-
- Fabian was excited as he once more rehearsed his speech
for the crowd certain to turn up tomorrow. He had always wanted prestige
and power and now his dreams were going to come true. He was a craftsman
working with silver and gold, making jewelry and ornaments, but he became
dissatisfied with working for a living. He needed excitement, a challenge,
and now his plan was ready to begin.
-
- For generations the people used the barter system. A
man supported his own family by providing all their needs or else he specialized
in a particular trade. Whatever surpluses he might have from his own production,
he exchanged or swapped for the surplus of others.
-
- .................
-
- Market day was always noise and dusty, yet people looked
forward to the shouting and waving, and especially the companionship. It
used to be a happy place, but now there were too many people, too much
arguing. There was no time for chatting - a better system was needed.
-
- Generally, the people had been happy, and enjoyed the
fruits of their work.
-
- In each community a simple Government had been formed
to make sure that each person's freedoms and rights were protected and
that no man was forced to do anything against his will by any other man,
or any group of men. This was the Government's one and only purpose and
each Governor was voluntarily supported by the local community who elected
him.
-
- However, market day was the one problem they could not
solve. Was a knife worth one or two baskets of corn? Was a cow worth more
than a wagon and so on. No one could think of a better system.
-
- Fabian had advertised, "I have the solution to our
bartering problems, and I invite everyone to a public meeting tomorrow."
...................
-
- The next day there was a great assembly in the town square
and Fabian explained all about the new system which he called "money".
It sounded good. "How are we to start?" the people asked.
-
- "The gold which I fashion into ornaments and jewelry
is an excellent metal. It does not tarnish or rust, and will last a long
time. I will make some gold into coins and we shall call each coin a dollar."
-
-
- He explained how values would work, and that "money"
would be really a medium for exchange - a much better system than bartering.
-
- One of the Governors questioned, "Some people can
dig gold and make coins for themselves", he said.
-
- "This would be most unfair", Fabian was ready
with the answer. "Only those coins approved by the Government can
be used, and these will have special marking stamped on them." This
seemed reasonable and it was proposed that each man be given an equal number.
"But I deserve the most," said the candle-maker. "Everyone
uses my candles." "No", said the farmer, "without food
there is no life, surely we should get the most." And so the bickering
continued.
-
- Fabian let them argue for a while and finally he said,
"Since none of you can agree, I suggest you obtain the number you
require from me. There will be no limit, except for your ability to repay.
The more you obtain, the more you must repay in one year's time. "And
what will you receive?" the people asked.
-
- "Since I am providing a service, that is, the money
supply, I am entitled to payment for my work. Let us say that for every
100 pieces you obtain, you repay me 105 for every year that you owe the
debt. The 5 will be my charge, and I shall call this charge interest."
-
- There seemed to be no other way, and besides, 5% seemed
little enough charge. "Come back next Friday and we will begin."
-
- ...............
-
- Fabian wasted no time. He made coins day and night, and
at the end of the week he was ready. The people were queued up at his shop,
and after the coins were inspected and approved by the Governors the system
commenced. Some borrowed only a few and they went off to try the new system.
-
- They found money to be marvelous, and they soon valued
everything in gold coins or dollars. The value they placed on everything
was called a "price", and the price mainly depended on the amount
of work required to produce it. If it took a lot of work the price was
high, but if it was produced with little effort it was quite inexpensive.
-
- In one town lived Alan, who was the only watchmaker.
His prices were high because the customers were willing to pay just to
own one of his watches.
-
- Then another man began making watches and offered them
at a lower price in order to get sales. Alan was forced to lower his prices,
and in no time at all prices came down, so that both men were striving
to give the best quality at the lowest price. This was genuine free competition.
-
-
- It was the same with builders, transport operators, accountants,
farmers, in fact, in every endeavor. The customers always chose what they
felt was the best deal - they had freedom of choice. There was no artificial
protection such as licenses or tariffs to prevent other people from going
into business. The standard of living rose, and before long the people
wondered how they had ever done without money.
