Beyond Victory:

Jerry Voorhis' Vision for the Post-War World

An article in The Nation, by Sherle R. Schwenninger, on May 13, 1996, "How 
to Save the World: The Case for a Global Flat Tax," shows just how thick the
disinformation can be piled in a respected and usually intelligent Left-wing
journal. Schwenninger, the director of the World Policy Institute at the New
School for Social Research, a Fabian-Socialist institution in Manhattan, credits
"U.S. generosity" for helping "rebuild Europe and Japan and create the United
Nations, the World Bank, the World Health Organization and other international
agencies dedicated to social and economic welfare."

He says that "...the institutional capacity of the IMF and the World Bank,
especially their ability to provide adequate long-term assistance to developing
countries, has not evolved to keep pace with the growing demands of the world
economy." This in turn, "along with some ill-considered lending practices,
explains why there are so few development assistance success stories."

Actually, it was the blind idealism of the Left, cultivated by the ruse of the
Popular Front, that led the progressives of that era to be deceived by the ploys
of the bankers, businessmen, and diplomats who framed the international institutions 
of the post-WW II era. Much of the Left enlisted on the side of the United Nations 
(read, the "Allies") in the Good Fight against Fascism. In the fervor of the immediate 
post-war period, the Left tended to believe the propaganda about the good natured-ness 
of the nascent World Bank/IMF, cloaked in internationalist "progressive" rhetoric, as 
it was. Schwenninger evidently thinks (probably correctly) that he can cash in on 
some of this vestigial Popular Front credibility.

Well, children, the shit is deep. And while it is not in the scope of this article 
to counter all of the inaccuracies assembled in Mr. Schwenninger's article, I can 
recommend the classic left-wing treatise exposing the IMF - Cheryl Payer's The Debt 
Trap, Monthly Review Press, 1974.  Readers may also contact Global Exchange of San 
Francisco, who can supply excellent, critical, contemporary references on the IMF.

The World Bank and the IMF are evil, neo-colonial institutions precisely because
their whole premise and justification is that Third World nations cannot create
their own credit monies to purchase goods from the First World. Instead, they
must borrow at interest from "the big boys," the commercial bankers of the G-10
nations, whom Schwenninger euphemistically refers to as "the globe's financial
and development community," portraying them as a truly "altruistic" [sic] bunch.
Schwenninger ends his article by saying, "Perhaps a debate about new ways of
financing global assistance would help clear some of the fog." I heartily 
agree; so let the debate begin.

One of the rare, enlightening books I have stumbled on is Beyond Victory, by 
the late Jerry Voorhis, former Congressman from the 12th district of California. 
Published in 1944, the year the bankers and the diplomats drafted the charter for 
the World Bank/IMF at the Bretton Woods Conference in New Hampshire, it shows that 
some progressives were engaged in a lively debate about the nature of the post-war
international institutions that should come. Beyond Victory proposed a blueprint for 
a post-war international institution that could supplant the Bank for International 
Settlements (BIS), the "World Bank" of that era. Voorhis envisioned an institution 
that would function systemically to benefit the developing nations and put an end 
to neo-colonialism and "neo-imperialism" forever. It was the path not taken.

The BIS had been founded in 1930 as an adjunct to the Young Plan, to refinance
German war reparations under the Versailles Treaty.  One of the chief architects
of the first "World Bank," Hjalmar Schacht, later became Hitler's Finance Minister. 
Another founder, Montague Norman, of the Bank of England, was also keenly involved 
in putting Hitler in power in 1933. All during the War, the BIS was doing business 
as usual, functioning as the chief back channel for financial transactions between the 
Allies and the Axis powers. On March 26, 1943, Jerry Voorhis, speaking on the floor of 
Congress, exposed the machinations of the BIS, this sinister "World Bank," the first of 
its kind. Voorhis proposed that Congress should pull the plug and disenfranchise the BIS, 
which was in the power of Congress to do at the time.

According to Anthony Sampson, British author of The Money Lenders, it was John 
Meynard Keynes himself who interceded on behalf of the BIS to prevent Congress from 
dismantling it during the war. Set out to pasture in the immediate post-war period 
and allowed to continue in a dormant state for a number of years, today the BIS is 
more powerful than ever and functions symbiotically with the Keynesian institutions, 
the World Bank, the International Monetary Fund, the General Agreement on Tariffs and 
Trade (GATT), and the World Trade Organization (WTO) that have developed out of Bretton 
Woods. All of these institutions could be dismantled and replaced by one streamlined 
institution, the International Clearing House (CH'I) that Jerry Voorhis first
conceived, then described in this wonderful book.

