"Yes, two things are bothering me. I don't understand the economic reforms under Holmes, and I don't see what this New Crusade was all about. It sounds screwy."

Cathcart grinned. "It's a good thing my professional research gives me some knowledge of the idiom of your period. It was screwy. But let's take 'em in order. We discussed before the cause of economic depressions and I asked you to take on faith the idea that the only thing that caused depressions was a financial system that automatically caused a spread between goods to be bought and money to buy them, or 'over-production' as it was euphemistically called. I'm not going into the mathematical theory even now. You can take it up later with an economist or in several books I can recommend. But President Holmes was one of the few men to occupy the White House who had sufficient insight and mathematical ability to see the trouble, the reasons behind it, and to devise a cure. He had a powerful weapon to work with, the Bank of the United States, and he had the free intellect necessary to do what needed to be done without clouding the issue with a lot of moralistic tape. In fact he helped to formulate a realistic social ethic that justified his new departure. To begin with he saw the 'over-production' or, as he looked at it, under-consumption or shortage of purchasing power. He directed a staff of actuaries to supply him with approximate figures showing the percentage of under-consumption and its dollar value for the past year. Then he undertook to make up the missing purchasing power by literally giving away through the Bank of the United States the necessary amount of money. He was aware that to do so without some control over prices would result in inflated prices and a new spread between production and consumption. So he held back about half of the newly created purchasing power and used it to control prices in the following manner: All of the retailers of consumption goods in the country were invited to join in the New Economic Cycle. If a dealer joined he agreed not to raise his prices over what they were when the new regime started. On the contrary he was to sell all his goods at a ten per cent discount, and the Bank of the United States would hand him the difference on presentation of his sales records. Then Holmes proceeded to give away through the Bank twenty-five dollars per month to anybody who would take it. Naturally business boomed. Prices didn't go up because all of the business went to the merchants who had joined the agreement.

Presently all the other merchants joined, too, in order to get in on the rush of business. Factories re-opened, labor was needed and unemployment disappeared like snow in July. The country hummed. And that is a thumbnail sketch of the present situation, Perry. No unemployment, plenty of well paid work for anybody that wants a job, and enough credit issued every month to anybody that wants it to keep body and soul together in decency."

Perry looked bewildered. "Wait a minute. It looks fine at first glance, but where did he get the money? Not from taxes, surely, with the country already broke. And not from the private bankers. They were ruined in the war."*

[*For the benefit of the reader who is arithmetically inclined:

(A) Value (Price) of consumption goods produced in 2010 $540,000,000,000.00

Average income per person $2,413.33

(B) Total of personal income (Wages, dividends, insurance, pensions, etc.) $434,400,000,000.00

(C) Difference or under-consumption $105,600,000,000.00

Practical check:

(D) Value of estimated excess in inventories (under-consumption) $110,400,000,000.00 Error $4,800,000,000 or ±4.45%

(E) Empirical control figure (C±D) $108,000,000,000.00

Divide by population of 180,000,000 to obtain under-consumption per person per year of 2010 $600.00

Divide by 12 to obtain under-consumption per person per month $50.00 Issue one-half of this directly $25 per month per person Ratio to (A) all consumption goods produced of (E) unconsumed consumption goods is one to five or 20%. Discount is to handle one-half of this. Therefore discount is 20%.

Q.E.D.

I have taken the liberty of using round numbers. The exact figures from the Washington Archives show $27.813 per month and discount of 11.87%.

The Author]

Cathcart grinned. "He got the cash money the same way we have gotten all cash money since Roosevelt put the gold back in the ground—right off the printing presses. But he didn't have to print much of it. The checks were issued at the Bank and the merchant and a great many others had accounts at the Bank and very little cash money changed hands. The bulk of it was mere bookkeeping entries, made by the bank clerks. Holmes had implemented what the bankers had known for centuries but were barred by LaGuardia from doing—taking money out of an inkwell. What's the matter, son? Still not satisfied?"

"Well, I don't know. Everything you have said seems okay, but how about this? If you keep pouring money into a country indefinitely, you are bound to get inflation, fixed prices or no fixed prices."

"You don't pour it in. You add just enough to keep it running. Each fiscal period the additional amount is the closest possible approximation of the amount necessary to prevent a spread between consumption and production, based on the value of the nation's inventories."

"But why do you have to keep adding money all the time?"

"I said I would stay away from theory but I'll give you this hint to chew over: the amount necessary to add each period is theoretically equal to the amount of savings invested as capital in the preceding period. And one more hint: Doesn't it take more money to run the country's industry now than it did when George Washington was President? But now let's pass on to the New Crusade. It's getting late."

"OK."

"It is difficult to assay the causes of any religious movement. There appear to be mass movements of the human spirit that we do not fully understand. Karl Marx attempted to interpret all history in terms of a rigid materialistic causation, but how does that account for the Children's Crusade? Carlysle would have us believe that history is no more than the acts of certain great men, heroes. I find that equally hard to believe. Would George Washington have been more than a gentleman planter if England's rule of the colonies had been more liberal? It is my belief that history is a story of the action of individuals, acting according to their characters in the environments in which they find themselves. A change either in character or in environment would change the resulting action. In the interplay of lives there are strong characters—Carlysle's Heroes—who exert powerful influences of personality and intellect on their fellow men, and thereby shape the environment in which less dominant creatures act. If these strong characters are born in a period and are able to reach an environment in which their peculiar talents find maximum expression, they will write their names large on the pages of history. 'There is a tide in the affairs of men, which, taken at the flood, leads on to fortune.'

"Such a dominant character was Nehemiah Scudder, founder of the New Crusade and leader of the Neo-Puritans. He found the opportunity to use his exceptional talents in the Middle West in the third decade of this century. He was first heard of about 2030 as an itinerant evangelist of an obscure fundamentalist sect. He preached over most of the Mississippi valley, and although not prominent enough to make a splash in the news of the day, he had a reputation in his denomination for the forcefulness of his preaching, and the virulence with which he called the vengeance of the Lord upon the erring brother. But his fortunes took no great change until the death in 2023 of a Mrs. Rachel Biggs, the septuagenarian relict of a wealthy shoe manufacturer. Mrs. Biggs left four million dollars outright and that much more in trust to establish and maintain a tabernacle and television station to be used by the Reverend Scudder. We have had our radio priests and our political preachers many times before, but while most divines are tuned out at once, Brother Nehemiah was able to project his magnetic personality through the broadcaster and those who heard him once were thereafter his followers, if they were temperamentally ready for his brand of fire and brimstone. He was able, also, to choose and inspire other preachers to help him in the organization of his rapidly growing spiritual following. About 2024 he interpreted certain passages in the Apocalypse to mean that the new Jerusalem was here and now, that Armageddon was at hand, that his followers were called on to take up the fight. He organized the Knights of the New Crusade to implement him for Armageddon. This organization was modeled in nearly every respect after the Ku Klux Klan of the previous century, even to many details of ritual, uniform and constitution, which Brother Nehemiah had not bothered to change.