-
- ..................
-
- At the end of the year, Fabian left his shop and visited
all the people who owed him money. Some had more than they borrowed, but
this meant that others had less, since there were only a certain number
of coins issued in the first place. Those who had more than they borrowed
paid back each 100 plus the extra 5, but still had to borrow again to carry
on.
-
-
- The others discovered for the first time that they had
a debt. Before he would lend them more money, Fabian took a mortgage over
some of their assets, and everyone went away once more to try and get those
extra 5 coins which always seemed so hard to find.
-
- No one realized that as a whole, the country could never
get out of debt until all the coins were repaid, but even then, there were
those extra 5 on each 100 which had never been lent out at all. No one
but Fabian could see that it was impossible to pay the interest - the extra
money had never been issued, therefore someone had to miss out.
-
- It was true that Fabian spent some coins, but he couldn't
possibly spend anything like 5% of the total economy on himself. There
were thousands of people and Fabian was only one. Besides, he was still
a goldsmith making a comfortable living.
-
- .........................................................
-
- At the back of his shop Fabian had a strong room and
people found it convenient to leave some of their coins with him for safekeeping.
He charged a small fee depending on the amount of money, and the time it
was left with him. He would give the owner receipts for the deposit.
-
- When a person went shopping, he did not normally carry
a lot of gold coins. He would give the shopkeeper one of the receipts to
the value of the goods he wanted to buy.
-
- Shopkeepers recognized the receipt as being genuine and
accepted it with the idea of taking it to Fabian and collecting the appropriate
amount in coins. The receipts passed from hand to hand instead of the gold
itself being transferred. The people had great faith in the receipts -
they accepted them as being as good as coins. ..................
-
- Before long, Fabian noticed that it was quite unusual
for anyone to actually call for their gold coins.
-
- He thought to himself, "Here I am in possession
of all this gold and I am still a hard working craftsman. It doesn't make
sense. Why there are dozens of people who would be glad to pay me interest
for the use of this gold which is lying here and rarely called for.
-
- It is true, the gold is not mine - but it is in my possession,
which is all that matters. I hardly need to make any coins at all, I can
use some of the coins stored in the vault."
-
- At first he was very cautious, only loaning a few at
a time, and then only on tremendous security. But gradually he became bolder,
and larger amounts were loaned. ...................
-
- One day, a large loan was requested. Fabian suggested,
"Instead of carrying all these coins we can make a deposit in your
name, and then I shall give you several receipts to the value of the coins."
The borrower agreed, and off he went with a bunch of receipts. He had obtained
a loan, yet the gold remained in the strong-room. After the client left,
Fabian smiled. He could have his cake and eat it too. He could "lend"
gold and still keep it in his possession.
-
- Friends, strangers and even enemies needed funds to carry
out their businesses - and so long as they could produce security, they
could borrow as much as they needed. By simply writing out receipts Fabian
was able to "lend" money to several times the value of gold in
his strong-room, and he was not even the owner of it. Everything was safe
so long as the real owners didn't call for their gold and the confidence
of the people was maintained.
-
- He kept a book showing the debits and credits for each
person. The lending business was proving to be very lucrative indeed.
-
-
- His social standing in the community was increasing almost
as fast as his wealth. He was becoming a man of importance, he commanded
respect. In matters of finance, his very word was like a sacred pronouncement.
-
- ..................
-
- Goldsmiths from other towns became curious about his
activities and one day they called to see him. He told them what he was
doing, but was very careful to emphasize the need for secrecy.
-
- If their plan was exposed, the scheme would fail, so
they agreed to form their own secret alliance. .................
-
- Each returned to his own town and began to operate as
Fabian had taught.
-
- People now accepted the receipts as being as good as
gold itself, and many receipts were deposited for safe keeping in the same
way as coins. When a merchant wished to pay another for goods, he simply
wrote a short note instructing Fabian to transfer money from his account
to that of the second merchant. It took Fabian only a few minutes to adjust
the figures.
-
- This new system became very popular, and the instruction
notes were called "checks". ....................
