1A DANGEROUS DIFFERENCE: POUND, DOUGLAS & PROUDHON

Leon Surette

Paper presented at the 19th International Pound Conference at the

Sorbonne, Paris July 2001.

Published " in Ezra Pound e l'eoconomia Milano: Edizioni Ares 2001 133-59.

Pierre Joseph Proudhon (1809-1865) is one of those

historical figures whose importance and relevance seem always to

be in dispute. Recognized as the earliest Anarchist and coiner of

the term as a label for a political philosophy, he is much less

cited by professed anarchists than either Mikhail Bakunin (1814-

76) or Peter Kropotkin (1842-1921). Though both Russians

radicalized Proudhon’s ideas and took them in far more violent

directions than he ever advocated, they both took inspiration

from him. Bakunin met Proudhon in Paris in 1844 and they talked

into the night over a period of several weeks.1 Proudhon and Karl

1 Bakunin saw a good deal of Marx at the same time. Many years later (1870) he compared the two men: “Proudhon was a perpetual contradiction: a vigorous genius, a revolutionary thinker arguing against idealistic phantoms, and yet never able to surmount them himself. . . . Marx as a thinker is on the rightpath. . . . On the other hand, Proudhon understood and felt liberty much better than he. . . .[Marx] lacks the instinct of liberty – he remains from head to foot an authoritarian” (Guillaume in Dolgoff p. 26).

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Marx also met during that same sojourn in Paris, but they were

later to become bitter rivals. Though Kropotkin never met

Proudhon-- who was 33 years his senior, he was converted to

socialism and anarchism by a reading of Proudhon’s Systéme des

contradictions économiques (Woodcock, 1990 p. 57-8).

The foundational text for Proudhonian anarchism is What is

Property? It answered the title question in the very first

paragraph, with the enduring phrase “property is theft!”(Proudhon

1840, 11). Much later in that work, after he has denied being a

republican, Proudhon is asked by a fictional interlocutor what

his political ideology is,:

"Well! you are a democrat?" -- "No." -- "What! you

would have a monarchy."

-- "No." -- "A constitutionalist?" -- "God forbid!" -- "You

are then an aristocrat?" -- "Not at all." -- "You want a

mixed government?" -- "Still less."

-- "What are you, then?" -- "I am an anarchist." (Proudhon

1840, p. 272)

Unlike Marx, Bakunin, and Kropotkin, Proudhon did not advocate

the abolition of private property – or the violent overthrow of

kings and governments. His notion of anarchism was an order

determined by reason, not by force:

just as the right of force and the right of artifice retreat

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before the steady advance of justice, and must finally be

extinguished in equality, so the sovereignty of the will

yields to the sovereignty of the reason, and must at last be

lost in scientific socialism. Property and royalty have been

crumbling to pieces ever since the world began. As man seeks

justice in equality, so society seeks order in anarchy.2

(Proudhon 1840. p.277)

Because of his faith in reason, Proudhon did not accept

Marx’s belief that reform could be achieved only by violent

revolution. He expressed that disagreement in a letter to Marx

of May 17, 1846:

2 Proudhon’s faith in reason is an Enlightenment prejudice shared by Pound – though Pound rather idiosyncratically locates this faith in a medieval neoplatonic theologian, Scotus Erigena:

"Called thrones, balascio or topaze"

Eriugina was not understood in his time "which explains, perhaps, the delay in

condemning him" And they went looking for Manicheans And found, so far as I can make out, no

Manicheans So they dug for, and damned Scotus Eriugina "Authority comes from right reason, never the other way on" Hence the delay in condemning him Aquinas head down in a vacuum, Aristotle which way in a vacuum? Canto36/180

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I believe we have no need of it in order to succeed; and

that consequently we should not put forward revolutionary

action as a means of social reform, . . .. I myself put the

problem in this way: . . . to turn the theory of Property

against Property in such a way as to engender what you

German socialists call community and what I will limit

myself for the moment to calling liberty or equality. . . .

I would therefore prefer to burn Property by a slow fire,

rather than give it new strength by making a St

Bartholomew's night of the proprietors. (17 May, 1846.

Correspondence)

Despite Proudhon’s commitment to gradualism, his preservation of

private property, and his belief in order, the Anarchist movement

has an evil reputation as a movement committed to violence,

political chaos, and the destruction of property.

But Anarchism is not the only political movement that looks

to Proudhon as its foundational theorist. The other strain

derives from Georges Sorel, who invoked Proudhon frequently in

Reflections on Violence. In 1911 the Sorelians – with the lukewarm

participation of Sorel himself – joined with Charles Maurras and

his Action Française to form the Cercle Proudhon. Though I have not found

any mention by Pound of the Cercle Proudhon, he did review a work by

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Le Marquis de la Tour du Pin La Charce in 1935. The work was a

reissue of an autobiographical account of the career of this

French aristocrat and royalist, Vers un ordre social chrétien: jalons de route:

1882-1907 (Paris 1907).

La Tour du Pin co-found the Oeuvre des Cercles Catholiques d'Ouvrier

with the Comte Albert de Mun in 1871. As the name suggests, it

was intended to “to promote the union of capital and labour in

Christian guilds under the patronage of the Church and the upper

classes.” That organization eventually foundered. De Mun then

joined the conservative republican camp, and in 1905 La Tour du

Pin joined the Action française. 3 Jalons de Route is an account of that

journey.

