Fiat Money Inflation in France - Part 3 of 3

This is Part 3 of the summary of Andrew Dickson White's essay Fiat Money Inflation in France (1876).


Recall how France was deeply in debt and the national treasury was empty in the late 1780s, and how in 1789 King Louis XVI tried to stop the people's "National Assembly," which led to the storming of the Bastille (1789) and overthrow of the king and queen and execution by guillotine (1793).

How Fiat Money Came About-- In 1789 France was "financially embarrassed." It was heavily in debt and had a serious deficit. Capital (savings) had retired out of sight as citizens and investors were not confident enough in the economy to take business and investing risks.

There was a general search for some short road to prosperity. Most of the politicians figured the solution would be to get more spending money circulating. They called for an issuance of irredeemable paper money.

By "irredeemable" it was meant that there would be no gold or similar assets in the national treasury to give "value" to the assignats (paper money). In other words, a citizen accepting the paper money would not be able to redeem it (i.e. trade it in) for gold. History has shown that people are justly skeptical about accepting mere paper money as having any real value.

The government came upon the idea of confiscating the real estate owned by the French Church, which comprised between 25-33% of all realty in France. The new paper money would be "backed" by the confiscated lands. In other words, the assignats were intended to be a form of mortgage-- a note secured by land. The government hoped that the assignats would also be used to purchase the church lands from the government, providing the treasury with money.

To stimulate loyalty and arouse public spirit the portrait of the King was placed in the center of the notes and patriotic legends and emblems surrounded his picture.

The assignats were put into circulation as speedily as possible.

In political speeches it was predicted that "the issue of money would bring strength, abundance and prosperity back into the public treasury, commerce and all branches of industry."

The king issued a proclamation recommending that the French people accept the new money without objection.

"It began to be especially noted that men who had never shown any ability to make or increase fortunes for themselves abounded in brilliant plans for creating and increasing wealth for the country at large. People did not stop to consider that it was the dashing speech of an orator and not the matured judgment of a financial expert."

What the politicians had hoped-- The rationale for issuing the assignats was--

(a) it would give the treasury something to pay out immediately;

(b) once in circulation, the money would stimulate business;

(c) it would give large and small investors a way to invest in real estate; and

(d) a stimulated economy and the proceeds from the sale of real estate would provide the government a way to pay its debts and fund new projects and programs.

The next posts on this subject will discuss what happened after the first issues of fiat money and the consequences and effects. Later parts will also discuss the parallels between the fiat money inflation in France during those ten years (1790s) and current events in the United States with the $160,000,000,000 "stimulus checks" of 2008, and then the authorized $700,000,000,000 TARP "bailout" of 2008, and the impending 2009 "stimulus package" calling for the immediate issuance and circulation of $800,000,000,000 in "new money."

Stamps and "Free" Medical

Some people are clamouring for the federal government to take over health care-- supposedly to reduce the costs. If that were to happen, have you ever wondered whether or not the actual cost of health care will decrease, stay the same, or increase in the future?

There's a pretty simple way to guess how the costs of government-controlled services will rise or fall in the future. (Government costs never fall, by the way. The real issue is how much and how often the increases will occur). Compare them to the cost of a stamp.

Just take a look at the history of the cost of a first class US postage stamp. The federal government runs the US mail and postal service. The US taxpayer subsidizes those services in lots of ways-- as an example, the wages and salaries of postal employees are costs in addition to the postage you pay to mail something, while UPS or Fed Ex employees and truck expenses are paid from the money you pay them to ship something. So, ever-increasing US postage doesn't cover the real costs.

I recall writing a postcard to my sister back in the 1950s. It cost something like 2 or 3 cents to mail postcards. I was one cent short, so I taped an extra penny on the card with the stamps and the postman took care of it. Since then, the cost of postage has steadily climbed.

The U.S. Postal Service has announced that the price of a first class stamp will rise to 44 cents on May 11, 2009. Didn't we just have an increase in stamp prices? Still, even with subsidies the Postal Service lost $2.8 billion in 2008 and, unless the economy turns around, is headed toward much larger losses in 2009. There is no cost control because the taxpayer foots the bill.

Would the federal government likely reduce health care costs, keep them the same, or increase them exponentially? My guess is that the patient's out-of-pocket portion of health costs under a federally-controlled program would likely increase in addition to the increase in the taxes necessarily paid to subsidize the program.

The costs will never stop climbing. Look at the "forever" stamp. You can buy a "forever" stamp now for 42 cents, but the same stamp will cost you 44 cents after May 11. Huh? And how long before a first class forever stamp no longer mails one ounce, but just mails one-half ounce?

