Freeland: A Social Anticipation

by Theodor Hertzka

Clark (Freeland): The last two speakers entertain unnecessary fears. The sums required to get possession of the land, to pay back the circulating capital, and to furnish the workers with more abundant means for carrying on business, are certainly enormous--are at any rate larger than the material advance of any country whatever can even approximately supply quickly enough to place the country in a position to bear such burdens in their full extent. Certainly, if the transition to economic justice were followed immediately by its full results--if, for example, such transition lifted any country at once to that degree of wealth which we enjoy in Freeland--comparatively little difficulty would be experienced in responding to the heavy demands that would be made; but this condition would not be reached for years; the tasks you must undertake would be more than you could perform, if you had at once to discharge the whole of your responsibilities. But you have no reason whatever to fear this. Simply because interest will cease will neither landowner nor capitalist have any motive for insisting upon immediate payment, but will be quite content to accept payment in such instalments as shall suit the convenience of the community or the private debtors--should there be any such--and which could be easily accommodated to the interests of those who were entitled to receive the payment. When it is considered that the latter would be compelled either to let their capital lie idle or to consume it, it will appear evident that, if only the slightest advantage were offered them, they would prefer to receive their property in instalments, so far as they did not actually want to use it themselves.

You have quite as little reason to fear the demand which will be made for supplying the workers with the means of carrying on business. If your exploited masses already possessed the ability to make use of all those highly developed capitalistic implements of industry which we employ in Freeland, then certainly the Old World would have to renounce any attempt even approximately to meet at once the enormous demand for capital which would be made upon it. In such a case the milliard and a-half of souls who would pass over to the new order of things would require two billions of pounds; but the two milliards of men will not require these two billions, because they would not know what to do with the enormous produce of the labour called forth by such means of production. To dispose of so much produce it would be necessary for every family in the five divisions of the globe to possess the art of consuming a minimum of from £600 to £700 per year, as our Freeland families do; and, believe us, dear friends, your masses, just escaped from the servitude of many thousands of years, at present entirely lack this art. You will not produce more than can be consumed. You have not been able to do so yet, and will certainly not be able to do it when the consumption of the workers is able to supply the only reason for production. The extent and the intensity of production have been and remain the determinating factors in the extent and kind of the means of production. You will at any time be able to create what you are able to make use of; and if here and there the demand grow somewhat more rapidly than can be conveniently met out of the surplus acquired by the continually increasing productiveness of labour, you must for a time be content to suffer inconvenience--that is, you must temporarily forego the gratification of some of your newly acquired wants in order the more rapidly to develop your labour in the future.

For the rest, I can only repeat that the Freeland commonwealth will always be prepared, in its own interests, to place its means at your disposal, so far as they will go. We calculate that your wealth--that is, looking at the subject from the standpoint of our material interests, your ability to purchase those commodities which we have special natural facilities for producing, and your power of producing those commodities which we can take in exchange for ours with the greatest advantage to you--will, in the course of the next two or three years, at least double, and probably treble and quadruple. From this we promise ourselves a yearly increase of about a milliard pounds sterling in our Freeland income. We have determined to apply this increase for a time, not to the extension of our consumption and of our own investments, but to place it at your disposal, as we have already done the unemployed surplus of our insurance reserve fund, and to continue to do this as long as it may seem necessary. [Tremendous applause.]

The President: I believe I am expressing the wish of the assembly when I ask William Stuart, the special representative of the American Congress, who arrived at Eden Vale this morning, to state to us the proposals laid before the congress of his country by the committee entrusted with the drawing up of the scheme for adopting the régime of economic equality of rights.

William Stuart: In the name of the representatives of the American people, I ask the kind attention of this distinguished assembly, and particularly of the representatives of Freeland who are present, to a series of legislative enactments which it is proposed to make for the purpose of carrying us--with the energy by which we are characterised, and, at the same time, without injury to existing interests--out of the economic conditions that have hitherto existed into those of economic equality of rights. Our government found themselves obliged to take this step because our nation is the first outside of Freeland--at least, so far as we are aware--which has passed the stage of discussion, and is about immediately to take action and carry out the work. The institutions of economic justice are no longer novelties; we can follow a well-proved precedent, the example of Freeland, and we intend to follow that example, with a few unessential modifications rendered necessary by the special characteristics of the American country and people. On the other hand, we lack experience; and as, notwithstanding our well-known 'go-ahead' habits, we would rather have advice before than after undertaking so important a task, I am sent to ask your opinion and report it to the American Congress before the recommendations of the committee have become law.