-
- Late one night, the goldsmiths had another secret meeting
and Fabian revealed a new plan. The next day they called a meeting with
all the Governors, and Fabian began. "The receipts we issue have become
very popular. No doubt, most of you Governors are using them and you find
them very convenient." They nodded in agreement and wondered what
the problem was. "Well", he continued, "some receipts are
being copied by counterfeiters. This practice must be stopped."
-
- The Governors became alarmed. "What can we do?"
they asked. Fabian replied, "My suggestion is this - first of all,
let it be the Government's job to print new notes on a special paper with
very intricate designs, and then each note to be signed by the chief Governor.
We goldsmiths will be happy to pay the printing costs, as it will save
us a lot of time writing out receipts". The Governors reasoned, "Well,
it is our job to protect the people against counterfeiters and the advice
certainly seems like a good idea." So they agreed to print the notes.
-
- "Secondly," Fabian said, "some people
have gone prospecting and are making their own gold coins. I suggest that
you pass a law so that any person who finds gold nuggets must hand them
in. Of course, they will be reimbursed with notes and coins." ....................
-
- The idea sounded good and without too much thought about
it, they printed a large number of crisp new notes. Each note had a value
printed on it - $1, $2, $5, $10 etc. The small printing costs were paid
by the goldsmiths.
-
- The notes were much easier to carry and they soon became
accepted by the people. Despite their popularity however, these new notes
and coins were used for only 10% of transactions. The records showed that
the check system accounted for 90% of all business. ....................
-
- The next part of his plan commenced. Until now, people
were paying Fabian to guard their money. In order to attract more money
into the vault Fabian offered to pay depositors 3% interest on their money.
-
- Most people believed that he was re-lending their money
out to borrowers at 5%, and his profit was the 2% difference. Besides,
the people didn't question him as getting 3% was far better than paying
to have the money guarded. ...................
-
- The volume of savings grew and with the additional money
in the vaults, Fabian was able to lend $200, $300, $400 sometimes up to
$900 for every $100 in notes and coins that he held in deposit. He had
to be careful not to exceed this nine to one ratio, because one person
in ten did require the notes and coins for use.
-
- If there was not enough money available when required,
people would become suspicious, especially as their deposit books showed
how much they had deposited. Nevertheless, on the $900 in book figures
that Fabian loaned out by writing checks himself, he was able to demand
up to $45 in interest, i.e. 5% on $900. When the loan plus interest was
repaid, i.e. $945, the $900 was canceled out in the debit column and Fabian
kept the $45 interest. He was therefore quite happy to pay $3 interest
on the original $100 deposited which had never left the vaults at all.
This meant that for every $100 he held in deposits, it was possible to
make 42% profit, most people believing he was only making 2%. The other
goldsmiths were doing the same thing. They created money out of nothing
at the stroke of a pen, and then charged interest on top of it.
-
- True, they didn't coin money, the Government actually
printed the notes and coins and gave it to the goldsmiths to distribute.
Fabian's only expense was the small printing fee. Still, they were creating
credit money out of nothing and charging interest on top of it. Most people
believed that the money supply was a Government operation. They also believed
that Fabian was lending them the money that someone else had deposited,
but it was very strange that no one's deposits ever decreased when a loan
was advanced. If everyone had tried to withdraw their deposits at once,
the fraud would have been exposed.
-
- When a loan was requested in notes or coins, it presented
no problem. Fabian merely explained to the Government that the increase
in population and production required more notes, and these he obtained
for the small printing fee. .......................
-
- One day a thoughtful man went to see Fabian. "This
interest charge is wrong", he said. "For every $100 you issue,
you are asking $105 in return. The extra $5 can never be paid since it
doesn't exist.
-
- Farmers produce food, industry manufacturers goods, and
so on, but only you produce money. Suppose there are only two businessmen
in the whole country and we employ everyone else. We borrow $100 each,
we pay $90 out in wages and expenses and allow $10 profit (our wage). That
means the total purchasing power is $90 + $10 twice, i.e. $200. Yet to
pay you we must sell all our produce for $210. If one of us succeeds and
sells all his produce for $105, the other man can only hope to get $95.
