Letter: Mr. Dight says this is the "The Kybosh" (1920)

Letter to the Editors from the November 1920 issue of the Socialist Standard

To the Editors.

Dear Sirs,

Your correspondent's reply to my letter is, like the flowers that bloom in the spring, nothing to do with it. I could not for the life of me grasp what he was driving at till I came to that part of it where he says—

"How the quotation from the twelfth paragraph describing the Commune as 'the political form at last discovered,' etc., helps Mr. Dight, who is opposed to political action and policy, I fail to see." 

I can only conclude that J.F. was sick when he read and replied to my letter, as I certainly do not believe that he would wilfully misrepresent, and the other alternative of stupidity on J.F.'s part is very far from being manifest. If he had read my letter carefully he would not have wasted, what must be to you, your valuable space, in replying, at such great length, to something that doesn't exist, except in his own heated imagination. If he had paid more attention to my letter he would have seen that I was NOT "opposed to political action and policy," but that I was concerned with advocating ''the political form at last discovered, under which labour could work out its own economic emancipation" as opposed to your parliamentarism. To utterly ignore and dismiss the above quotation from Marx with the remark that it doesn't help me, "who is opposed to political action and policy" (J.F. says that, I don't) is on a par with the rest of his reply, namely, a shuffle.

Even though I were opposed to political action, the above quotation from Marx does not help your party, or J.F., but diametrically opposes your position, when in your Declaration of Principles you refer to "THE machinery of government" and the need for utilising "THIS machinery" as a means for achieving working-class emancipation. The British parliamentary political machine existed at the time when Marx wrote in reference to the Commune that "its true secret was this. It was essentially the government of the working class—it was the political form at last discovered, under which labour could work out its own economic emancipation." (Italics mine.) Note the words "at last discovered." For the purpose of emancipation, therefore, .Marx had apparently been seeking to discover "the political form," etc., and in spite of the existing British parliamentary political machinery, "the political form" was only "at last discovered" with the advent of the Paris Commune.

Another instance in J.F.'s reply which may be cited as one in which he attempts to set up an Aunt Sally before proceeding to knock it down, is the one in which he quotes Lenin in "contradiction" to my "attempt at a case" (as if in my letter I was in any way concerned with supporting or opposing Lenin). And how does Lenin "so flatly contradict" etc. To show how J.F. quotes as follows : "The exploited classes need political supremacy in order to abolish all exploitation," etc. Seeing that I advocate this political supremacy, I fail to see how it contradicts my position. As I have already inferred, J.F. could not have read my letter with any great care, else he would have noted my statement that "during a proletarian revolution the bourgeois State machine will not be utilised but broken and in its stead another State erected—the dictatorship of the proletariat." What J.F. fails to see (among other numerous things) is that there is a vast difference between attaining to "political supremacy" and the politically unsound attempt at capturing "the machinery of government" and utilising it as "the agent of emancipation and the overthrow of privilege." (Your Declaration of Principles.)

With reference to the charge levelled against me of having lifted a sentence from its context and so subjecting that sentence to a different interpretation than was originally intended, I am fully aware that that has been attempted by Anarchists in the past, and I have had occasion to frustrate the attempt and to point out that Marx and Engels were not "opposed to political action and policy." But then I quoted the sentence from its context in the sense that implied the existence of the context in the same way as Marx and Engels have seen fit to do, for in the preface to the "Communist Manifesto" Marx and Engels have found it quite sufficient to quote the sentence only as being all-important in itself.

I note that my letter has been given the title of "Those Misrepresentations of Marx Turn Up Again." Now I am very much concerned about "those misrepresentations," and I contend that you are the party that has been indulging in them on the one hand, and the Anarchists on the other : for, while on the one hand the Anarchists have sought to establish the claim that Marx and Engels were opposed to any political activities on the part of the workers, you, on the other hand, claim that the working class can "simply lay hold of the ready made State machinery and wield it for its own purposes." If J.F. read my letter as he should have done, he will see it to have been an endeavour to turn those "misrepresentations" down rather than up.