Pound's reaction to the marquis's politics in the review is

somewhat ambivalent, but on the whole favourable. He even credits

du Pin with anticipating Mussolini's corporate state:

Tour du Pin is, I believe, no end of great sheiks among

French Royalists. If you consider him a registering

gelatine, he indubitably, from 1882 till 1907, registered

ideas which have gone into effect.

If he didn't foresee he at least fore-argued the

corporate state. He also blamed a lot of things on the Jews

and in so doing foreshadowed the Nazis.

3 Eugen Weber, p. 69.

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At this date, Pound was not inclined toward La Tour du Pin's

anti-Semitism, but he found common ground in their shared

antipathy for the capitalist financial system, which both label

“usury:” “Tour du Pin curses usury. He baptises the XIXth century

the ‘Age of Usury.’ He says several good things in so doing.”

Pound was less sympathetic toward the Marquis's Catholicism

as he was of his anti-Semitism, finding du Pin’s Catholic and

anti-Semitic arguments tedious, long-winded and unpersuasive:

His extensive ergotisation bringeth sleep as a

sapphire. He has, finally, a good reason, that is a lot of

very reasoned reasoning, to show that Ma Church was right.

He then without documents or much detail, blames the

Jews for Aryan inability to think clearly. This runs back

into retrospect, the Templars, etc. He blames the Jews

equally for Calvin and for Voltaire. Taking it impartially

as a transpontine Confucian, I fail to see why the Jews

should commit race suicide merely because Aryans can't think

clearly. And I still more emphatically fail to see why any

Jew should be expected to think so.4

Though he does not mention Proudhon in the review, Pound does

link the marquis, Proudhon, and Mussolini's corporate state in an

Esquire article a year later, telling his American audience that: 4 “American Notes: Time Lag.” New English Weekly VII.1 (Apr.

1935) 5-6. EPP VI p. 277 .

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“The corporate state grows out of Proudhon and was predicted by

Le Marquis La Tour du Pin”5

But the lesson he takes from the book in the review is that

the marquis' good sense has been, and continues to be, ignored:

The things Tour du Pin was thinking in the late 1880's seem

now to be thinkable by the mutts who control almost all

governments. The Edens, Duff-Coopers, Ezekials and other

government frontages seem to be able to mumble about the

topics the French were discussing while you and I were

learning cricket and baseball.

Does this mean 50 years more of official imbecility

about money? Or have still obscurer continentals been

thinking it out unreported by the press? Naturally unreported

in England where the aborigines never read foreign

letterpress, or in New York where the official obscurantists

never hear of anything till London hacks have proclaimed it.

Despite his broad endorsement of du Pin's political posture,

Pound closes his review with some strongly negative remarks on

the Action Française – the movement where du Pin found his final home

–, on France, and on his (Pound's) native land :

Has the "Action Française" any ideas about money? Has

5 “How to Save Business: Invoking Social Credit plus Free Economy to Prove no Man wants Ten Million Washtubs” Esquire V.1 (Jan. 1936) pp. 195-6.

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it ever heard of the subject? Is any Englishman capable of

telling us what, or even if, "L'Action Française" thinks

about money at all (its nature, its mode of issue, the

relation of the whole people's purchasing power to the whole

people's available produce?)

Not as statement but as subject for undergraduate

debate, one might almost ask: Did Le Marquis de La-Tour-du-

Pin register and foreshadow the main trends or drifts of

Europe as follows:--

Corporate State, Italy;

Anti-Semitism, Germany

Ergotizing muscle, La Douce France, now lowest, most

corrupt, most confused of all the once civilised nations.

?

? ?

This stands as the week's “American Notes,” because no

one will ever understand America until they try to compute

how much of American thought and thought-Ersatz is just

European sediment, delayed and decanted.

Though I have given Pound's political opinions considerable

thought over a good many years, I am never confident that I

understand his motivations – or, indeed, the content of his

analysis. From what we know about his right-wing radicalism, he

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ought to have been attracted to Proudhon, Sorel, Maurras, and the

French right generally. Certainly he had ample opportunity to

familiarize himself with their views. His fellow Imagist and New

Age contributor, T. E. Hulme had translated Julien Sorel’s

Reflections on Violence in 1908. Had Pound read that translation – and

I have no evidence that he did – he would have learned that Sorel

was an admirer of Proudhon as well as an acknowledged precursor

of Mussolini’s Fascism. Even if he knew nothing of Proudhon and

Sorel during his London years, by 1933 he was aware of the

Mussolini-Sorel-Proudhon connection, for in a letter of, 14-17

Dec., 1933 he drew Arthur Kitson's attention to Action nouvelle a new

journal of political opinion issuing from the French Caribbean

island of Martinique: “Those ‘Action Nouvelle’ people think

they are descended from Proudhon. Mussolini has mentioned him

[i.e. Proudhon] with respect. One of the few economists whom I

happen to have seen cited by M.” Later in the letter, he tries to

get Kitson to pick up with the Action nouvelle folks: “What about

these french Proudhonists?? Did I ask whether you are in touch

with ‘em? Sending copy/ Action Nouvelle sep. cov/[?]”