Also, part of his goods cannot be sold, as there is no money left to buy
them.
-
- He will still owe you $10 and can only repay this by
borrowing more. The system is impossible."
-
- The man continued, "Surely you should issue 105,
i.e. 100 to me and 5 to you to spend. This way there would be 105 in circulation,
and the debt can be repaid."
-
- Fabian listened quietly and finally said, "Financial
economics is a deep subject, my boy, it takes years of study. Let me worry
about these matters, and you look after yours. You must become more efficient,
increase your production, cut down on your expenses and become a better
businessman. I am always willing to help in these matters."
-
-
- The man went away still unconvinced. There was something
wrong with Fabian's operations and he felt that his questions had been
avoided. ...................
-
- Yet, most people respected Fabian's word - "He is
the expert, the others must be wrong. Look how the country has developed,
how our production has increased - we must be better off." ..................
-
- To cover the interest on the money they had borrowed,
merchants were forced to raise their prices. Wage earners complained that
wages were too low. Employers refused to pay higher wages, claiming that
they would be ruined. Farmers could not get a fair price for their produce.
Housewives complained that food was getting too dear.
-
- And finally some people went on strike, a thing previously
unheard of. Others had become poverty stricken and their friends and relatives
could not afford to help them. Most had forgotten the real wealth all around
- the fertile soils, the great forests, the minerals and cattle. They could
think only of the money which always seemed so scarce. But they never questioned
the system. They believed the Government was running it. ..................
-
- A few had pooled their excess money and formed "lending"
or "finance" companies. They could get 6% or more this way, which
was better than the 3% Fabian paid, but they could only lend out money
they owned - they did not have this strange power of being able to create
money out of nothing by merely writing figures in books.
-
- These finance companies worried Fabian and his friends
somewhat, so they quickly set up a few companies of their own. Mostly,
they bought the others out before they got going. In no time, all the finance
companies were owned by them, or under their control. ..................
-
- The economic situation got worse. The wage earners were
convinced that the bosses were making too much profit. The bosses said
that their workers were too lazy and weren't doing an honest day's work,
and everyone was blaming everyone else.The Governors could not come up
with an answer and besides, the immediate problem seemed to be to help
the poverty stricken.
-
-
- They started up welfare schemes and made laws forcing
people to contribute to them. This made many people angry - they believed
in the old-fashioned idea of helping one's neighbor by voluntary effort.
-
- "These laws are nothing more than legalized robbery.
To take something off a person against his will, regardless of the purpose
for which it is to be used, is no different from stealing."
-
-
- But each man felt helpless and was afraid of the jail
sentence which was threatened for failing to pay. These welfare schemes
gave some relief, but before long the problem was back and more money was
needed to cope. The cost of these schemes rose higher and higher and the
size of the Government grew. ...................
-
- Most of the Governors were sincere men trying to do their
best. They didn't like asking for more money from their people and finally,
they had no choice but to borrow money from Fabian and his friends. They
had no idea how they were going to repay. Parents could no longer afford
to pay teachers for their children. They couldn't pay doctors. And transport
operators were going out of business.
-
- One by one the government was forced to take these operations
over. Teachers, doctors and many others became public servants.
-
- Few obtained satisfaction in their work. They were given
a reasonable wage, but they lost their identity. They became small cogs
in a giant machine.
-
- There was no room for personal initiative, little recognition
for effort, their income was fixed and advancement came only when a superior
retired or died. ............................................................
-
- In desperation, the governors decided to seek Fabian's
advice. They considered him very wise and he seemed to know how to solve
money matters. He listened to them explain all their problems, and finally
he answered, "Many people cannot solve their own problems - they need
someone to do it for them. Surely you agree that most people have the right
to be happy and to be provided with the essentials of life. One of our
great sayings is "all men are equal" - is it not?"