How the long quotation from "The Civil War in France" goes to show "the workers' position after they have seized this power (political supremacy) I cannot see. Nor is it very clear what is meant by "the workers' position after they have seized this power." We get an inkling, however, from another source, as instance, the statement of Gilmac in this month's Socialist Standard, Says Gilmac:

  "This statement appears before Marx's summary of the development of the State and he then goes on to show why the working class cannot wield it for its own purposes. The reason is that the State is a repressive power used against a subject class. As there will be no subject class in the new society, there will be no use for a repressive power." 

The quotation by Gilmac from Engels as well as from Marx is very unfortunate for your party and supports my contention. But how does Gilmac quote Engels in support of your Declaration of Principles that the "instrument of oppression" (the State) can be "converted into the agent of emancipation"? Here is the quotation from Engels:

  "From the very outset the Commune had to recognise that the working class having once obtained supremacy in the State, could not work with the old machinery of government." (Italics mine.) 

And here is his quotation from Marx :

  "The worker must, sometime, get the political power into his own hands in order to lay the foundations of a new organisation of labour. He must overthrow the old political system that upholds the old institutions, etc." (Italics mine.) 

Marx here clearly shows my contention in my letter to have been correct, namely, that "during a proletarian revolution the bourgeois State machine will not be utilised but broken," etc. Your party is not out for the "overthrow" of the "old political system," etc., but to "convert" it "into the agent of emancipation." The position when Socialism is established is such, of course, that the State will not be needed, because of the abolition of classes, and Engels has told us that in the process of this abolition "the State will wither away." What State did Engels refer to? Did he refer to the bourgeois or the proletarian State? The Communards "overthrew the old political system" (it did not "wither away") because "they could not work with the old machinery of government," and Marx says that the workers "must overthrow the old political system." Obviously it is the proletarian State to "which Engels refers—the erection of which you should advocate if you are Marxians. I said in my letter that I was opposed to your parliamentarism and in justification of this parliamentarism J.F. quotes as follows; "The Commune was to have been a working, not a parliamentary body, executive and legislative at the same time."

Well, of course, the proletarian State will be parliamentary in the broad sense of its meaning, and so are the Russian Soviets; but then I used the term in the limited sense, as you did some months ago when you had an article on "Parliament or Soviets," and when you advocated for Parliament as opposed to the other.

Referring to my statement that there can be no such thing as a constitutional social revolution J.F. says that in that way I have shown my "ignorance of even modern history, for Japan carried through a constitutional social revolution in 1871 when feudalism was abolished." I do not deny that Japan carried through a social revolution, but is J.F. sure that it was constitutional? I take it from his remarks on this point that he has read the constitution of feudal Japan and that he hasn't in any way found it in conflict with the political aspirations of the Japanese bourgeoisie of that time. If that is so, then I am astounded at J.F.'s merit in the analytical sense—or the lack of it. All I know is that it runs counter to the Marxian theory of the Materialist Conception of History. Fancy, a constitutional social revolution when "the economic structure of society is the real basis on which the juridical and political superstructure is raised, and to which definite social forms of thought correspond : in short, the mode of production determines the character of the social, political, and intellectual life generally." (Marx," Capital.") And again:

 "In every historical epoch the prevailing mode of production and exchange, and the social organisation necessarily following from it, form the basis upon which is built up, and from which alone can be explained, the political and intellectual history of that epoch." (Engels, second preface to the "Communist Manifesto.") 

In conclusion, I am convinced that if Marx and Engels were living to-day, and providing you had any influence with the working class, they would ask to be saved from their "friends." Apart from commenting upon the fact that I have noticed one or two minor distortions of my letter, I think I have given you enough to ponder over.

The statement by J.F. that I haven't read the works I quoted from is not true. This is the result of his knowledge that I did not quote from the actual works which I read years ago, but which I did not possess at the time of writing my letter. I note that J.F. calls his reply "The Socks." Will you kindly permit me to call this rejoinder "The Kybosh"?

