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The Nationalization of Credit

Arthur Travers-Borgstroem,* a Finnish writer, published a book entitled Mutualism that deals with ideas of social re­form, and culminates in a plea for the nationalization of credit. A German edition appeared in 1923. In 1917, the author had established a foundation under his name in Berne, Switzerland, whose primary objective was the conferring of prizes for writings on the nationalization of credit. The panel of judges consisted of Professors Diehl, Weyermann, Milhaud, and Reichesberg, the bankers Milliet, Somary, Kurz, and others. The judges awarded a prize to a paper sub­mitted by Dr. Robert Deumer, director of the Reichsbank in Berlin. This paper was published in book form by the Mu­tualist Association of Finland.1

From the background material of the paper we can learn why the author is not concerned with the rationale of credit nationalization, but merely with the details of its realiza­tion. Dr. Deumer is presenting a proposal, elaborated in its insignificant details, on the nationalization of all German institutions of banking and credit, and the establishment of a national credit monopoly. But his plan can be of no interest to us as no one is contemplating its implementation in the foreseeable future. And if there ever should be such a movement, conditions may be quite different so that the Deumer proposal will not be applicable. Therefore, it would not make any sense to discuss its details, such as article I, section 10, of the “Draft of a Bill Nationalizing Banking and Credit,” which reads: “He who engages in any banking and credit transaction after the nationalization will be subject to a fine not exceeding ten million gold marks, or imprisonment up to five years, or both.”2

Deumer's work is of interest to us because of its motives for the nationalization of credit, and its statements on a reform that preserves the superiority of "profit" management over "bureaucratic" management. These statements reveal an opinion that is shared by a large majority of our contemporaries, yes, that is even accepted without contradiction. If we should share this Deumer-Travers-Borgstroem-mutualist position we must welcome a nationalization of credit and every other measure leading to socialism. In fact, we must agree to its realizability and even its urgent necessity.

The public welcomes all proposals designed to limit the sphere of private property and entrepreneurship because it readily accepts the critique of the private property order by the Socialists of the Chair in Germany, the Solidarists in France, the Fabians in Great Britain, and the Institutionalists in the United States. If the nationalization proposals have not yet been fully realized we must not search for any opposition in social literature and the political parties. We must look to the fact that the public realizes that whenever enterprises are nationalized and municipalized or government otherwise interferes with economic life, financial failure and serious disruption of production and transportation follow instead of the desired consequences. Ideology has not yet taken stock of this failure of reality. It continues to hold fast to the desirability of public enterprises and the inferiority of private enterprises. And it continues to find only malice, selfishness, and ignorance in opposition to its proposals, of which every objective observer should approve.

Under such conditions an analysis of Deumer's reasoning seems to be in order.

  • *. Translator’s note: In his Notes and Recollections (South Holland, Ill.: Libertarian Press, 1977) the author revealed that he meant to include this essay—written in 1926—in the original German edition (1929). It was left out of that volume through editorial error, but was included in the 1976 German edition.
  • 1. Die Verstaatlichung des Kredits: Mutualisierung des Kredits [Nationalization of cred­it: mutualization of credit], Prize Essay of the Travers-Borgstroem Foundation at Berne, Munich, and Leipzig, 1926.
  • 2. Ibid., p. 335.
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