Index

Book review

First published 1934, Methuen. Republished 1994, Ossian Publishers, Ltd. 268 Bath St. Glasgow G2 4JR £9.95 inc. p&p (few remaining) ISBN 0 947621 12 1

As an ex-Lord Privy Seal, The Rt. Hon. Thomas Johnston was evidently well-placed to know his subject first-hand.

Acting as a supplement to Stephen Zarlenga’s great tome, which covers the long history of money and power, and was reviewed in SustEc 11/2, it deals in more detail with the way the ‘money powers’ fleeced the population of this country over this more limited period, starting with the many ‘ramps’ and dubious speculations that investors were tricked into and ruined by, and the frequent bank failures which ruined their depositors in the 19th century. The role of the then-private Bank of England is analysed, and an important section of the book deals with the scam of the First World War debts – see the extract from it in the last-but-one issue of SustEc.

The author is clear that reform is vital, and he summarises a number of proposals, starting with ‘the Douglas Scheme’ for social credit, then noting ‘the Liverpool Note Issue’, when in 1793 a special Act of Parliament authorised the Liverpool City Council to issue its own banknotes because of a complete collapse in the local private banking system. Next, the ‘Guernsey Experiment’ is summarised, in which the States – the island’s parliament – first issued its own notes in 1816 (and continues to do so).

Next he touches on Prof. Frederick Soddy’s proposal that the State, and only the State, should issue new money, and lastly, on Silvio Gesell’s proposal for a ‘demurrage’ currency, of notes, requiring periodic re-valuing by addition of stamps which must be purchased. As he notes, this was successfully applied in the thirties in Schwanenkirchen, Bavaria and Worgl, Austria and then, with Irving Fisher’s encouragement, in over twenty towns in America.

As ‘Remedial Measures’, he notes the growth of the Post Office Bank despite the severe, unjustified restrictions on it imposed as a result of lobbying by the private banking interests, and the struggle against the ‘Money Power’ to establish municipal banks, only eventually successful, to its great benefit, in the case of Birmingham, in 1919.

He then describes how ‘several publicly-owned banking corporations’ had been started in Scotland, and in 1920 he himself also bypassed Parliament successfully to establish the Kirkintilloch Municipal Bank Ltd.

He describes the benefits of these, as well as the opposition to them from vested interests, which in 1929 succeeded in inserting a clause into the Companies Act of that year to ban the word ‘municipal’ from any further de-facto municipal banks.

The CWS Bank also gets a short chapter before one on the Joint Stock Banks. The book finishes with an analysis of ‘High Finance and the Crisis of 1931’.