Yours faithfully, 

H. Dight

Reply:

Then What Is This? 
One can easily agree with Mr. Dight when he complains that he does not understand my reply to his first letter. The lack of understanding is certainly not limited to that reply. It extends to Marx's writings, and even to several of his (Mr. Dight's) own statements.

When a correspondent misquotes, misinterprets, and opposes the works of an author he claims to agree with, there are two explanations possible of his action. One is that he has not read that author, the other is that he is deliberately misquoting him. I gave the long quotations from Marx to show the inaccuracy of Mr. Dight's statements, and gave the charitable interpretation that he had not read Marx. Now, while claiming that he has read Marx, he states that it "was years ago," and admits that he had not the works by him when writing, thus confirming my case. But he makes a far more important admission. In quoting from Lenin's book he had omitted certain words that I pointed out altered the whole sense of the paragraph. He now admits that he omitted those words, and then says "Well, of course, the proletarian State will be parliamentary in the broad sense of its meaning." This latter statement not only shatters his whole position, but is another illustration of the lack of understanding referred to above.

Mr. Dight tries to contend that his first letter showed that he "was not opposed to political action and policy," and in support of this contention says he was "concerned with advocating 'the political form at last discovered under which labour could work out its own emancipation' as opposed to your parliamentarism." This is another case of failure to understand his own terms. Although I had, in my previous answer, given a short account of political and parliamentary actions, Mr. Dight makes not the slightest attempt to deal with that account, nor even to state what he means by "parliamentarism."

There are two, and only two, general methods of political action open to the working class. One is to use their political weapons to place the master class in Parliament—the citadel of power—and the other is to use those weapons to drive the master class out of that citadel. We, being Marxists, advocate the latter method.

Mr. Dight opposes this policy. But he does not advocate the former policy. Therefore the only attitude left open to him by his antagonism to our policy is opposition to political action.

Mr. Dight says that he "cannot see" how the long quotation from "The Civil War in France" says what it states. Most of our readers will agree as to his blindness when they are reminded of a phrase in the Manifesto of the Central Committee given in the earlier part of the quotation: "They" (the proletarians of Paris) "have understood that it is in their imperious and their absolute right to render themselves masters of their own destinies, by seizing upon the governmental power." Marx gloried in their action, which is the policy laid down in our Declaration of Principles. When I said that the quotation in full showed that the much abused phrase of Marx was referring to the workers' position after this seizure Mr. Dight retorts that I am answered by Gilmac when quoting Engels in the same issue. Doubtless it surprises Mr. Dight to find two writers in such close agreement, a crime of which our writers and speakers are commonly guilty. Gilmac's quotation says: " From the very start the Commune had to recognise that the working class having once attained supremacy in the State, could not work with the old machinery of government." Here, in language simple enough for a child to understand, Marx and Engels state that the workers must first seize political power to achieve emancipation. It is as clear as daylight that before the workers can construct a State in harmony with the common ownership of the means of life, they must have reached power, must have "attained supremacy," must have "laid hold of the State machinery," must have captured Parliament. Not until they have carried out this political action can they control the armed forces and use them as the agent of emancipation to drive the capitalist class out of possession.. Obviously those who oppose this policy are anti-Marxians, whether they call themselves Anarchists or Communists.

Mr. Dight asks if I found "the constitution of feudal Japan in conflict with the political aspirations of the Japanese bourgeoisie of that time?" And then he says: "All I know is that it runs counter to the Marxian theory of the Materialist Conception of History." Of course, he does not know anything of the sort. His statement shows first the confusion existing in his mind, secondly the lack of knowledge of the conditions by his reference to the "political aspirations" of the Japanese bourgeoisie, and thirdly his entire ignorance of the Materialist Conception of History.

