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THE MONOMANIACS: A FABLE IN FINANCE.
Once upon a time there lived in the moon a race of people who subsisted principally by eating one another. In course of time their numbers became so diminished that they viewed with alarm the approaching extinction of their species. But the first law of nature sufficiently asserted itself to induce them to relinquish cannibalism except as a luxury, and by degrees they went to fishing, to pasturage and husbandry, ultimately developing a rude system of commodity production.
By and by they found hand-labor to be excessively tiresome, and although they worked from morning till night they had very great difficulty to produce enough to support themselves. Step by step, they devised better tools, and contrived some ingenious inventions by which a great deal of labor became economized. They soon found out that a still more economical method of production resided in the principle of division of labor; and the quantity of their products were thus augmented to a considerable degree. At this stage, a new problem arose. How were they to measure the relative quantities which each should equitably exchange with the other? Hence arose the necessity of a medium of exchange. The principle of barter no longer sufficed. He who produced six times the quantity of corn he himself stood in need of could find ready customers, but it often happened that these customers had no suitable thing which they could offer in exchange, and so no exchange could take place. He who caught enough fish to feed the rest of the community could exchange some of it for corn, but he also required other things than corn, for was it not said of old that man cannot live by bread alone? He required a pair of boots, for instance, and the bootmaker, preferring flesh, did not want the fish. So after tarrying until the fish stunk, he would manure the soil with it and go barefooted. In fine, they were in a hopeless fix for the want of some means to adjust exchanges.
Now there happened to be amongst them, one known by the name of Old Roth, who much resembled a chimpanzee. He had never been known to do any labor worthy of mention since he devoured his mother-in-law in the old time when cannibalism was the only political economy practised by these people. He had suffered the worst terrors of indigestion and was a confirmed invalid He eked out an existence under the new regime by borrowing from his neighbors. He would borrow from one and preserve his credit by repaying him with what be borrowed from another. He was doubtless the prototype of that subtle economist who first announced the idea of the productivity of capital.
His opportunity had at last arrived. His inventive genius had made him the hero of the hour. He had discovered a. royal road to fortune, but affected the utmost indifference with respect to his own interests, and posed as the benefactor of his race. So he summoned together all the people and when they were seated about him, he addressed them in this wise:
“Friends—I have made a brilliant discovery, which is destined to be of the greatest service to you all. You have long labored under the manifest disadvantage of being unable to exchange your respective productions with equity and facility. I have devised a system of exchange whereby the equitable transfer of products can be made and nothing wasted. After a long time of deep study, during which I have been ungenerously reproved for idleness, I have solved this all-important problem, and have brought you hither to tell you of it and to make you a present of the idea if you will just grant me one small concession.”
“Name it,” shouted all.
Continuing, he said, “The concession I refer to is that I be permitted to hold the exclusive possession of that yellow dirt I have scraped together in the corner, it being all that I could find in these regions.”
This was so peculiar a request that the people fell to looking in each others’ faces in bewilderment, Wondering if the old man had taken leave of his senses.
“Certainly we agree,” said they, after recovering from their astonishment, knowing that the dirt could be of no possible value, and remembering that he was entitled to it, seeing that he had scraped it together with his own hands.
“Thanks,” exclaimed Old Both, “and now I will unfold my scheme. It must have occurred to you hundreds of times that the system of barter which you have so long practised is a most wasteful and inefficient one.”
“Hear, hear,” shouted the multitude.
“Such being the case,” he went on, “it must be equally plain that if some scheme were devised to supersede it and to make the exchange of your products perfect and complete,-no matter whether one of the parties in an exchange desired what the other possessed a superabundance of, or not,—it would be the greatest boon ever bestowed upon the inhabitants of Lunarland.”
“Good Old Roth,” shouted the astonished natives.
“Very well,” he resumed, “then let each and all of you agree to accept yellow dirt in payment for products. The bootmaker may have boots for sale. The fisherman may require a pair of boots, but it may also happen that the bootmaker will prefer flesh to fish for his repast, and therefore will not sell his boots for fish, in which he will be wise, seeing that the perishability of the latter is more rapid than that of the former. Now if you will all agree to accept yellow dirt for your vendible products, the problem is solved. The bootmaker will sell his boots to the fisherman for so much yellow dirt; with which the bootmaker will be able to buy beef from the butcher, and so on.”
The inhabitants of Lunarland were simply entranced with the proposal—it appeared to them so simple, and so effectual.
One of them, a bit of a wag in his way, rose and said he would like to ask the speaker a question. How would the fisherman procure, in the first place, the yellow dirt wherewith to pay his bootmaker’s bill? At which, the old man waxed exceeding wroth.