Had Pound paid attention to the French right, he would have

found much to agree with in the 1911 manifesto of the Cercle

Proudhon:

The founders – republicans, federalists, integral

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nationalists, and syndicalists – having resolved the

political problem or dismissed it from their minds, are all

enthusiastically in favour of an organization of French

society in accordance with principles taken from the French

tradition which they find in Proudhon’s works and in the

contemporary syndicalist movement, and they are all

completely in agreement on the following points:

Democracy is the greatest error of the past century. If

one wishes to live, if one wishes to work, if one wishes in

social life to possess the greatest human guarantees for

production and culture, if one wishes to preserve and

increase the moral, intellectual and material capital of

civilization, it is absolutely necessary to destroy

democratic institutions.6

Of course, in 1911 Pound was not yet interested in political and

economic action. It is true that he had developed that interest

by the time he moved to Paris in 1921, but he was then committed

to Douglas and Social Credit. Although his brief sojourn in

Paris was devoted to literary rather than political and economic

activity, he did attempt to introduce Douglas to a French

audience in a 1921 article in Les Écrits nouveaux. Having complained

6 Quoted by Zeev Sternhell, The Birth of Fascist Ideology, trans. David Maisel; with Mario Sznajder & Maia Asheri, Princeton: Princeton UP 1994, p. 87.

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of the conspiracy of silence in Britain about Major Douglas's

earth-shaking discoveries, he dismissed both the French left

(Marx) and the French right (Sorel): “Qu'est-ce qu'il y a là-

dedans pour créer un tel silence? On babille bolschevisme, Marx,

Sorel, dans tous les pseudo-salons littéraire-politiques; dans

tous les journaux contrôlés par Vickers et consorts; et les

livres du Major Douglas sont si petits!” [What is there in that

[i. e. New Age articles on economics] which would create such

silence? People babble bolshevism, Marx, Sorel, in all the

supposed literary and political salons, in all the newspapers

controlled by Vickers and friends, and the books of Major Douglas

are so small.] 7 It seems fair, then, to conclude that

Pound’s right-wing radicalism owes nothing to Proudhon, Sorel and

the French right.

Pound knew little of Proudhon before 1934, when he made

contact with Hugo Fack, an enthusiastic Gesellite, and therefore,

a Proudhonian. Fack was an expatriate German living in San

Antonio, Texas, where he produced a journal, The Way Out, whose

masthead declared it was “Devoted to showing the nation the basic

causes of our economic problems and their adequate correction,

and to furthering the realization of our national and

humanitarian ideals.” The “basic causes” were those identified by7 "Le Major C.H. Douglas et la Situation en Angleterre" Les

Écrits Nouveaux VIII Aug./Sept. 1921. Ezra Pound's Poetry & Prose IV 167.

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Proudhon and analysed by Silvio Gesell.

Pound, who had long been a proponent of C. H. Douglas’s

Social Credit program of economic reform, wrote to Fack on

September 26, 1934 in response to a critique of Social Credit in

The Way Out by E. S Woodward. Pound characterized the article as an

“IGNORANT attack on C. H. Douglas.”8 E. S. Woodward was a young

Canadian Gesellite from British Columbia (not to be confused with

W. E. Woodward, the American historian with whom Pound also

corresponded). He was an indefatigable critic of the burgeoning

Social Credit movement in Western Canada, which formed the

government of Alberta after the election of September, 1935 –

almost exactly a year after Pound’s complaining letter. Pound’s

indelicately expressed assessment was that “E. S. W.’s account of

Douglas is simple bull shit . . ..”

Despite these remarks, the letter was an attempt to recruit

Fack and Woodward as allies in Pound’s program of economic and

political reform. Pound was particularly upset because he had

praised Woodward in a letter to The Morning Post, published five

days before (Sept. 21), and thought he could recruit the

followers of Gesell as allies in his program of economic reform –

though at this point he knew next to nothing of Gesellite

8 Unless otherwise indicated all citations of correspondence are from the Ezra Pound Papers at the Beinecke Rare Book & Manuscript Library, Yale University.

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economics. He probably first heard of Gesell, stamp scrip and the

Wörgl experiment in Woodward's April article.9

I have not seen Woodward’s article, but the remedy applied

in Wörgl was “demurrage money,” or “stamp scrip,” a currency that

carried “negative interest.” Demurrage money is Gesell’s solution

to the problem on insufficient purchasing power. In Wörgl the

stamps applied negative interest of 1% a month, or 12% annually –

more than double the rate Gesell recommended. The eminent

Americvan economist, Irving Fisher, endorsed Gesell’s idea as an

emergency remedy for the collapse of purchasing power in the

thirties in Stamp Scrip. Pound reviewed Fisher's book in October of

1933, where he laboured mightily to persuade his Social Credit

audience that Gesell and Douglas were compatible.

As we will see, the Geselite and social Credit schemes are

diametrically opposed to one another. Pound was never able to get

his head around their incompatibility – though he acknowledged it

in a long letter in Eliot's Criterion about a year later (XIV.55

9 The earliest mention by Pound of the scheme that I have found is in “Slim Hope,” a letter to the Chicago Tribune, Paris (3 July 1933) p. 4. The letter is dated June 30, 1933. Probably Woodward's article mentioned Irving Fisher's book, Stamp Scrip published that year and later reviewed by Pound in the New English Weekly IV (26 Oct. 1933) 31-2. Fisher includes an account of the introduction of stamp scrip in Wörgl, Austria between 1931 and 1933 – something Pound mentions frequently in subsequent months and years.