If only we could pay today for a medical services tomorrow. Instead, we're demanding services today which our children will pay for tomorrow. (Never mind the likely rationing and decrease in quality, which is another subject).

KNEW Spokane

In 1963 Jimmy Soul had a hit song called "If You Wanna Be Happy."



My early-teen-aged buddies and I listened to the song on Spokane's "top 40" radio station KNEW. Some of the lyrics went like this--

If you wanna be happy for the rest of your life
Never make a pretty woman your wife
So for my personal point of view
Get an ugly girl to marry you

A pretty woman makes her husband look small
And very often causes his downfall
As soon as he married her and then she starts
To do the things that will break his heart

But if you make an ugly woman your wife
Ah' you'll be happy for the rest of your life
An ug-a-ly woman cooks meals on time
And she'll always give you peace of mind

Well . . . we weren't quite sure the last phrase really said . . . she'll always give you peace of mind. Sometimes it sounded like . . . she'll always give you a piece of (unintelligible). AM radio stations seemed to have some interfering static right then, but we knew what we heard. Either that, or there was some other reason the lyrics weren't 100% clear to us.

We didn't know Jimmy Soul's telephone number or where he lived, but we did know the whereabouts of the KNEW broadcasting station. It was on Moran Prairie-- just a couple of miles from our homes and just about 30 minutes away by bicycle. So, we decided to ride up there and ask Larry Lujack-- probably the most famous disc jockey among the Spokane teenagers-- Just what was the oracle Jimmy Soul singing?



KNEW (now KJRB) was started as KVNI in 1946 when the Federal Communications Commission (FCC) issued a license to the Coeur d'Alene (Idaho) Broadcasting Company. In 1947, the company moved to Spokane and changed the call sign to KNEW. The studios were in downtown Spokane but were then moved south to Moran Prairie in 1954. The studio was just adjacent to the transmitter. http://spokaneradio.philcobill.com/knew/index.php



Larry Lujack was born in 1940 in Idaho (as Larry Blankenburg). He started working as a disc jockey in Idaho at age 18. He was at KNEW Radio in Spokane (now KJRB) from 1962-64. After that he went to Seattle's KJR until 1966. He then went back east to work, primarily at WLS in Chicago (20+ years). He’s been a radio star in the Chicago area since first arriving there more than 40 years ago. Lujack chronicled his career in his 1975 autobiography "Superjock." Although he retired in 1987, he's continued to do some remote broadcasts since. He lives in New Mexico.

http://en.wikipedia.org/wiki/Larry_Lujack
http://www.museum.tv/rhofsection.php?page=230

Anyway, we rode our bicycles to the KNEW studios on Moran Prairie. We went right up to the window and could see Larry Lujack working away at the microphone. The music was piped to speakers outside. We knocked on the glass. During a song Lujack came to the back door and we asked our question. I think he was smoking a cigarette-- or maybe my buddy was smoking one. Larry Lujack chuckled and gave us an answer and then went back inside. We rode away. The mystery of the "true" lyrics is still unsolved. (Listen to the record and you'll hear what I'm talking about).

Jimmy Soul was born in 1942 (as James McCleese) in North Carolina. He performed gospel music as a teenager. He was discovered and recruited to sing songs which had been handpicked for-- but rejected by-- Gary U.S. Bonds ("Quarter To Three"). Jimmy Soul only had two hit singles, both of which were Bond's cast-offs-- "Twistin' Matilda" (1962) and "If You Wanna Be Happy" (1963) which became a Billboard Hot 100 number one hit. Jimmy Soul was unable to follow up the success of those two songs, so he gave up his career as a musician and joined the US Army. He died of a heart attack in 1988 at age 46.




http://en.wikipedia.org/wiki/Jimmy_Soul

The Schooner "Equator"

Robert Louis Stevenson (1850 - 1894) was a Scottish novelist, poet and essayist. At age 29 he traveled to the US to marry his wife Fanny. He lived in California between 1880 and 1887 (returning to Scotland and England for summer visits) during which time he wrote the famous books "Treasure Island " and "The Strange Case of Dr. Jekyll and Mr. Hyde" (among many others).


In "Treasure Island" the central character is Jim Hawkins. Jim meets an old pirate Billy Bones, who has in his possession a map showing the location of a treasure. Bones dies and Jim opens the pirate's chest and finds the map. He sets off for Treasure Island. Jim has a number of adventures with pirates and a one-legged man named Long John Silver. The treasure is found and Jim and his friends sail back to England.

