“Okay. The country was just as rich in natural resources—richer as a matter of fact. We had plenty of factories to fabricate raw materials, but lots of them were shut down. Our farms produced liberally, plenty of good food, enough to feed everybody well. We had the technical knowledge, tools and materials to produce an abundance of luxuries and comforts, and in fact we did, for our retail stores were stocked to the ceilings with every sort of desirable article. That is the production side. On the consumption side about half of the population had less to eat than it needed and that of poor quality and wrong variety. In other respects they were worse off, living in houses that were fire traps, and disease breeders, frequently without running water and with primitive heating systems. Most of them had no medical or dental attention and were rotten with disease. My dentist once told me that four-fifths of the population never received dental care in their lives. The next third or so of the population just barely got by. They lived in fair comfort but in the fear of slipping back into squalor. A small group at the top had more than they needed of everything. While I’m speaking of consumption I suppose I should mention that we made a practice of destroying annually a large part of our production, especially food. Some people considered this wasteful, and we devised means to produce less rather than destroy part of what we had produced. But it came to the same thing.”
“You speak of a small group that had too much. Do you know what the result would have been if everybody had consumed share and share alike?”
“As a matter of fact I do. I used to worry about that and worked it out on my slide rule in 1938 from some figures quoted in Time magazine. That was a news sheet published in those days. The average national income came to about one hundred and thirty dollars per month per family, which wouldn’t have been a very high standard of living. But the same figures showed that only thirty per cent of the population had that much or more, seventy per cent had less. I have to mention money at this point, but I’ll translate it into goods. A family at that standard of living would live in a cheap house, drive a second hand car, set a decent but not fancy table, have a radio, and go to the movies occasionally. But they would have no reserves, and sickness, accident, or the loss of a job would land them almost overnight in squalor.”
“Then—still speaking in physical terms—was this average standard of living the best the country was capable of, by and large?”
“Oh no. Not nearly. The country was able to produce at least twice as much as was actually produced. Some authorities said three times or more. But anyone could see by looking around him that much more could have been produced. For one thing at least ten million people were out of work.”
“Very well, then. You have described two different economic systems in terms of the physical realities involved. Now which one of them denies common sense, which one challenges your reason?”
Perry smiled. “You’ve sprung your trap, just as I anticipated. The 1939 system is the ridiculous one, certainly—when you look at it that way. But that still doesn’t explain your cock-eyed financial arrangements.”
“The paradoxes you appeared to find arise from flaws in your training. They have no reality. I am about to state an axiom: Anything which is physically possible can be made financially possible, if the people of a state desire it.”
“That sounds good, but is it true?”
“Yes, if the people of the state understand finance. Tell me, what is money?”
“Money—money is a lot of things. It is a medium of exchange, based on some precious metal, usually gold. It is also a commodity, bought and sold, and rented out for interest. And it’s capital for industry.”
“Which one of those things is it?”
“Well—when you come right down to it, I guess money is gold.”
“That’s what J.P. Morgan thought, at least he told a Senate committee that in 1912. I wonder whether he was lying or deluded. Try this definition: ‘Money is anything which can always be swapped for goods, or services.’ I believe that you will find that to be the only characteristic common to all money, and common to nothing else. How much money does a country need?”
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