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((Jan. 1935)) 297-34). That letter is of interest because Pound

printed part of it as a preface to Jefferson and/or Mussolini. However,

he left out most of the discussion of Gesell. In the full letter

Pound – rather opaquely – acknowledges the incompatibility of his

three enthusiasms:Fascism, Social Credit, and Gesell: “Any ass

can see the contradictions between the three living theories: the

Corporate State, Douglas, Gesell. Or between these and the

technocrats. Superficial imbeciles can see the contradiction

between these systems and those of Marx or Henry George. ....

Even Douglas seems unaware of the profound harmony between his

economics and fascism. I am not talking about the surface of his

politics.” Pound's point seems to be that imbeciles and asses can

see the contradictions, but more profound thinkers can see the

harmony. He never gets past this bullying mode of reconciliation.

(The Technocrats and Henry George – like Marx – represent

alternative economic remedies with which Pound flirted, but which

he eventually dropped. Gesell, however, was retained.)

Pound had lots of opportunity to come to an understanding of

Gesell and his Proudhonian roots. In addition to his

correspondence with Fack, he was in correspondence with the

maligned E. S. Woodward, and Arthur Kitson, an English

businessman 25 years Pound’s senior. All of three of these men

drew their economic ideas from Proudhon – Fack and Woodward by

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way of Silvio Gesell, Kitson directly from Proudhon. However,

none of them – not even Gesell – called themselves “Anarchists.”

Earlier in 1934 Fack published an American edition of Silvio

Gesell’s The Natural Economic Order (only Vol I – in William Pye’s

translation) He mailed Pound a copy on September 3rd, but Pound

complained in December that the copy had not reached him. So Fack

sent a second copy on Dec. 15th. It must have arrived promptly,

for Pound told Fack in a Christmas letter that he had “done a

longish article on Gesell” for Orage’s New English Weekly. 10 That

article rehashes defences he had already mounted against the

criticisms that Woodward and Fack had levelled against Douglas’s

National Dividend scheme:

Gesell was born in 1862, his refutation of Marx is a bore to

us Douglasites, it is heavier in method than Douglas’s. Marx

stands as historian. ... But when Gesell wrote the Natural

Economic Order, Douglas's view wasn't available. The

technocrats were not all over the place. ... Economics may 10 Fack had first sent a copy on Sept. 3, but Pound

complained in a lost letter of Oct. 27 that the book had not arrived, so he sent a second copy. Pound does not record its arrival, but it seems unlikely that he could have read the copy mailed on December 15 by Christmas. However, he later lends his “precious copy” of Gesell to Odon Por, so presumably he did not have two copies.

Pye’s translation was first published in 1919, and the original German edition of Part I was published in 1906 (in Geneva).

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have got to the stage where one worker will look upon

another rather as an aid and concurrent. We might, rather,

say Gesell's rectification of Marx and of Proudhon. (“ Leaving

out Economics (Gesell as Reading Matter)” New English Weekly

VI.16 (31 Jan. 1935) 331-3.)

The affectation of boredom with Gesell’s “refutation of Marx” is

an odd posture for Pound to adopt because a little lower down –

and in virtually every subsequent mention of Gesell – he praises

Gesell's remark that “Marx finds nothing to criticise in money”

(New Economic Order p. 371), as “a beautiful sentence.”

In this review Pound criticizes Proudhon’s terminological

imprecision: “Very important that the econ/ vocab/ should be

decently articulated. Proudhon a MESS in this respect.” And in a

letter of Dec 25, 1934 to Douglas he reassured him that he was

not abandoning Social Credit for Proudhon, and offered a very

Poundian reason, “Reading Gesell, one sees Proudhon’s mess due to

failure (to have read Ta Hio) / no sense of ROOT and BRANCH.” I

think that the two remarks are equivalent in Pound’s mind – that

is, Proudhon’s alleged terminological imprecisions, would have

been repaired if he had read the Ta Hio. However, it is difficult

to divine from these remarks what Pound understood about

Proudhon’s ideas – or what he found lacking in them. All we can

say for sure, is that at this early exposure he rejected Proudhon

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and attached him – quite inaccurately as we have seen – to Marx.

Though Pound’s remarks on Proudhon are scattered and cryptic, we

can reconstruct his reading of Gesell, an avowed Proudhonian.

Pound was troubled by the disjunction between Gesell's

Proudhonian analysis and Douglas’ because both appealed to him.

Both Proudhonians and Social Creditors believed that the cause of

the business cycle was a structural shortage of purchasing power

traceable to structure of the banking system. But they had

competing prescriptions for the remedy. Douglas's remedy was the

“National Dividend.” On this plan a sum of money would be

directly disbursed by the government to every resident of the

nation, thereby correcting a perceived shortfall in purchasing

power. Gesell's remedy was the “demurrage money” already

mentioned, currency which bore “carrying costs” – hence the name.

The cost took the form of stamps which had to purchased and

affixed to the bill at specified intervals. Gesell suggested an

annual rate of depreciation of 5.2%, levied by the weekly

attachment of 52 10¢ stamps to a $100 bill, or 1¢ stamps to a $10

bill. Proudhon's remedy was different again. He would establish

“commodity banks” where farmers, manufacturers and merchants

could exchange goods without the intervention of currency, using

only commercial paper – bills of sale, promissory notes and the

like.

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It should be noticed that the Proudhonian and Douglasite

schemes would appear to be diametrically opposed in their effect

on the total money supply. Douglas’ National Dividend would

increase the total money supply by the amount of the dividend.

