Israel Mattuck, 03 October 1931

It is not necessary to justify before this congregation the discussion from the pulpit of a subject that is primarily economic. You have given me evidence on other occasions that you agree with me in the view that religion must consider all matters that have a spiritual, moral, or social significance. It is impossible generally to separate economic questions from social thought; they involve the evils of the social order and bear on the way to a better one. Poverty is an economic fact, it can be eliminated, as it is produced, by economic factors. Yet poverty is a social evil against which all religion must contend out of loyalty to its own teachings about the right of men to live and in the effort to bring nearer the better world which it believes that it is God's will that men should establish.

The effect of the present emergency on the position of the unemployed shows at once its social implications. I am prepared to admit that the alterations in the unemployment grant were justifiable. Whether it was inevitable or particularly wise are questions which divide the present Government from the Opposition. It is difficult to take the view of either side as founded on reasons rising out of the emergency; each is for the most part continuing, or maintaining, its previous view about unemployment unaltered by anything in the crisis. Nearly all who say that the unemployment grant need not have been reduced (are the same as those who have) always said that the unemployment grant should be comparatively high. And those who now say it had to be reduced all with the exception of the Prime minister and the Chancellor of the Exchequer, always said that the unemployment grants were too high. And when we turn from the politicians to the economists, we find that one says that the cuts were urgent and another that they are disastrous. But though there is this diversity about their necessity, it was justifiable to ask the unemployed to join with the rest of the nation in making a sacrifice for the nation's well-being. And even those who objected to the cut should not have opposed it while disapproving it. In the face of a national emergency national unity is the greatest force, making even a poor weapon potent to conquer.

It is the first demand that religion makes on its adherents in relation to the present crisis that they make all interests subsidiary to the national interest, supporting loyally the Government in its efforts to restore the economic good health of the nation. Loyally - but not unconditionally. The condition is that no advantage be taken of the national unity to promote what only part of the nation wants or believes in. They who seek to gain out of the emergency a party advantage or the advancement of their special economic interests are guilty of a crime. The price of national unity is to transcend all that normally divides the nation to the neglect of party policies and group interest, in order that it may work with a united strength for complete victory over the present danger.

I see in such unity a force whose influence may outlast the present emergency. I have in mind especially the instigation of the class struggle, which, I fear, has in recent decades been painfully intensified. Those who try to think of large issues in social terms, endeavouring to judge them by standards of social justice must find cause for alarm in the growing tendency to identify political parties with social classes, making party politics a fight between classes for the prosecution of their respective interests. Class politics have become a serious threat to democracy which is government by principles not government for interest. These are some factors in the crisis that make for aggravated social dissension. They may, however, be so overcome by a united nation as to make for a larger permanent spirit of social unity. (In support of this statement, I must attempt an analysis of the emergency. It will naturally have to be brief, but I hope adequate for our present purpose and intrinsically true.

The trouble goes back to the war and the Treaty of Versailles. They so upset the economic arrangement of the world that all the nations became economically crippled with unemployment as the evidence of their disturbed economic condition. There are many causes for the unemployment in England, known and unknown, but among them are the impoverishment by the war of the countries that used to buy machines or cloth or commodities in England, and the free coal which the Treaty of Versailles gave to France from the Ruhr. The economic disturbance was aggravated by financial incidents due to war. France and America became the world's creditors, France because of the reparations from Germany which the Treaty stipulated, America because of the loans it made to the Allies during the War. They refused to take anything but gold in payment from their debtors with the result that three quarters of the world's gold supply was locked up in the vaults of their treasuries. Two effects of this process need mentioning in this connection. The contraction of the mobile world's gold supply tended to restrict trade, which being the exchange of commodities, affected the production of commodities, so that unemployment was further increased. Secondly the concentration of so large a part of the world's gold into two countries gave them a great power over other countries. These effects were due to the important position which gold held in relation to the currencies of the various nations. There is no magic in gold itself, but it came to be the basis of money. Gold was important because it was money. The way to avoid the evil effects of the concentration of gold in America and France was to divorce gold from money. That is what this country has done in "going off the gold standard."

Whatever may be the ultimate outcome of this step, it will have the immediate effect of emphasising the economic interdependence of the nations. Because England went off the gold standards, several other countries in Europe had to do the same within a few days and some others will probably have to follow their example soon. The dethronement of gold must produce adverse effects on France and America. It means among other things that things will be cheaper in other countries, than in theirs, so that their export trade will be seriously crippled and perhaps completely blocked. Circumstances will force on them a larger international feeling which out of a blind selfishness they have refused to adopt up to now. A growing economic selfishness has been the cause of the post-war world. It was not even an enlightened selfishness; just the short-sighted self-seeking of the miser, who isolates himself for and by accumulation, thinking to make himself rich by always keeping and never giving. The future peace of the world depends on an international outlook and conscience within the nations. What the world needs is a society of nations, wherein each while maintaining its identity should recognise its responsibility to the whole. No nation, any more than an individual, can live alone. That is the first lessen of the present crisis. And if the lesson becomes a consequence, the world will have made a great gain toward the goal of a society of nations established in peace.

