PEOPLE everywhere associate revolution in the twentieth century with the dramatic events that occurred in Russia during World War I. But there occurred a still greater revolution of which most people are unaware. This was a revolution more gradual, more subtle, and more far-reaching in its consequences. It was a revolution in government fiscal policy, which not only has underwritten the socialist developments in this century by the revenues it has provided the state, but has further promoted these developments through the debilitation and demoralization of personal enterprise that has followed.

The power of any government to make paternalism seem practical, and thus insidiously to socialize the economy, lies entirely in the belief that it can and does issue money. This is the foundation error from which all socialistic projects receive their unsuspected sustenance. To attribute to government the power to issue money, makes of it an apparent fountain of wealth that strikes the ground from under all opposition to the welfare state. If government has the power to issue real money, what can possibly be wrong with paternalism and the socialistic ideology?

The practice of deficit financing seductively turns the minds of the people from the economic means of attainment to the political. For, obviously, when government can continuously take out without putting in, it strengthens itself and commensurately weakens personal enterprise, with the result that the people develop a growing respect for and dependence upon government and a contempt for enervated personal enterprise. This conditions them for progressive socialization and dictatorship. The secret of this process lies overwhelmingly in the Government's power to dilute the money stream. Ideologies have little to do with it; they are an accompaniment more than a cause.

This revolutionary shift in government finance has come about, in the United States, since 1931. Here is the historic record of war deficit financing and of subsequent debt reduction:

It is evident that the Government's traditional practice was to run deficits under the stress of war and to reduce them during the succeeding peace. Government money issue power was therefore curbed by fiscal policy. The creation of money was normally the function of private businessmen, and the banking system remained largely the servant of personal enterprise. In the depression year of 1931, however, peacetime deficits were instituted for the first time. Soon thereafter, the policy was adopted of treating the depression as a war and ameliorating it by public borrowing and lending and spending. These deficits, greatly expanded during World War II, have become an established habit that constitutes a veritable politico-economic revolution. Credit is now controlled by the Government, the banks are but branches of the Treasury, and deficit financing is established policy.

Such a policy by a government is, in all innocence, the beginning of a process which culminates in communism, which is but the receiver for bankrupted personal enterprise. By issuing monetary units, government acquires the people's labor and substance, and gives them nothing in return. Simultaneously, exchange, upon which personal enterprise depends, is destabilized, and by this sabotaging process the people, in desperation, are finally compelled to petition the government to go into the production and distribution of the necessities of life. In other words, the process of issuing monetary units, without giving anything in exchange for them, ultimately brings a public demand that the government return something for its issue. With this, the people petition themselves into communism. For when government enters production and distribution, free exchange and, therewith, all freedom, ends.

Lenin reputedly said, "the surest way to overturn the social order is to debauch the currency." Certainly a major instrument of the Bolshevik revolution was the extensive counterfeiting of the Czar's currency with this objective in mind. This deliberate policy is memorialized in the following curious passage translated from the Russian:

"I would like to dedicate this imperfect work of mine to the one who, by the perfection of his own work and its unbounded abundance gave me the impulse to write these pages. I refer to the printing press of the People's Commissariat of Finance. The revolutionary government of France managed to exist and to wage war thanks to paper issues; the 'assignats' saved the Great French Revolution. The paper money of the Soviet Republic supported the Soviet Government in its most difficult moments, when there was no possibility of paying for the civil war out of direct tax receipts. Glory to the printing press! To be sure, its days are numbered now but it has accomplished three quarters of the task. In the archives of the great proletarian revolution, alongside the modern guns, rifles, and machine guns which mowed down the enemies of the proletariat, an honorary place will be occupied by that machine gun of the People's Commissariat of Finance which attacked the bourgeois regime in its rear—its monetary system—by converting the bourgeois economic law of money circulation into a means of destruction of that same regime and into a source of financing the revolution."*

* Preobrazhensky, Eugeny A., Bumazhnyeden'gi v epokhu Proletarskoi dictatury [English translation: Paper Money During the Proletarian Dictatorship.] Moscow, State Publishing House, 1920, page 4.

Money, the hated device of capitalism, was found, however, to be indispensable to progress, and since the revolution, the dictators of Russia have been trying to restore this instrument of the social order. Thus they have been forced into the position of trying to regain the principal instrument of capitalism—without too obviously retreating from their ideology. In frustration they have turned to robbing their neighbors under the pretense of “liberation” and “democracy.”

The non-communist governments, while innocent of any intent to destroy their monetary systems, are nonetheless proceeding by gradual steps to attain the same ends that the communists did by plan—and the means of accomplishment is the same, namely, counterfeiting, albeit of the legalized variety. Thus are the non-communist governments proceeding blindly toward collapse. The communist governments, for their part, are striving to avert collapse by desperate attempts to steal that which the former in their ignorance are sabotaging. Hence the capitalism vs. communism confrontation is false. It is a fog obscuring the real issue, which is fiscal policy. The real issue is between counterfeit and genuine money.

Socialization, which now threatens every nation in the world and is really unwanted in every nation, is being forced upon every people and every government as the result of deficit financing, which is the Lorelei of the do-gooder politician. She promises relief to the distressed without cost to anyone. This illusion, once accepted, requires more courage to renounce than the politician can muster, and thus the ship of state is led to the rocks. I see no escape but for the people to declare the separation of money and state, and thus forever end unbalanced budgets with their impulsion to socialization and interference with personal rights.