen under the new Republican administration
of the 1940's would be precisely the same thing that hap-
pened under the old Republican administration of the 1920's?
The boom would be followed by a crash. Directly the wave
of construction which the political triumph of reaction might
have provoked had passed, the old question of who was to
buy the goods would return in full force.

And it would return, not merely to the same extent, but to
a far greater extent than ever before. Can there be the slight-
est doubt that the triumph of reaction in America would mean
the smashing of the recent gains of the American people? It
would mean the curtailment of all social services, the stop-
ping of any distributions of purchasing power by the govern-
ment, and above all the smashing of the new American trade-
unions. Wage rates would fall steeply. Therefore, as soon as
the wave of construction was finished, the market for the
ultimate product of industry would be smaller than ever. The
crash would be far worse than anything seen before. More-
over a new reactionary administration would do as little as,
or less than, the administration of Mr. Hoover did, to mitigate
the suffering of the American people in the new catastrophe.

7 , Can there, therefore, be the least doubt that

Roosevelt s it i c

. the American people can nave no hope of any-

thing but the most short-lived and dearly
bought prosperity from turning back toward reaction? The
opposition which the capital-owning class is inevitably rais-



ing to the attempt to answer the question of who is to buy the
goods by distributing purchasing power to the mass of the
population, is formidable. But all the same, along these lines
lies the only way out. However, the opposition which has
arisen, and which will inevitably grow more and more intense,
should warn us that the distribution of purchasing power can,

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Online LibraryJohn StracheyHope in America → online text (page 5 of 12)