Letter: Socialism and the Gold Standard. (1929)

Letter to the Editors from the December 1929 issue of the Socialist Standard

The following’ letter has been received from a correspondent :

38, Bromar Road, S.E.5. 

13/11/29.

To the Editor.

Sir and Comrade,

I am surprised at you for bolstering up vested Interests by following statement in [the] November issue :—

“Banks receive money on loan and lend it out at a higher rate of interest,” and put this forward as an explanation of how banks make their profit.

Mr. McKenna, Chairman, Midland Bank, has for eight years been impressing on us that banks also create money (and get interest on such money).

Since 1913 the total amount of bank deposits has increased by £1,000,000,000, whereas gold has increased by about £7,000,000. Treasury Notes are credit money and need not cost anything.

The only interest due to money system is at most the interest on £130,000,000 of gold which is all there is in Britain, say, £7,000,000 a year.

We actually pay £1,000,000,000 or more in interest.

People fail to see through this fraud because Marxians and others approve of a gold standard.

See pages 68-102 of “Capital,” I Vol. edition ; also pages 27-33 of “Value, Price and Profit.”

The quickest and best way to establish Socialism and Communism is by money reform and by nationalising money, starting with this bank credit.—Yours fraternally.

E. Wright.

Will join the S.P.G.B. when you cease to bolster up present system in this way.

___________________________________

Reply:

In previous correspondence Mr. Wright urged us to support what he calls “nationalising money,” because that is the way to build up “State owned industries” (see October issue). As we are Socialists and are therefore opposed to nationalisation or State industries, we invited Mr. Wright to give us reasons why we should abandon our work for Socialism in order to support State industries. Instead of giving us his reasons, Mr. Wright calmly replaces the words “State owned industries” by the words, “Socialism or Communism,” thus showing that his terms mean so little to him that they are interchangeable, and showing that he has not troubled to learn the most elementary Socialist principles. It is plainly impossible to treat seriously the arguments of one who evades every issue by substituting one loosely-used term for another. The present letter merits reply only because Mr. Wright repeats a not uncommon misrepresentation of Marx and of ourselves.

Most of his criticisms originate from his inability to distinguish between statements of fact and statements of principle or policy. Thus he charges us with “bolstering up vested interests” because we allowed to appear in the November issue of the “Socialist Standard” the statement that banks receive money on loan and lend it at a higher rate of interest than they pay to depositors. Mr. Wright reads into this an expression of opinion about the merits or demerits of bankers and the banking system. It is nothing of the kind. It is a statement of facts, and although Mr. Wright lets us know that he disagrees with it, he is careful not to risk telling us which part of the statement he thinks is untrue.

Then he goes on to tell us that Marxians and Marx “approve a gold standard.”

Here Mr. Wright pretends to quote authorities for his statement by referring to a passage 34 pages long in Volume I of “Capital.” He refrains from giving any specific quotation either from “Capital” or from “Value, Price and Profit,” or from any other work of Marx, or from any publication of the Socialist Party to justify his assertion. He does not quote such a passage because no such passage exists. The statement is completely false.

Marx did not, and Socialists do not, approve the gold standard or any other currency system. Socialism means a system of society in which goods are produced for the use of the members of society, not for the profit of a privileged class. There will, under Socialism, be no buying and selling, and therefore no need for any currency system, on a gold basis, or of any other kind. That is Socialism, and that is what we work for. Until Mr. Wright takes the trouble to acquaint himself with the objects of the Socialist Party his attempts at criticism will necessarily continue to be irrelevant.

In his postscript, Mr. Wright threatens to join the S.P.G.B. While we cannot prevent him from applying for membership, the decision—fortunately for Socialism— rests in the hands of the Socialist Party.

Editorial Committee.