“Oh, that’s simple enough,” replied Old Roth, concealing his annoyance, “all that the fisherman has to do is to bring me so much fish in exchange for so much dirt, and the same applies to every other member of the community. Once in their possession they will be able to spend it in such manner as best pleases them.”
There was unanimous assent.
From the moment that the people came to understand that yellow dirt was a charm which brought anything one wished, there came to pass a fierce scramble to secure the possession of the yellow dirt in preference to any other thing. The fisher toiled all day and night and brought a huge haul to Old Roth in exchange for some of the yellow dirt. Likewise, the bootmaker labored intensely to make and to bring his productions to Old Both in exchange for yellow dirt. All other producers of all other things. indeed, acted similarly. But presently they met with disappointment.
“See,” said Old Roth, “I have no use for more than one pair of boots, or more than enough fish to last me two days, or more than a single suit of clothes, or more than one bushel of corn which I can get my servant to make into bread. And for these things I will cheerfully give you relative quantities of my yellow dirt. You must then go about your business, which is clearly to exchange these other remaining things amongst yourselves, by means of the yellow dirt which I have given to each of you.”
The old man’s manner was so persuasive, his contention so plausible that they straightway set about the doing of this thing.
The fisherman bought a bushel of wheat from the corngrower with all the yellow dirt he had, since Old Roth had previously determined that so much of his dirt was of the same value as the bushel of corn he had bought. Then the corngrower bought a pair of shoes from the bootmaker with the yellow dirt he had. And the bootmaker bought a basket of fish from the fisherman. Here was an obvious advantage which the invention of money had brought them. They each now possessed the same quantity of yellow dirt that they had before, and had made a complete circle of exchanges.
Albeit, it soon became obvious that the quantity of yellow dirt Old Roth had given them in exchange for products for his individual consumption was insufficient to effect the exchange of all the multitudinous products that were requisite for the consumption of the rest of the community. Their combined wants were so much greater than his. So business came to a comparative standstill, the number of exchanges to be made with yellow dirt were of course restricted, and consequently production was stopped; for, under the regime of division of labor, production was only carried on for the immediate object of exchange, and if exchange were depressed, production had to be correspondingly diminished.
A great stagnation in trade occurred; and while they were all desirous to fashion useful things from the raw products of nature, they were compelled to be idle and to suffer privation for the want of these things, for the reason that the means of exchanging them were insufficient. There was plenty of yellow dirt to suffice for this purpose, but it remained in Old Roth’s possession.
This commercial anomaly did not fail to bring fresh grist to Old Roth’s mill. Yellow dirt being so desirable an acquisition for all, they competed wildly with each other to give more of their products for the same quantity of yellow dirt. This mad race was carried on until those who worked hard twenty four hours a day could only get from Old Roth such an amount of yellow dirt as would purchase the merest means of supporting life. The finance king chuckled exceedingly that his stock of yellow dirt would last the longer.
After a time, there arose a. great commotion in Lunarland, and the people murmured. They began to have a dim perception that Old Roth, in controlling the supply of yellow dirt to the community, had made them his veritable slaves. Old Roth never ceased to preach to them that they were free, as a blind. But they began to grow desperate; crime developed very rapidly; person and property were no longer safe. So Old Roth bethought a little, and devised new means to restore peace and at the same time preserve his supremacy. He very graciously offered to lend them any quantity of yellow dirt on good security, if they would agree to repay him at the end of a specified time with a little more added to it, as a compensation for the service rendered. Where the “little more ” was to come from did not transpire, nor did these people, reduced to their last straits, higgle over the terms.