That theory points out that when economic development reaches a certain stage, a more or less rapid change must take place in the superstructure of society, but, of course, says nothing at all of the change being brought about "constitutionally" or "unconstitutionally." as, clearly, this factor depends upon the circumstances prevailing at the time. In accordance with the powers given them by the constitution, the ruling class in Japan (partly capitalist partly feudal) carried through a social revolution. All Mr. Dight's "fancies" cannot touch these facts. Another illustration of what can be done "constitutionally" occurred in this country in 1914. When war broke out the Parliament—the central organ of Political Power—wiped out the whole legal basis of Private Property and Personal Right by giving the Government power to take any property and any person it desired under the notorious Defence of the Realm Acts. And this was quite "constitutional" and not in the least "Fancy," as so many found to their cost.

There is one other inaccuracy. Mr. Dight wishes to call his rejoinder "The Kybosh." Its proper title would be "The Boomerang."

Jack Fitzgerald

Editorial: Light, More Light ! (1920)

Editorial from the November 1920 issue of the Socialist Standard

Now that the winter season is upon us, with the usual contraction of outdoor activities and surrender to the lure of the "kitchen cobbles"—at 3s. 3d. per cwt. (observe how neatly we steer between the sentimental poetic and the stodgey prosaic)—we take the opportunity of directing our readers' attention to the very important matter of their education—Socialist education.

If it is anywhere true that 'a little knowledge is a dangerous thing,' it surely must be in the movement for working-class emancipation. Here a mere glimpse of the truth, revealing the glory of the possibilities of the future society, may kindle hopes and stir emotions that might become a very valuable asset—to the labour misleader, and therefore to his capitalist paymasters. Socialist education is the only thing that can make the workers thoroughly acquainted with their economic and social interests and how to proceed to secure their earliest realisation, and is, therefore, the only thing that can keep them out of the hands of those ghouls the "labour leaders," and from being led off onto the roads of error, and even shepherded into the masters' camp.

Those upon whom devolve the task of producing this journal keep ever before them the vast importance of this matter of education in the deeper things of our propaganda, as also do our speakers and lecturers; but it is precisely these things that are least suitable for expounding in the meagre pages of a monthly journal, and even less suitable for exposition from the street-corner platform. For these highly scientific and technical subjects there is nothing to compare with the classic works, and no method within the general reach of men and women of the working class which can altogether take the place of home study.

We urge upon all readers, therefore, to make profitable use of the winter nights by securing Socialist works and studying them. In this course we unreservedly place our services at the disposal of our friends, and shall be happy to advise, or to explain difficult points.

To Heel. (1920)

From the November 1920 issue of the Socialist Standard

The antics of the "Daily Herald" are just now extremely interesting and, in these days of fakes and fakers, keep the observer wondering what will turn up next.

We have seen the one in which the Bolshevik £75,000 was turned down in heroic mood, and our admiration was excited—more or less—by the beatific terms of self-righteousness in which the martyrs made public their martyrdom.

Being credulous, we may try to believe in the protestations of Lansbury and Co. that they were ignorant of the negotiations carried on by Francis Meynell in Russia, although it may be noted that this individual resigned from the "Herald" board when their action was made public. Nelson is alleged to have put his glass to his blind eye at the battle of Copenhagen, and one wonders if that was the action of the "Herald" directorate whilst Meynell was wandering around in Russia. In any case, the offer became public property from other sources than the sheets of the "Daily Herald" before its readers were regaled with the details and were asked to express their opinions as to the acceptance or rejection of this mysterious lucre.

If any of my readers followed the published answers to this query they will have waded through extracts giving ayes and nayes, and will have had fresh evidence of the hope for Socialism expressed by such a journal, supported by such a medley of points of view.