-
- Well, the only way to balance things up is to take the
excess wealth from the rich and give it to the poor. Introduce a system
of taxation. The more a man has, the more he must pay. Collect taxes from
each person according to his ability, and give to each according to his
need. Schools and hospitals should be free for those who cannot afford
them."
-
- He gave them a long talk on high sounding ideals and
finished up with, "Oh, by the way, don't forget you owe me money.
You've been borrowing now for quite some time. The least I can do to help,
is for you to just to pay me the interest. We'll leave the capital debt
owing, just pay me the interest."
-
- They went away, and without giving Fabian's philosophies
any real thought, they introduced the graduated income tax - the more you
earn, the higher your tax rate. No one liked this, but they either paid
the taxes or went to jail. ....................
-
- Merchants were forced once again to raise their prices.
Wage earners demanded higher wages forcing many employers out of business,
or to replace men with machinery. This caused additional unemployment and
forced the Government to introduce further welfare and handout schemes.
-
-
- Tariffs and other protection devices were introduced
to keep some industries going just to provide employment. A few people
wondered if the purpose of the production was to produce goods or merely
to provide employment. ...................
-
- As things got worse, they tried wage control, price control,
and all sorts of controls. The Government tried to get more money through
sales tax, payroll tax and all sorts of taxes. Someone noted that from
the wheat farmer right through to the housewife, there were over 50 taxes
on a loaf of bread.
-
- "Experts" arose and some were elected to Government,
but after each yearly meeting they came back with almost nothing achieved,
except for the news that taxes were to be "restructured", but
overall the total tax always increased. ...................
-
- Fabian began to demand his interest payments, and a larger
and larger portion of the tax money was being needed to pay him.
-
-
- Then came party politics - the people started arguing
about which group of Governors could best solve the problems. They argued
about personalities, idealism, party labels, everything except the real
problem. The councils were getting into trouble.
-
-
- In one town the interest on the debt exceeded the amount
of rates which were collected in a year. Throughout the land the unpaid
interest kept increasing - interest was charged on unpaid interest.
-
- Gradually much of the real wealth of the country came
to be owned or controlled by Fabian and his friends and with it came greater
control over people. However, the control was not yet complete. They knew
that the situation would not be secure until every person was controlled.
...................
-
- Most people opposing the systems could be silenced by
financial pressure, or suffer public ridicule. To do this Fabian and his
friends purchased most of the newspapers, T.V. and radio stations and he
carefully selected people to operate them. Many of these people had a sincere
desire to improve the world, but they never realized how they were being
used. Their solutions always dealt with the effects of the problem, never
the cause.
-
- ...................
-
- There were several different newspapers - one for the
right wing, one for the left wing, one for the workers, one for the bosses,
and so on. It didn't matter much which one you believed in, so long as
you didn't think about the real problem.
-
- Fabian's plan was almost at its completion - the whole
country was in debt to him. Through education and the media, he had control
of people's minds. They were able to think and believe only what he wanted
them to. ..................
-
- After a man has far more money than he can possibly spend
for pleasure, what is left to excite him? For those with a ruling class
mentality, the answer is power - raw power over other human beings. The
idealists were used in the media and in Government, but the real controllers
that Fabian sought were those of the ruling class mentality.
-
- Most of the goldsmiths had become this way. They knew
the feeling of great wealth, but it no longer satisfied them. They needed
challenge and excitement, and power over the masses was the ultimate game.
-
- They believed they were superior to all others. "It
is our right and duty to rule. The masses don't know what is good for them.
They need to be rallied and organized. To rule is our birthright."
....................
-
- Throughout the land Fabian and his friends owned many
lending offices. True, they were privately and separately owned. In theory
they were in competition with each other, but in reality they were working
very closely together. After persuading some of the Governors, they set
up an institution which they called the Money Reserve Centre. They didn't
even use their own money to do this - they created credit against part
of the money out of the people's deposits.
-
-
- This Institution gave the outward appearance of regulating
the money supply and being a Government operation, but strangely enough,
no Governor or public servant was ever allowed to be on the Board of Directors.