There is another possible international effect which must be noted. The large amounts of gold which America and France have accumulated have caused a certain amount of irritation in other nations. France has even used the financial power given it by this gold to force her political policies on countries that did not want them. Germany and Austria have several times found themselves constrained to political actions or provisions which went completely against their grain because France holds the power strings. The attitude of France has been wrong in principle, and bad in practice, resulting in grievances which hold the seed of dangerous international dissensions in the future. The power in international affairs which was once measured by the size of battalions seems now to be measured by the size of the gold hoard. The power which belonged to a large army now belongs to a large gold supply. Of the two the power of finance is preferable, being less likely than an army to lead to war. But international relations will not be on a sound, which is a peaceful, footing until in the society of nations no nation has a dominating power over other nations.

When I come to seek the consequences of the present crisis in the national life, I find everything obscure. If, as some say, it will result in a revival of industry, then it may mean further steps in social progress. The social services have to suffer a reduction through the budgetary difficulties. The growth of necessary educational facilities for the poor must be delayed; housing reforms will be checked. There are those who blame the budgetary difficulties of the nation on the development of the social services. It is true that the social services dwell fairly large in the expenditures of the nation. But let us remember that they are as necessary, perhaps even more necessary, than the fighting forces for the defence of the nation. It would be a national calamity if the present emergency produced an attitude in the nation which would interfere permanently with the development of the social services. When I read, or am told, of the terrible hard lines in America where there is no unemployment grant, and compare with it the statement that despite the huge unemployment figures there has been no starvation in England, I can see the meaning of the social services in terms of human life and human rescue from suffering and shame. In spite of the abuses to which the unemployment grants were subjected, the establishment of unemployment insurance in England was a tremendous social advance. Its permanent establishment in the services of industrial organisation means a society better for the elimination of economic fear in individuals at all times, and of danger to their lives in hard times.

My thoughts have been moving around another question, involving a fundamental aspect of our social organisation. A moment ago I noted the powerful influence to which finance had attained in international relations, and I expressed the hope that one result of the emergency will be to internationalise international finance, to give it an international conscience as well as an international character or work. The present crisis reveals also the potency of finance in the national life. It is no longer what it once was an adjunct to industry, it holds so dominating an influence that industry is profoundly affected by it. The Stock Exchange, which is the home of finance, can, and does affect by its dealings in finance, the number of people that will be employed in the cotton or steel mills. The crash last year on the New York stock exchange threw tens of thousands of Americans out of work. A more direct evidence of the influence of finance is the growing control by bankers of individual factories and shops (Recent evidence). The social danger in that fact lies in that it gives an exaggerated importance to money. The wealth of a nation is not its gold, but its land, its minerals, its factories and machines, the working and thinking power of its people. This is the true and good basis of its economic organisation. Money is in itself only a token, and as such can serve a good purpose, but when it is exalted to such importance that it arrogates a tyrannical power, the real elements of economic wealth must suffer. There may be some connection between poverty - not, as some extreme socialists say, with finance, but with an over-dominating finance.

Such a view has been implied in the views recently expressed by several economists of outstanding ability and repute that the maintenance of the gold standard was responsible in a measure, perhaps in a large measure for the economic ills of our world. Finance was eager to maintain the gold standard, and if the economists to whom I have just referred are right, then the poor man out of a job owes his plight to the power of finance which maintained the gold standard. In 1896, William Jennings Bryan was chosen the democratic nominee for the presidency of the U.S. because of a speech he made at the party's convention in which he condemned the gold standard as the cause of the poverty then prevalent in the U.S, exclaiming: "You must crucify the people on a cross of gold". He was defeated for the presidency. But today when the whole world is in a plight similar to that which then characterised the U.S., others are repeating his charge with greater authority. If it is true, then now is the time to organise against the return to the gold standard. The interests of finance must yield to those of industry.

The economic plight of the world during recent years had made many think that the capitalist system has broken down. The fact most responsible for this conclusion is the glaring anomaly that in many places food is nothing while in others people are starving. A few months ago there were riots in American cities in the middle-west where men broke into ginger shops to get food by plunder. Yet there were and are millions of bushels of wheat in America lying useless in granaries because nobody offers an adequate price. Starvation stands next door to plenty, but cannot reach it. The world needs the things that the unemployed are not making. Therefore some say the capitalist system has broken down, while others retort vehemently it has not. It is, however, necessary to define what is meant by capitalist system; it has several aspects. Private ownership of wealth is fundamental to it - but I do not think that the economic breakdown is due to that. Finance, however, is another aspect of it. It plays its largest part in distribution and that has broken down.

So I am brought in still another way to the same conclusion that the present emergency forces upon us a reconsideration of the place of finance in the life of our society, and the necessity of regulating its function and power to accord with that place. And I venture to suggest that in that direction lies the way to an improvement of the capitalist system which will mean advancement to the better society. The present workings of that system must now be condemned because while it produces plenty, there is yet poverty. And until it eliminates avoidable poverty it cannot claim justification. It may be true that it can produce more than any other system. Or it might justly be said: Better to produce less and let all be satisfied, than to produce more and give some men nothing. It may be an advance to the better world of the future.