Indeed, that was its purpose, for Douglas's A + B theorem

maintained that there was a structural shortage of purchasing

power in modern industrial economies. Demurrage money, on the

other hand would automatically shrink the money supply by 5.2%

per annum of the issued stamp scrip. Indeed, Gesell called it

Schwundgeld or “shrinking money.” However, the opposition is not

as stark as it might appear, for Gesell's Proudhonian analysis

held that it was not the total money supply that determined

economic activity so much as the “velocity” of money – that is,

the rate of circulation. Demurrage money was designed to

discourage hoarding – a practice which in his view was equivalent

to a reduction of total purchasing power. However, only currency

would carry the negative interest. So bank deposits would

attract positive interest as is normal practice. So only a

portion of “money” would shrink11

11 Gesell explained the difference between himself and Proudhon in a passage (NEO p. 324) that Pound deliberately misquoted in “Leaving out Economics:” “Here, in this idea of raising goods to the level of gold, lay Proudhon's error. He should have inverted the proposition and said: ‘We wish money andgoods to circulate on the same level, so that money shall never

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Pound was never able to get his head around these issues. He

thought that the two schemes were compatible, and proposed to

Douglas that the National Dividend be paid with demurrage money.

Douglas was unpersuaded. Pound complained to Fack on Oct. 30,

1934:

I am at it hammer and tongs with Doug/ and Orage, to get ‘em

to see SS [Stamp Scrip] as the proper medium in which to pay

the div/ and also to see that it does PART of what Doug/

aims at with his compensated price.

Pound followed that with a letter (undated) detailing the "points

of concord between Douglas and Gesell." But, like Douglas, Fack

was not persuaded. In a typed postcard postmarked Dec. 15, 1934

he left Pound in no doubt that he considered the two schemes to

be completely incompatible:

When I read in the N[ational] D[ividend] that the great flaw

in the money system, the flaw that makes it impossible to

distribute the goods has nothing to do with the velocity of

its circulation, I look at this depression [the Great

Depression of 1929-39], at all depressions and laugh.

S[ocial] C[redit] must be said to be right, by all means,

be preferred to goods; goods thus becoming money, and money goods. Let us therefore debase money to the level of goods. We cannot alter the qualities of goods and endow them with the advantages inherent in gold as a commodity.’”

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while the ending of every inflation with plenty of money out

proves it is wrong. Money will be saved, hoarded in S[ocial]

C[redit] just as now. No control of what is to happen.

“Dividend” is a capitalistic term. It has no use in an order

where each gets his share. S[ocial] C[redit] is

fundamentally wrong--where did you get your information

after having been in touch with me and Cordian12 only, as far

as I know, that Gesell's teaching is in the hands of

ignorants? In central Europe we have more historical

background than people anywhere, it seems to me.

But Pound was not to be discouraged; he persisted in his

delusion that Social Credit, Gesell’s Proudhonian prescriptions,

and Italian Fascism were compatible and mutually supportive. Six

months later, Pound is still linking his three enthusiasms:

Orage grew out of Guild Socialism.13 The Duce grew out of 12 Andrew Cordian, was a Gesellite with whom Pound engaged in

a letter-to-the editor exchange. See Ezra Pound "To the Editors: Re/ Mr. A Cordian's letter." (15 Jan. 1934) EPP&P VI 123-4; letter to the editor, New Democracy I.11 (1 Feb. 1934 p. 7) EPP&P VI 130; and "The Bear Garden" letter to the editor, New Democracy II 2/3 (30 Mar/15 Apr. 1934) 7 EPP&P VI p. 147.

13 Guild Socialism was a British movement in which Orage and The New Age participated before Douglas came along. The principal names associated with it are S. G. Hobson (not to be confused with J. A. Hobson) and G. D. H. Cole. See my Pound in Purgatory (Urbana & Chicago University of Illinois Press 1999) for a brief discussion of the movement.

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Guild Socialism, and refers now and again to Proudhon. A

representative body wherein each kind of worker is

represented by a man of his own trade cannot fall into the

same kind of servility.14

Another six months on, he repeats the same assessment in a

January 1936 article in Esquire, then newly launched, now stressing

the compatibility of all three with private property:

Both Douglas and Gesell show how to conserve individual

initiative. Neither of ‘em in any way ham-strings it ......

Douglas and Gesell were from their starts ALIKE in

being basic attacks on usury IN NO WAY implying an attack on

SHARE HOLDING or deriving dividends from the material

profits of united action.15

Pound is correct on the last point – neither Proudhon,

Gesell, Douglas nor Mussolini advocated the abolition of private

property, but they agreed on little else. However, that one small

point of agreement highlights the importance Pound placed on the

14 “The Italian Score,” New English Weekly, VII.6 (23 May 1935)p. 107. All of the cited essays can be found in Ezra Pound's Poetry and Prose edds Lea Baechler, A. Walton Litz, and James Longenbach. 10 vols. New York: Garland 1991. However, I give the references to the original publications since not everyone has access to theGarland reproduction.

15 "How to Save Business: Invoking Social Credit plus Free Economy to Prove no Man wants Ten Million Washtubs" Esquire V.1 (Jan. 1936) pp. 195-6.

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preservation of private property, and identifies him as a

conservative economic reformer. In English terms he was a Tory –

like his friend T. S. Eliot. In American terms – as Alec Marsh

has argued – Pound can be seen as a Jeffersonian, and even a

Populist. Both political postures wish to preserve the good

aspects of the past, and place high value on individual liberty

within the context of social responsibility. Pound's slogan"make

it new" captures the first principle, and his economic engagement

manifests the second.