The vision of Beyond Victory shows that a better world is possible. Monetary reform on
a worldwide basis (divesting banks from the control of credit) is a vital step along the 
path. Here follows, in his own words, excerpted from Beyond Victory  (only the subtitles 
are mine), Jerry Voorhis' blueprint for world peace, a world beyond warfare, imperialism, 
and neo-colonialism. I submit his proposal to promote and finance global development as 
an entree in the debate that Schwenninger proposed.






             ...from  BEYOND VICTORY, by Jerry Voorhis, 1944:




                       First,  Nationalize  Credit,  Worldwide



"Congress [should provide for governmental purchase of the capital stock of the
12 central Federal Reserve Banks from the member banks which now own it... This
would cost $144,000,000 in round figures and would correct the present anomalous
situation of a privately owned bank of issue. The Federal Reserve Banks could
then create money in the form of "Federal Reserve Bank credit" entries on their
books just as they do now. A "National Credit Account" (in contrast to present
national debt) could be established on the Central Banks' books in favor of the
United States Treasury. To such an account would be credited each year... amounts
of newly created "Reserve Bank credit" [to] provide the increased purchasing
power needed to maintain economic balance and a stable price level.

"The Treasury would draw checks against this account and pay them out to those to
whom the government owed money, thus getting it into the purchasing power
stream. In this way the whole nation would derive the benefit from the creation
of the additional supply of money, which its own growth had made necessary. No
interest-bearing debt would be incurred... only a bookkeeping transaction between
two public agencies. Should inflation threaten [making it necessary] to reduce
the volume of money in circulation, the process could be reversed and the
Treasury could transfer a portion of its tax revenues to the central banks for
cancellation and retirement of the requisite amount of money to restore
stability.


                             Banks Should Not Create Money



"It is ethically wrong for any private person or agency to enjoy the privilege of
creating money... for the same reason that it [is] wrong to give one citizen the
right to levy a tax upon another one. The power to create money, either in the
form of currency or credit, pocketbook money or checkbook money, is the precise
equivalent of the power to tax. Anyone exercising the power to create a new
dollar can... require a dollar's worth of the labor or the property of a fellow
citizen without giving anything of equivalent value in exchange.

"Banks should be paid honestly for their services. By and large we do not now so
pay them. We expect them to service our accounts, including government accounts,
free of charge, and then we make the very bad... ethically wrong bargain of
letting them make their profit by creating and... destroying the very medium of
exchange upon which all the business of the nation depends.




                 Developing  Nations  Should  Create Their Own Credit



"The essential economic basis for world peace is for the nations to so "keep
their books" as to enable their people as a whole to pay for and consume goods
and services equivalent to what they themselves can produce.

"This one reform in national bookkeeping is... a cornerstone upon which...
economic improvement [and] world peace itself can be constructed.... A rise in
the standards of living of the people in all types of nations is bound to follow
the fearless application of this principle. Once it has been applied, each nation
will be in a position to go to work in earnest. And as all peoples devote
themselves to the vigorous development of their own natural resources and their
industrial possibilities... under this principle, [there will] be... created a
home market equivalent to the value of the goods and services produced...

"Problems connected with fair distribution of national income, of equity for
agriculture, of improved health and educational standards [would remain]...

"Nothing in the field of world economics which could be done by a peace
conference of the nations would create greater confidence between those nations
than a mutual pledge that they would each one maintain, within its borders, the
purchasing power of its people at a level [equal] with their power to produce...




                               The Root Of Colonialism



"The main drive that has pushed the highly industrialized nations to... stake out
"possessions" for themselves in various parts of the world and to fight wars in
defense of their trade, has been the fact that their own people at home have had
insufficient purchasing power to increase their standards of living rapidly enough
to form an effective market for the goods they themselves were producing. This... 
has been due to the faulty system of creation and distribution of the medium of 
exchange... total prices of goods produced always tend to be greater than the 
amount of money distributed as income to would-be purchasers of goods... Under 
the system of financial balance here proposed nations would not have vast 
"unsalable surpluses" of goods... to "dump" abroad.