The latest turn is the raising of the price of the "Daily Herald" from 1d. to 2d., and at the moment of writing the matter is being presented as a life and death struggle between the capitalist Press and itself. And judging by the tone of the scribes who are entrusted with the "writing up," the demise of the "Daily Herald" would be a double funeral—that of itself and that of Socialism. This, however, is hardly likely to be the case for the following reasons :

The "Daily Herald" is not a Socialist journal, is not run by Socialists, is not written by Socialists, does not present Socialism in any shape or form, and is not read by Socialists as such. The only thing connected with it that has any relation to Socialism is the word, and it has to be presumed that the idea behind the constant use of the term "Socialism" in its columns is that constant repetition of terms is the only necessity for the production of facts.

This point of view may be good enough for readers of the "Daily Herald" (which is so much the worse for them) but it is not good enough for us, and we state unequivocally that Socialism would not suffer one jot or tittle if that paper suspended publication to-morrow.

I am prepared to admit that the "Daily Herald" very occasionally tells a little more of the truth than the organs of the Press when it suits the powers behind it, but the Socialist knows what value to place on the news ladled out daily to the working class, and therefore is not to be carried away by that, and the members of the working class who have not yet awakened to the knowledge of their position in society will not arrive at that awakening any faster by reading what the renegade Atheist, Lansbury, or any of his staff, may decide is good for them to know.

To give an idea of the "freedom" of opinion represented in the columns of the "Daily Herald" we have only to remember that quite a large and growing interest is controlled by the trade unions and co-operative societies, and various of them from time to time vote sums of money to be invested therein. In addition it is common knowledge that a proportion of seats on the board are allotted to their representatives, "responsible trade union leaders" and co-operative society officials, all of which obviously shows that the policy of the paper has to coincide with the ideas of these gentry. Otherwise the funeral service of the paper would soon be read, as it could not exist through many issues without such support.

Thus it is quite clear that any criticisms of the actions of ''responsible trade union leaders'' and their like have to be made, if at all, with an eye to the possible effect upon the funds and circulation. As an illustration of this may be cited Robert Smillie's crawl out over the miner's strike, where he endeavoured to get the miners to consent to their demand for higher wages being made contingent upon increased production. Only Smillie can explain how the miners could benefit under such a scheme, and though he might satisfy the readers of the "Daily Herald" by such an explanation, the could not satisfy a Socialist, and probably only a small proportion of the miners. Anyway, the "Labour" daily dared not criticise Smillie, although its policy—if such a term can be applied to a total absence of any semblance to a definite point of view—appears to be in disagreement with the Smillie backslide.

The same argument applies generally. No journal not supported by Socialists can put the Socialist viewpoint, just as no worker can produce works of art if he is paid to make golly-wogs—"he who pays the piper calls the tune," and the tune the "Daily Herald" has to pipe is called by as motley a crew of anti-Socialists and time-servers as could be found in the whole newspaper world.

When the workers decide that they require a Socialist daily Press they will have it and support it, and they will not invite assistance from Lansbury and his like, or accept it if offered. They will see to it that Socialism is presented and Socialism only, recognising that Socialists can only be made by Socialist propaganda.

D.W. F.

Don't Be Misled. (1920)

From the November 1920 issue of the Socialist Standard

While attending a crowded meeting held by the Socialist Party of Great Britain in North London the other night, the writer was afforded a glimpse into the mind of a man in the audience who might be taken as representative of the ordinary type of individual.

This man showed by his manner that he was intelligent to a degree, but he also showed that his education was sadly in need of extension.

He asked the speaker (who had referred to the probability of the coming winter being a very hard and

BLACK ONE for the workers) a question, the gist of which is as follows:

  "Don't you think that, while keeping to the idea of bringing in Socialism, the workers would be well advised to agitate for reforms to mitigate the hard times that are undoubtedly in store for them this winter ? Such reforms as getting the Government to give up the campaign in Mesopotamia, to resume trade relations with Russia, to start building houses on a large scale in England, which would put thousands into work, and to take full advantage of countless other ways of economising and making work for the enormous army of unemployed ?" 

It may also be noted here that the questioner declared that he was "in sympathy with the Socialists," in fact he was a Socialist !

