munity; and more lately, the expansion and contraction of currency and bank-notes, and the validation of credit for the purpose of increasing the volume of money, which is a very dangerous power in the hands of individuals and groups, has also passed partially to the community under our Federal Reserve System, with consequences which still demand open-minded scrutiny, since what we have done is to delegate these arbitrary powers of validation to a narrow personal control, however carefully selected. This, under our political system, is almost bound to suffer periods of deterioration with disastrous results, for the very impersonal reason that our present currency has no integral relation to basic value.[1]
The arbitrary units of power, therefore, as they became unduly massed in individual hands, have been either dispersed or absorbed by the community; but the silent concentration of power in land-ownership has not yet been dealt with as an immediate menace. This is due to the absence of direct pressure, owing to the intervention of an arbitrary system of taxation and a spurious basis of value, both of which break the enlightening sequence of cause and effect. With growing economic consciousness, however, the domination of large land-holdings is beginning to be brought to focus locally in this country and to be apprehended even more keenly elsewhere. Certain popular legislation in Great Britain and Australia, the economic justification for which may well be questioned, has been in response to noticeable pressure and gathering apprehension.
In the United States, the imposition of an inheritance tax is perhaps our first hasty defensive posture but, even with this
- ↑ The conversion of swaying credits into apparent measurable resources—a desperate attempt to create economic demand out of thin air—was probably one of the incurable conditions that forced Germany to try to cut her way out of an impossible situation by the sword. It was fairly well known to merchants doing business in South America and the Orient, that the long-term credits granted by the officially supported merchant-emissary of the German Government were not sound; but they were validated—by a long chain of banks centering in Berlin whose functions were semi-official. The rosy-looking but ridiculous expansion went on while our zealous American Consuls upbraided us for failing to follow suit: we could not, then; but we are opening the way by various devices for making endorsed foreign obligations a further basis of currency.