Pound was unable to move either Fack or Woodward toward an

acceptance of Douglas’s National Dividend. He had no better luck

in moving Douglas toward Gesell.16 Pound first wrote to Douglas

rom Italy in an attempt recruit him as a Mussolini supporter –

without success. By the summer of 1933 Pound was pushing Gesell

and Mussolini on Douglas – still to no avail. In a long letter of

Oct. 13, 1933 he praises the Gesellites' political savvy in

comparison to the ineffectiveness of Douglas and Social Credit:

The damn trouble IZ that ought [sic] gang (new Age) 1919

hadn’t tuppence worf of POLITICAL ability in the lot. Having

16 The correspondence with Douglas is incomplete – many of Pound’s letters are missing –, and it is very one sided in that Douglas’s letters are curt and dismissive, while the surviving Pound letters are voluble and deferential. The surviving correspondence covers fewer than nine years – from Jan 1931 to May 1940.

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a better article to put forrard we are still a pale

inefficient group of foetid intellexshuls, the perfect

cartridge and no canon to fire it.

Gesell and Untreguggie [Unterguggenberger, Mayor of

Wörgl] have got as far in 2 years as we have in 15... that

aint vurry flatterin to Orage and the undersigned... but

shucks ... I come in from the EEEEstheetic side of the

pyper.....

Douglas’s response to Pound’s praise of Mussolini’s five

year plan evinces the insulting nature of most of his letters to

Pound:

I am surprised that a man of your moderate intelligence

should make such an elementary mistake. Your arguments

merely prove that your local Works Foreman [Mussolini] is

successfully carrying out a number of Five Year Plans better

than his Russian Opposite number.

If you have not realised that the problem is not to

carry out Five Year Plans, then all I can say is that your

proper place is at the “better, bigger, and brighter

business” meeting of the Rotary Club at Oshkosh, Indiana!

(Letter of Oct. 16, 1933)

Pound, then, was frustrated on both sides in his efforts to

reconcile the competing prescriptions and analyses of Social

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Credit and Gesell. Undaunted, he continued in his published

articles to attempt a reconciliation, relying on bluster and

analogy instead of reasoned argument:

My position re/ Mussolini, Douglas, AND

Unterguggenberger (as exponent of Gesell) can be judged by

men sufficiently evolved to understand that:

The existence of an electric automobile does not

invalidate the existence of automobiles using petrol.

The helicopter plane does NOT cancel either Wright

brothers, Col. Lindbergh or Count Zeppelin.

All of these inventions are one (or more) in the eye

for the drivveling [sic] idiots who think the horseless

carriage impossible and who believe it impossible to travel

by air.17

As noted above Unterguggenberger, the mayor of Wörgl, a small

industrial town in Austria, had instituted a version of Gesell's

demurrage money between Autumn 1931 and early 1933. The town

issued its own scrip, requiring a 1% stamp every month, which it

issued to its citizens, and offered to redeem at any time with

Austrian currency at a charge of 2% on the remaining value. It

used the proceeds to do necessary town works. All city employees,

including the mayor received half their salaries in scrip. 32,00 17 "To the Editors: Re/ Mr. A Cordian's letter." 15 Jan.

1934. EPP&P VI 123-4.

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schillings were issued, but the amount proved more than

necessary, and only about 1/3 was kept in circulation. The

experiment was a complete success (Fisher 22-9), until the

Austrian authorities shut it down. It is referred to repeatedly

by Pound, to the exclusion of dozens of other similar experiments

mentioned by Fisher, many of them in the USA.

Pound’s combative remarks were prompted by a letter of

Andrew Cordian to the editor of the American Social Credit

journal, New Democracy. Cordian alleged – as did Fack and Woodward

– that Pound did not understand Gesellite economics. Cordian

repeated this judgment in a second letter:

In his letter publ. 1. 15. inst., Ezra Pound gives another

proof of his ignorance of Gesell's Natural Economic Order by

confounding Professor Irving Fisher’s “stamped scrip” with

Gesell's free-money. This scrip has as little to do with

free-money as Douglas’s ideas have with the demonstration of

Wörgl; at best, stamped scrip is but a caricature of free-

money.18

(“Free money” is a loan which bears no interest, but must

nonetheless be repaid.) But Pound was not to be discouraged.

As we saw above, a year later he has not advanced his

argument, but has merely ratcheted his rhetoric up a notch, 18 Cited by Pound in his letter to New Democracy I.11 (1 Feb.

1934) p. 7 EPP&P 130:

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calling those who disagree with him “asses.” Pound’s major

attempt to weave the various threads of economic radicalism into

a sound fabric is “The Individual in His Milieu” (Criterion Oct.

1935 VI 317-26), written only 3 months after his first extended

effort – “Leaving out Economics (Gesell as Reading Matter)”–

though it was published 9 months later. He begins by listing the

various threads he must weave together – without labelling them:

Gesell was right in thanking his destiny that he had begun

his study of money unclogged by university training. But as

focus in 1935? What other possible subject could bring

together the Pope of Rome, a Scotch engineer in the orient

[Douglas], the English Church Assembly, a German business

man in the Argentine [Silvio Gesell], a physicist [Frederick

Soddy], a biologist [Mark Alfred Carleton], a medical

journalist [Paul de Kruif], an orthologist and historian of

philosophy [C. K. Ogden] , and the present practitioner of

versification?