It is proposed to declare all the land in the United States to be ownerless, but to pay all the present owners the full assessed value. In order to meet the cases of those who may think they have not received a sufficient compensation, special commissions of duly qualified persons will be appointed for the hearing of all appeals, and the public opinion of the States is prepared to support these commissions in treating all claims with the utmost consideration. It is proposed to deal with buildings in the same way, with the proviso that dwelling-houses occupied by the owners may be excepted at the owners' wish. The purchase-money shall be paid forthwith or by instalments, according to the wish of the seller, with the proviso that for every year over which the payment of the instalment shall be extended a premium of one fifth per cent. shall be given, to be paid to the seller in the form of an additional instalment after the whole of the original purchase-money has been paid. The payment is not to extend over more than fifty years. Suppose a property be valued at ten thousand dollars; then the owner, if he wishes to have the whole sum at once, receives his ten thousand, with which he can do what he pleases; but if he prefers, for example, to receive it in ten yearly instalments of 1,000 dollars, he has a right to ten premiums of 20 dollars each, which will be paid to him in a lump sum of 200 dollars as an eleventh instalment. If he wishes the payment to be in fifty instalments of 200 dollars, then his premiums will amount to fifty times twenty dollars--that is, to 1,000 dollars--which will be paid in five further instalments of 200 dollars. The national debt is to be paid off in the same way.

The existing debit and credit relations of private individuals remain intact, except that the debtor shall have the right of immediate repayment of the borrowed capital, whatever may have been the terms originally agreed upon. As the commonwealth will be prepared to furnish capital for any kind of production whatever, the private debtor will be in a position to exercise the right above-mentioned; but, according to the proposal of the committee, the commonwealth shall, for the present, demand of its debtors the same premium which it guarantees to its creditors. The object of this regulation is obvious: it is to prevent the private creditors--in case no advantage accrues to them--from withdrawing their capital from business and locking it up. If those who needed capital had their needs at first supplied without cost, simply upon undertaking gradually to repay the borrowed capital, they would not be disposed to make any compensatory arrangement with their former creditors, whilst, should the committee's proposal be adopted, they would be willing to pay to those creditors the same premiums as they would have to pay to the commonwealth.

The opinions of the committee were at first divided as to the amount of the premiums to be guaranteed and demanded. A minority was in favour of fixing a maximum of one in a thousand for each year of delayed payment: they thought that would be sufficient to induce most of the capitalists to place in the hands of the commonwealth or of private producers the property which otherwise they must at once consume or allow to lie idle. Eventually, however, the minority came over to the view of the majority, who preferred to fix the maximum higher than was necessary, rather than by untimely parsimony expose the commonwealth to the danger of seeing the capital withdrawn which could be so profitably used in the equipment of production. The voting was influenced by the consideration that we, as the first, outside of Freeland, among whom capital would receive no interest, must be prepared, if only temporarily, to stand against the disturbing influences of foreign capital. That such disturbing influences have not been felt in Freeland, though here no premium of any kind has ever been in force, whilst interest has been paid everywhere else in the world, was an example not applicable to our case, as we have not to decide--as you in Freeland have--what to do with capital which we do not need, and which, after all conceivable demands on capital have been met, still remains disposable; but, on the other hand, we have to attract and to retain capital of which we have urgent need. But that the proposed one-fifth per cent. will suffice for this purpose we are able with certainty to infer from the double circumstance that, in the first place, the anticipated adoption of this proposal, which naturally became known at once to our world of capitalists, has produced a decided tendency homewards of our capital invested abroad. It is evident, therefore, that capitalists scarcely expect to get elsewhere more for large amounts of capital than we intend to offer. In the second place, the capitalistic transactions which have recently been concluded or are in contemplation show that our home capital is already changing hands at a rate of interest corresponding to our proposed premium. Anyone in the United States who to-day seeks for a loan gets readily what he wants at one-fifth per cent., particularly if he wishes to borrow for a long period. Such seekers of capital among us at present are, of course, in most cases companies already formed or in process of formation.

Thanks to the fact that the election for the Constituent Congress has been the means of universally diffusing the intelligence that it was intended to act upon the principle of respecting most scrupulously all acquired rights, productive activity during the period of transition has suffered no disturbance, but has rather received a fresh impetus. The companies in process of formation compel the existing undertakers to make a considerable rise in wages in order to retain the labour requisite for the provisional carrying on of their concerns; and as this rise in wages has suddenly increased the demand for all kinds of production it has become still more the interest of the undertakers to guard against any interruption in their production. These two tendencies mutually strengthen each other to such a degree that at the present time the minimum wages exceed three dollars a day, and a feverish spirit of enterprise has taken possession of the whole business world. The machine industry, in particular, exhibits an activity that makes all former notions upon the subject appear ridiculous. The dread of over-production has become a myth, and since the undertakers can reckon upon finding very soon in the associations willing purchasers of well-organised concerns, they do not refrain from making the fullest possible use of the last moments left of their private activity. Even the landlords find their advantage in this, for the value of land has naturally risen very materially in consequence of the rapidly grown demand for all kinds of the produce of land. In short, everything justifies us in anticipating that the transition to the new order of things with us will take place not only easily and smoothly, but also in a way most gratifying to all classes of our people.

The President asked the assembly whether they would continue the debate on the fourth point on the Agenda, by at once discussing the message from the American Congress; or whether they would first receive the report which the Freeland commissioner in Russia had sent by a messenger who had just arrived in Eden Vale. As the congress decided to hear the report,