                     How The International Clearing-House Would Function



"There will be a place in the making of peace for an international financial
agency to facilitate the multi-lateral clearing of export and import balances
between the nations, to promote stabilization of international exchange ratios,
and... to extend short-term credits to certain nations for the stimulation of
their trade and economies.

"Such an international clearing house could... in the first place, maintain and
publish accurate running records of the export-import balances of each of the
nations... National governments [would] have knowledge of these matters, [and]
the facts regarding them would also be available to people generally throughout
the world. Nations would be constantly advised of their international trade and
financial positions.

"Thus a powerful influence could be exerted to prevent any nation from piling up
insupportable debt by importing far beyond its power to increase its exports and
services... The people of a nation exporting beyond the point of balance with
probable future imports, would continually be warned of the stubborn economic
fact that they could only expect payment for their exports if they stepped up the
volume of their import trade...

"If all national currencies were valued by the clearing house in terms of their
buying power over a selected list of basic commodities, and if exchange ratios
were determined upon such calculations, a real parity for exchange purposes could
be established. Adjustments could be made as the domestic buying power of
currencies changed. Full statistics on these matters should be regularly
published by the international clearinghouse. Whatever national currency a man
was dealing in, he would ... always know the approximate amount of real wealth he
could purchase with it....

"The basic requirement for healthy international trade and financial
relationships is that normal and ordinary transactions should balance accounts
between the nations...Nations [should not] become so deeply indebted that they
are forced virtually to "mortgage" their national economies to foreign countries,
or... become creditors to such an extent that they cannot collect what is owing to
them without completely destroying their foreign markets...

"Nations [should agree] that if one country exports in excess of its imports it
would... acquire claims against the goods of other nations but nothing more.
Debtor nations should be able to discharge their debts by giving to creditor
nations (or depositing to their credit with the international clearing house)
certificates of indebtedness which could be used for but one purpose - payment for
goods or services. If the creditor nation... [wanted] to collect, it would have to
do so by importing goods.

"Such a scheme would end the present deception of people all around the world who
believe that they and their country are somehow getting paid for the real wealth
they have shipped abroad if gold comes into their country or if some individual
capitalist acquires ownership of a factory in a debtor country. Obviously neither
of these types of "payment" can ever do the People of the creditor nation any
good. Nor can they promote peace... A country which pays for imports by handing
over to foreign ownership its resources must eventually come to the place where
it can continue the process no longer...

"The proposals here advanced do not give to the international clearing house any
power to dictate or control the domestic monetary policy of any nation..."




                  The   Negative   Course  of   the  IMF   Foreseen


"It would be highly dangerous and a fruitful cause of future war if an 
international bank were to be set up and given the power to compel nations to
pursue internally the...monetary policy which such a bank might dictate. If... 
an international bank were to be given control of a considerable portion of the
world's gold [as the BIS still holds] and if it were to insist upon the maintenance 
of the gold standard, or... gold "reserves" in all the nations... it would hold a 
more powerful control over the internal economic life of many nations than their own 
governments could exercise. Loans could be granted or denied depending upon whether 
governments were willing to restrict the supply of money in their countries to a 
certain multiple of the amount of gold available to them.

"Nations seeking to expand their domestic production could be stopped short in
their tracks... Financially powerful nations like the United States and Great
Britain, which... would have a great deal to say about the operations of such an
international bank... would be able to exert a telling pressure upon [the
economic and political policies] of any government. The same situation which
obtained between the American Colonies and Great Britain in the 18th century
could be projected onto a worldwide scale in the 20th century.




                  Gold   Should   Not   Be The  Basis  For  Credit


"Money and its even flow are all-important in the life of the average person...
It is only through the device of money that they are able to live at all...No
nation [can] hope to be free or to live on a plane of equality with other
countries if the domestic buying power of its people [is] dependent upon the
financial dictatorship of any international bank or upon the possession of large
reserves of gold... Nations must be free to promote economic health and activity
within their own borders. All that should be asked of them by any international
economic body is that they maintain within their domestic economies a stable
buying power for their monetary unit whatever it may be."

                        - Article, by Mark Walter Evans, 
                        North Coast Xpress, Summer, 1996 -  


                                  quoting 


                    - Jerry Voorhis, Beyond Victory, 1944 -