Now, as men who have studied the matter from the point of view of working-class interests—and the interests of the only other class, the capitalist class, are in good enough hands— we are able to state most emphatically that agitating for reforms of THE CAPITALIST SYSTEM will not better the material conditions of the working class generally.

It matters not what reform the working class may agitate for or against, the final say as to whether it shall or shall not be rests with the capitalist class and their agents.

The term "capitalist agent" comprises every member of Parliament and a great many who would like to be members. Very few workers, however, have sufficient knowledge to understand that the three candidates who stood for the constituency of Ilford at the recent bye-election were, without exception, agents of the capitalist class.

However, let us get back to this matter of reforms.

During recent years we have had some shining examples of reforms that were or WERE NOT WANTED by the workers being placed on the Statute Book because the capitalist class judged them expedient for their own interests. Take for example the National Health Act.

When that "rare and refreshing fruit" was dangled before the eyes of the workers by the capitalist agent, Mr. Lloyd George, it was a reform strongly objected to by the workers in general, but because it suited the interests of the capitalist class, and because, as at Ilford recently, the workers had blindly given away their power to have things otherwise, that reform went on the Statute Book.

Again, the granting of a pension to aged poor persons was a reform that the workers generally desired.

The capitalist agents examined the idea, laughed up their sleeves, and old age pensions became an accomplished fact.

And now the poor old pensioner knows that he would be better off in the workhouse. We can get what satisfaction we may out of knowing that the workhouses are practically empty (some having been sold), and that old age pensioners—who must have led "respectable" lives—cannot possibly live on the miserable pittance that reform has given them.

Old people without friends or resources did not starve in the workhouse, but now they are COMPELLED to do so on the terribly inadequate sums they receive, while, by way of contrast, a law-breaking criminal, a convict, according to Sir J. L. Baird, Under Secretary at the Home Office, costs the Government the sum of £111 per annum for his upkeep.

Take the latest reform that has come about, the Unemployment Insurance Act that comes into force on November 8th.

Unemployment benefit will be at the rate of 15s. weekly for men and 12s. for women—and not for more than 15 weeks in any insurance year.

According to the "Daily Chronicle" of Oct. 8th, Preston, to take only one town, had a sixth of its population out of work, and "an increasing number of firms are adopting short time and curtailing output."

Our capitalist masters hare seen the possibility of serious trouble arising as a result of the terrible misery, want, and disease that will unavoidably follow in the train of such widespread and lasting unemployment.

They know that it is easier for them to subsidise misery than to meet strife, hence the 15s. per week for the breadwinner to keep himself, his wife, and his children on, and bread costing 1s. 4d. per quarter ! AFTER 15 WEEKS WHAT?

Let the workers gravely consider these reforms, and then reflect that all the material wealth of the world is the result of the application of the workers' energy to nature-given material.

Wealth can be produced in stupendous abundance by the workers, but that production is limited by its profit-extracting possibilities for the capitalist class. When the capitalist sees no chance of disposing of the articles that his employees have produced, for a substantial profit, he curtails production or closes down his works altogether.

To-day the warehouses of the world are filled to overflowing with the goods necessary to life. The capitalists cannot dispose of them; the workers are forbidden by capitalists' property-protecting laws to take what they are so much in need of, although there is plenty for all.

And the worker, in his profound ignorance and general apathy toward these problems that concern him so vitally, is content to starve, or at best to agitate for reforms !

The wonderful knowledge attained up till now by human beings is not sufficient to prevent the vast majority of them being in danger throughout their lives of starving in the midst of plenty—of the plenty created by themselves.

This vicious system that we live under has not always been, and it need not continue. But before it can be superseded by Socialism, which is a system of society based upon the common ownership of the means of life, Socialism must be understood and desired by the workers generally.

To agitate for the reform of a system which has such a basis as the capitalist system has, to endeavour to palliate its inevitably harsh bearing upon those who possess nothing, is a waste of energy and time.

Worse than that, the struggle for reform obscures the main issue.

One thing, and one thing only, will change for the better the condition of the workers generally, and that is the OVERTHROW OF CAPITALISM and its supersession by Socialism.