This creation of an army by force majeur is typical of Pound's

political manoeuvring. Of course, neither the Pope nor the

Anglican Church adopted Social Credit – though both were on

record as deploring the economic mismanagement of Western

democracies in the thirties. Frederick Soddy was a economic

heretic who rejected Douglas’s ideas, as did both Fack and

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Woodward – followers of Gesell. Carleton, the developer of a

hardy strain of wheat, died in 1925 and had no views on

economics. Paul de Kruif, from whom Pound learned of Carleton (in

Hunger Fighters) was a Douglasite. But C. K. Ogden, whose Basic English

impressed Pound had no engagement in economic radicalism of which

I am aware.19

Having conscripted his army of economic reformers, Pound

proceeds to hector the Gesellites and Social Creditors in hopes

of reconciling their differences:

So long as Douglasites refuse to consider (if they any

of them really do so refuse) the unjust privileges of money

above any other product, so long as the Gesellites refuse to

consider the cultural heritage (the increment of

association, and the possibilities inherent in a right

proportion in the issue of fixed money and Schwundgeld,

monnaie fondante, stamp scrip) for just so long will both

groups sabotage each other and delay economic light.

A membership ticket in neither party exempts its holder

from the natural human frailty of being bored at the thought

of changing a painfully acquired set of ideas.

No Douglasite can improve on Gesell's criteria for

money.19 See Pound’s “Debabelization and Ogden” New English Weekly

VI.20 (28 Feb. 1935) pp. 410-11. EPP&P VI p. 251

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No Gesellite will bite deeper than Douglas's fountain

of values.

In the earlier piece on Gesell ("Leaving out Economics") Pound

had attempted to present Gesell as a precursor of Douglas:

I cannot feel that we ‘on paper’ need in the least worry

about Douglasite sheep getting lost, and led astray by other

wicked economists. ... Gesell, and if I remember rightly,

Proudhon, were among economists whom Douglas found worth

attention.

He soon learned that this tactic would not work. In response

to Pound's championing of Gesell in letters to him, Douglas

responded negatively (Letter to Pound Dec. 3, 1934): “Gesell’s

practical proposals seem to me merely a continuous and heavy tax.

Any validity that they have rests on the assumption that the

plant of civilisation does not belong to the consumer.” Douglas,

then, regarded stamp scrip as just another tax, and he thought

taxes were unnecessary, believing that governments could meet

their obligations by issuing currency. He thought the shortage of

purchasing power was due to interest charges and the

appropriation of the “increment of association” – that is, the

benefits of technological development – by entrepreneurs, which

resulted in under consumption, that is, the impossibility of

selling the all of the products of manufacturing and services.

Page of 36

Gesell, by contrast, thought hoarding – the withholding of money

from circulation – was the leading cause of underconsumption.

In “The Individual in His Milieu,” instead of asserting that

Gesell anticipated Douglas, Pound takes credit for anticipating

Gesell’s ideas himself:

For what it may be worth my ABC, written in ignorance of

Gesell, left a place for Schwundgeld. This ought to have a

confirmative value, just as a table of known chemical

elements, with certain lacunae, serves to validate the

existence, or be ready to welcome a newly discovered

chemical element. (322)

He insists that Gesell has made a signal contribution to economic

wisdom – without quite specifying just what that contribution is:

“Once discovered I don't see how Gesell’s sidea can disappear. It

will not crawl back again into its box., We find honest

economists sporadically coming on it independently as soon as

they begin to think of modern conditions.” Of course, he also

wants to reconcile Gesell with Fascism, but he does not go so far

as to claim that Gesellite policies are being followed by the

Fascist state. Instead he excuses Gesell for not having

anticipated Mussolini’s wise economic policies – again without

specifying what they are: “Gesell's limitation in regard to the

corporate state, lay perhaps only in space, time and energy. He

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was born long before Mussolini, he had not the Duce's organizing

capacity or his knowledge of men.”

Having reconciled Gesell with himself and Mussolini to

his own satisfaction, Pound turns to the thornier

problem of Douglas: “In respect to C. H. Douglas,

Gesell as business man, having discovered a most

marvellous mechanism for unshackling commerce, for

liberating all trade and consumption from the manacles

of the money monopoly, having invented an unhoardable

money, a money that cries to be spent within a given

period of time, went on only toward consideration of

land.” That is to say, Gesell failed to take the next

step--Douglas's “increment of association”:

Nevertheless, faced with Douglas, Gesell neither

saw nor demanded to know more about the generation of

value.

He saw (to his eternal glory) that Marx did not

question money.

Douglas saw the limitation of Marx’s value theory. He

saw that if value arises from work, a vast deal of that work

has already been done by men who can no longer eat its

fruit, namely by the dead, by Edison, Carleton, and ten

thousand others, who have rendered it needless to get up

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water from wells with buckets, to put oil into individual

lamps, to dig and burn coal in order to cook and run railway

trains, etc. etc. etc., ad infinitum.

Pound’s pint is that Douglas can take credit for theorizing the

place of technological innovation in a system of economic justice

– something that the Gesellites fail to appreciate:

When Dr. Fack and the noble Gesellites consider this

perfectly justifiable extension of justice which in no way

invalidates Silvio Gesell, they will be ready for a

scientific economy, as distinct from a sectarian.

Gesell, fighting usury, did not specifically confuse it

with the increment of associations.

But if he consciously noted their difference, he failed

to spend any great verbal energy in sorting out one from the

other.

The “increment of association” remained a sore point between

Pound and the Gesellites – one they never resolved.