...................
-
- The Government no longer borrowed directly from Fabian,
but began to use a system of I.O.U.'s to the Money Reserve Centre. The
security offered was the estimated revenue from next year's taxes. This
was in line with Fabian's plan - removing suspicion from himself to an
apparent Government operation. Yet, behind the scenes, he was still in
control.
-
- Indirectly, Fabian had such control over the Government
that they were forced to do his bidding. He boasted, "Let me control
the nation's money and I care not who makes its laws." It didn't matter
much which group of Governors were elected. Fabian was in control of the
money, the life blood of the nation. ..................
-
- The Government obtained the money, but interest was always
charged on every loan. More and more was going out in welfare and handout
schemes, and it was not long before the Government found it difficult to
even repay the interest, let alone the capital.
-
- And yet there were people who still asked the question,
"Money is a man-made system. Surely it can be adjusted to serve, not
to rule?" But these people became fewer and their voices were lost
in the mad scrabble for the non-existent interest. ...................
-
- The administrations changed, the party labels changed,
but the major policies continued. Regardless of which Government was in
"power", Fabian's ultimate goal was brought closer each year.
The people's policies meant nothing. They were being taxed to the limit,
they could pay no more. Now the time was ripe for Fabian's final move.
...................
-
- 10% of the money supply was still in the form of notes
and coins. This had to be abolished in such a way as not to arouse suspicion.
While the people used cash, they were free to buy and sell as they chose
- they still had some control over their own lives.
-
-
- But it was not always safe to carry notes and coins.
Checks were not accepted outside one's local community, and therefore a
more convenient system was looked forward to. Once again Fabian had the
answer. His organization issued everyone with a little plastic card showing
the person's name, photograph and an identification number.
-
- When this card was presented anywhere, the storekeeper
phoned the central computer to check the credit rating. If it was clear,
the person could buy what he wanted up to a certain amount. ..................
-
- At first people were allowed to spend a small amount
on credit, and if this was repaid within a month, no interest was charged.
This was fine for the wage earner, but what businessman could even begin?
He had to set up machinery, manufacture the goods, pay wages etc. and sell
all his goods and repay the money. If he exceeded one month, he was charged
a 1.5% for every month the debt was owed. This amounted to over 18% per
year.
-
- Businessmen had no option but to add the 18% onto the
selling price. Yet this extra money or credit (the 18%) had not been loaned
out to anyone. Throughout the country, businessmen were given the impossible
task of repaying $118 for every $100 they borrowed - but the extra $18
had never been created at all.
-
- Yet Fabian and his friends increased their standing in
society. They were regarded as pillars of respectability. Their pronouncements
on finance and economics were accepted with almost religious conviction.
....................
-
- Under the burden of ever increasing taxes, many small
businesses collapsed. Special licenses were needed for various operations,
so that the remaining ones found it very difficult to operate. Fabian owned
and controlled all of the big companies which had hundreds of subsidiaries.
These appeared to be in competition with each other, yet he controlled
them all. Eventually all competitors were forced out of business. Plumbers,
panel beaters, electricians and most other small industries suffered the
same fate - they were swallowed up by Fabian's giant companies which all
had Government protection.
-
- Fabian wanted the plastic cards to eliminate notes and
coins. His plan was that when all notes were withdrawn, only businesses
using the computer card system would be able to operate.
-
- He planned that eventually some people would misplace
their cards and be unable to buy or sell anything until a proof of identify
was made. He wanted a law to be passed which would give him ultimate control
- a law forcing everyone to have their identification number tattooed onto
their hand. The number would be visible only under a special light, linked
to a computer. Every computer would be linked to a giant central computer
so that Fabian could know everything about everyone.
-
-
- ________________________________________________________
-
-
- The story you have read is of course, fiction. But if
you found it to be disturbingly close to the truth and would like to know
who Fabian is in real life, a good starting point is a study on the activities
of the English goldsmiths in the 16th & 17th centuries.
-
|