Our friend the questioner, although declaring himself to be a Socialist, proved beyond doubt that he did not understand what Socialism means, and consequently he could not be a Socialist.

He is not alone, however, in labouring under a multitude of disarranged ideas. There are many unfortunately like him who do not understand what Socialism means but who are always ready to assert that they are Socialists.

There are also a great many who, while thoroughly understanding the Socialist position, are satisfied to improve their own position at the expense of the workers whom they mislead—men who make a good fat living out of wearing out the workers' energy and obscuring their understanding by leading them in strivings for reform that, at best, only prolong the life of a system that makes the existence of the worker a long-drawn-out terror.

Some of these paid misleaders of men have actually enough subtlety and bare-faced villainy about them to call themselves Socialists.

This refers to such agents of the capitalist class as the apostles of reform who, a short time ago were strenuously advising the workers to PRODUCE MORE with the result that is plain for any poor fool to see to-day, when, as the consequence of having "produced more" than our capitalist masters can find a ready market for, the workers are unemployed and unable to obtain the things they need to keep themselves alive.

The abolition of capitalism and the inception of Socialism is a work that necessitates knowledge of the system now obtaining, of the system that can replace it, and of the necessary work that shall make Socialism an accomplished fact.

To gain this knowledge the workers must think for themselves !

Socialism will not come until it is generally understood and desired.

Organisation will give knowledge an effectiveness that will sweep want and poverty from the earth.

Such an organisation is to your hand in the Socialist Party of Great Britain.

Your lot to-day is insecurity of life, misery, degradation and want, but if you will have it.

S.

Letter: An Interesting Letter from a Reader. (1920)

Letter to the Editors from the November 1920 issue of the Socialist Standard

To the Editor.

Dear Sirs, —The article “Paradox or Illusion” which appeared in your July issue should be read by all who desire their minds cleared of the bunkum served up by the daily Press.

The vicious reasoning that leads to a “vicious circle” conclusion is effectively dealt with. Therefore it surprised me not a little to find a discordant in the person of ” Bannochie,” whose contribution appeared in last month’s issue.

Our friend assumes, apparently, that as the market price of gold is above the mint price, the law upon which your conclusions are based is inoperative,

Is it not probable that this unusual phenomenon of gold premium is due to the chaotic state of the foreign exchanges, and not to an excessive issue of paper money, and that the sum total of prices still determine the sum total of money and not vice versa ?

A perusal of the metal market quotations shows that the price of gold varies inversely with the exchange rate for American dollars. The Government is redeeming a portion of the debt contracted during the war. The usual method adopted in the repayment of foreign loans is the cancellation of “bills” purchased from the exporters of goods to the creditor country. “Bills” are, however, at a premium, and it may be more economical to purchase gold and export it than to purchase “bills,” which, incidentally, by reducing the number available for importers, would tend to depreciate the rate of exchange still further.

No private individual is allowed to draw sovereigns from the Bank for export, but he may purchase gold bullion. Consequently the keen competition for gold to evade the necessity of buying ‘”bills” forces the price of gold to a premium.

And now for the point at issue:

Every “bill” endorsed is a promise to pay in gold.

It matters not the method, or the expense incurred in the process. The question of premiums and discounts is, strictly speaking, a domestic one.

Goods have had their values expressed in terms of gold, and equal quantities of gold have equal value, nothing more or less.

Yours faithfully, 

Wm. Nicholls.

Our Comment.

Mr. Nicholls’s views are correct, as is easily seen when one calls to mind the large number of countries that are in debt owing to the war. This means that not only here, but in every country in Europe, there is a scramble for gold either to meet the interest on this debt or to pay balances for goods received. As the gold is, obviously, not paid for by gold, but by goods or credit, it simply means that more goods, or more credit, is being offered for the gold to-day. Hence its “price”—a term causing great confusion in the minds of people at the moment, is higher than before.—Ed. Com.