Although the following dismissal by Fack of Douglas’ idea

that technological innovation – the “increment of association” –

is a public good co-opted by entrepreneurs is found in a letter

of January 5, 1936 – a good six months after Pound's final

revision of “The Individual in his Milieu,” – that dismissal is

merely the latest in a series of exchanges between them on the

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subject. He substitutes “cultural heritage” for “increment of

association,” but both men are speaking of the degree to which

technological innovation can be factored into economic theory.

Fack believes it cannot be:

A price does not consist of wage and cultural heritage, but

of wage and interest plus rent plus profit. Douglas took

this terminology in, either because he did not know better

or because he wanted to fool the people. His remedy is

adequate to his proposal. He distributes presents. Cultural

heritage. Gesell eliminates the interest and realizes the

full proceeds of labour so that all the cultural heritage

becomes the heritage of the worker and of the worker only

who creates the entire cultural heritage.

Fack’s written English is not quite as “colourful” as Pound's

written Italian, but it is certainly not idiomatic. However, his

point is clear enough, I think. Fack believes that Douglas is

wrong, perhaps a fool, but more likely a charlatan.20

20 It is not my purpose in this piece to adjudicate between Douglas and Fack, but clearly Fack is being obtuse. Technological innovation has a direct impact on the wage bill since it reduces the number of workers. For example a single operator of a mechanical back hoe can do the work of many men with shovels. Of course, the back hoe must be purchased or rented, but it would not be purchased or rented if it did not reduce the total cost of digging the hole. Hence there is an “increment of association” in which Douglas believed the worker should share with the entrepreneur on grounds of equity, since

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Fack’s scorn for Douglas had no more effect on Pound's

enthusiasm than did Douglas's scorn for Gesell and his followers.

However, it could not help but cause some “cognitive dissonance”

in his general economic “theory.” That dissonance is evident in

“The Individual in his Milieu,” and is retained thereafter in

Pound’s economic journalism. Of all the individuals and groups

that Pound attempted to recruit to his program of economic

reform, it was only the Proudhonians – Silvio Gesell, E. S.

Woodward, Arthur Kitson, and Frederick Soddy – that truly altered

his notion of what should be done to repair the damage of

economic ignorance. Although Pound also flirted with Marxists,

Technocrats, and Fascists, none of those alternative

prescriptions altered his own economic views – not even Fascism,

which he always hoped to bring on side.

Pound was essentially a cheerleader for economic reform. He

thought he knew when to cheer and when to boo, whose triumphs he

should celebrated and whose he should bemoan. Gesell and his

followers fatally confused him on that score, and he found

himself cheering with Gesellites when Social Creditors booed, and

booing with Social Creditors when Gesellites cheered.

Unfortunately, the one thing upon which Gesellites, Social

the technological innovations which make the back how possible belong to the community, not to any individual. The time limit on patents recognize such a principle.

Page of 36

Creditors, and Fascists agreed wholeheartedly was that the Jews

were behind most of the world’s economic difficulties. For a

cheerleader that agreement proved to be fatally attractive. Pound

eventually gave up attempting to persuade Douglasites and

Gesellites to agree on economics in favour of denouncing Jews,

where he could be confident of agreement from Fack and Kitson,

and perhaps Soddy.

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de Kruif, Paul. Hunger Fighters. New York: Harcourt, Brace & Co.

1928.

Dolgoff, Sam, editor & translator.1980. Bakunin on Anarchism.

Montréal: Black Rose Books.

Fisher, Irving, Stamp Scrip. New York: Adelphi, 1933.

Marsh, Alec. Money and Modernity. Tuscaloosa: University of Alabama

Press, 1998.

Gesell, Silvio. The Natural Economic Order, trans. Philip Pye, London:

Peter Owen 1958.

Pound, Ezra. Ezra Pound's Poetry and Prose edds Lea Baechler, A. Walton

Litz, and James Longenbach. 10 vols. New York: Garland 1991.

................... "To the Editors: Re/ Mr. A Cordian's

letter." 15 Jan. 1934. EPP&P VI 123-4

................... "Leaving out Economics (Gesell as Reading

Matter)" New English Weekly VI.16 (31 Jan. 1935) 331-3. In EPP&P

VI 241.

................... "The Italian Score," New English Weekly, VII.6

(23 May 1935) p. 107. In EPP&P VI

................... "How to Save Business: Invoking Social

Page of 36

Credit plus Free Economy to Prove no Man wants Ten Million

Washtubs" Esquire V.1 (Jan. 1936) pp. 195-6. In EPP&P VI

Proudhon, Pierre-Joseph 1970 [1840]. Trans. Benj. R. Tucker.

What is Property? An Inquiry into the Principle of Right and of Government. New

York: Dover.

.....................(1875) Correspondance de P.-J. Proudhon, Tome

Troisième. Paris: Librairie I nternationale.

Sternhell, Zeev. The Birth of Fascist Ideology, trans. David Maisel;

with Mario Sznajder & Maia Asheri, Princeton: Princeton UP

1994.

Weber, Eugen. Action Française: Royalism and Royalism and Reaction in Twentieth-

Century France. Stanford,CA: Stanford UP 1962

Woodcock, George & Ivan Avakumović. 1990. Peter Kropotkin: From Prince to Rebel. Montréal: Black Rose Books.

Woodcock, George. 1956. Pierre-Joseph Proudhon: A Biography. London: Routledge & Kegan Paul.

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