Matters became smoothed, and everyone fell to thinking that the arrangement was a perfectly just one. Business revived the moment more yellow dirt circulated, and there seemed no lull until the interest became due. Then so much yellow dirt vanished from circulation and correspondingly depressed trade. And as these periods recurred, so business became worse and worse. Eventually Old Roth got every scrap of his yellow dirt back again, as interest, and yet the community were ever indebted to him the same. After almost all the yellow dirt had disappeared from circulation and had got into Old Roth’s hands once more, then the Lunarians began to think that interest was not just, for it became impossible to pay any more, notwithstanding that they were still under an obligation to do so. Old Roth therefore was obliged to content himself in going without the return of the principal, it no longer being in existence, having been paid as interest. He remembered the maxim “Ex nihilo nihil fit.” But the people’s debt remained for ever (since they could not refund the principal) and he was therefore able to command all he desired. He had a huge mansion built, magnificent in its appointments; the decorations were sumptuous; the most delicate alabaster statuary adorned the majestic entrance. The best stud of horses was his, the most costly carriages that the artistic and mechanical ingenuity of mortal could devise, and the daintiest delicacies that ever graced the table of a prince. All these things he could enjoy, and could perpetuate these enjoyments because his debt never diminished—-each year the interest return on the unpaid principal being more than enough to command its payment in kind and to furnish him with such luxuriance and splendor. And in the same degree that he increased his riches, did they who ministered to him become poorer. So potent was the power of yellow dirt,—it being now the only means wherewith to procure happiness,—that the people became possessed of an irrepressible mania to get it at all costs. All other considerations were excluded from their thoughts; but those who were the shrewdest amongst them suggested that money be made of a more plentiful thing, and there was an idea in the air that yellow dirt, as a token of exchange, had had its day. Seeing this, Old Roth went to great pains to ridicule all innovations; and as he controlled the newspapers he made them circulate all sorts of sophistries about the nature of money. The people being comparatively unacquainted with these things, became more more or less bewildered, and abandoned, in despair, all hopes of improvement.
It occurred to Old Roth that it would be more expedient to offer the people small loans on easier terms. He foresaw that unless some yellow dirt was put into circulation, all industry would collapse, and then he would not be able to procure the things that he desired, in spite of his vast possessions.
The reappearance of yellow dirt electrified the community. The people were literally seized with a wild impulse to get and to keep it; those who failed to secure it in the usual way of producing something of value to exchange for it, concocted all manner of devices by which they could gamble it from those who had been more fortunate in their quest. The arts of commerce were shaped to the mad pursuit of dirt-scraping. Once in their possession, they hoarded it in strong iron boxes and vaults of masonry. They quite forgot its original utility, which was that of purchasing food and luxuries, and simply secured it for the purpose of worshipping it.
Old Roth had his claws tightly riveted on the yellow dirt he had put into circulation, notwithstanding all their strong boxes. He laughed long and loudly at their financial guilelessness. He always was able to dictate terms to his debtors, and made them favorable to himself, so arranging the conditions of payment at such specified times that it was a physical impossibility for all of his debtors to discharge their claims. By this means he could foreclose on the securities of the delinquents, which were always double the value of the loans, and so get, even more than his dues, and could thereby undersell other dealers and monopolize markets. Thus the yellow dirt would come straight back to him just when he willed. And by contracting or expanding the volume of yellow dirt in circulation, he could thus depress or raise the value of all other things to his own advantage when about to buy or sell. In a word, Old Roth, in controlling the circulating medium, pulled the wires of the entire industrial and commercial world.
The manipulation of the volume of the currency soon got to be a fine art with Old Roth. He forced the wages of those who worked for him down and down until the women replaced the men because they were content with lesser quantities of dirt. As time went on the women were replaced by the children for the same reason. These miniature slaves had to support their parents in idleness. The death rate of the children rose rapidly: half developed boys and girls often were seen dropping from sheer exhaustion at their work. Avarice filled the whole being of the financier: not even satisfied with the pass to which he had brought the community by his designs, he cut down the very means of subsistence of his child-slaves, so that only the more robust survived. The women offered their bodies for sale, and the men their souls. Crime increased to an incredible degree. Starved men became wild beasts. Old Roth organized a number of men, who were only too willing to do anything to get yellow dirt, to terrorize the criminals, and built jails and torture racks to make men honest. In course of time, he triumphed; all human arts were called into play to exterminate all those who refused to be starved to death for Old Roth’s amusement. Yes, crime was eventually suppressed, but only to be replaced by widespread insanity. Presently, a scourge came upon the land, and it happened that all who contracted the dire disease died of it. All the vaunted wisdom of the medicine men availed nothing: it was beyond all human skill to arrest its ravages. Its cankerous roots were fastened in the very conditions of social life. Its name was Demoralization.
Old Roth and his children alone survived. For the first time it became manifest to him, now that he had no food to eat, how worthless was his yellow dirt. How glad he would be now if he had an opportunity to give all of it for a single loaf of bread. But alas, there were no more ignorant people to traffic with, and so Old Roth and his family were reduced to the necessity to eat yellow dirt. Filled to overflowing with disgust, he afterwards concluded to emigrate to a more congenial planet where fools abounded, and looking around, he made for Terra Firma, in search of fortunes new, cogitating, on the journey, a colossal scheme for exploiting the universe.
Henry Seymour, “The Monomaniacs: A Fable in Finance,” Liberty (London) 2 no. 24 (December, 1895): 191-192.
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