There is famous poem from the novel -- "Fifteen men on the dead man's chest / Yo-ho-ho, and the bottle of rum!/ Drink and the devil had done for the rest / Yo-ho-ho, and a bottle of rum!"

"The Strange Case of Dr. Jekyll and Mr. Hyde" is about a London lawyer who investigates strange happenings between his old friend Dr. Henry Jekyll and the misanthropic Mr. Edward Hyde. The book is known for its portrayal of a split personality-- split in the sense that within the same person there is both a good and an evil personality, each being distinct from each other. The work has gone on to inspire many plays and movies.

Suffering from poor health, Stevenson decided to try a complete change of climate. For nearly three years he sailed the eastern and central Pacific, visiting important island groups and stopping for extended stays in the Hawaiian Islands. In 1890 he purchased four hundred acres of land on one of the Samoan Islands. His experiences were preserved in his letters and in the books "The South Seas."

During these voyages Stevenson chartered several yachts, one of which was the "Equator."

This is a picture of "The Stevenson Party Leaving Honolulu, June 30, 1889, on the Schooner Equator."

When my family moved to Everett Washington in the early 1960s my Mom mentioned that the Equator was located at the Everett waterfront. Sure enough, she drove around and found it and pointed it out for me and told me the story of Robert Louis Stevenson and the schooner.

Now the remains of the Equator are protected under a metal roof near the entrance of the 10th Street Boat Launch in Everett. The two-masted schooner was built in San Francisco in 1888 and was later used as a trading vessel and steamer. It was eventually abandoned in the Everett harbor in 1953. The Equator is on the National Register of Historic Places. Attempts to rebuild the ship have failed since it was placed on the Register. It will probably continue to deteriorate.

In 1894 Stevenson felt depressed and wondered if he had exhausted his creativity and completely overworked himself. He even feared that he might return to poor health again and become a helpless invalid. Yet, he rebelled against this idea-- "I wish to die in my boots . . . To be drowned, to be shot, to be thrown from a horse . . . to be hanged, rather than pass again through that slow dissolution." He got back to work writing.

After a hard day at writing in December 1894, while conversing with his wife and straining to open a bottle of wine, he suddenly yelled "What's that?" Then he asked her "Does my face look strange?" and collapsed beside her. He died within a few hours at the age of 44 (probably of a cerebral hemorrhage).

"4 Dot" Olympia Beer Label

Where do myths begin? Is there any basis in truth to them?

Perhaps the answer can be found in cyberspace, which is a good place to start to find the truth of this mythical question--

If a female signs her name to the back of the label from a stubby Olympia beer (i.e., an "Oly") . . . and the label has four dots on it . . . does that really mean she's agreed to . . . and has to . . . (well, you know) . . . ?

The myth began (at least among my circle of miscreants) in the 1960s. Somebody heard it from somebody. So, it must have had some merit to it. The process was very very simple--

(1) Have some money.

(2) Get some Olympia beer from somebody (a) old enough to buy it and (b) stupid enough to be willing to break the law by supplying it to incredibly stupid minors with no common sense.

(3) Consume enough Olympia "stubbies" until a label is
found with what appears to be four dots on the back side.

(4) Reach into the glove box and pull out a magnifying glass to examine the smear marks after the first couple of dots. Study it in the light of the campfire.

( 5) Have a friend or other impartial observer double-check the marks.

(6) Get a consensus that the label does in fact have the requisite four official dots.

(7) Resist the urge to sell the priceless label for just enough money to buy another case of beer.

(8) Find a pencil.

(9) Find a willing female participant who's gullible enough or sympathetic enough to sign the label.

(10) Get the signature.

It's been my observation that nobody has ever gotten past step (5). Never. Ever.

It has occurred to me that the myth was generated and circulated by the marketing department of Olympia Brewing Company at Tumwater Washington. But, probably not. The Olympia Brewing Company began brewing Olympia Beer in 1896 at Tumwater Washington, just south of Olympia. Olympia Beer was very popular in the Pacific Northwest and eventually expanded nationwide. It was reasonably priced (i.e., cheap). The brewery was eventually purchased by Miller, which closed the Olympia brewery in 2003 as being unprofitable.

http://en.wikipedia.org/wiki/Olympia_Brewing_Company

So, the answer to the question? Inconclusive. It appears that there's just not enough hard evidence to reach a conclusion. Still, there are people out there who are still contemplating, inquiring, conducting research:

http://blog.oregonlive.com/thebeerhere/the_beer_bizz/ ". . . and peeling off the label to count how many dots were on the back. A four-dot was treasure indeed because, when presented to your girlfriend, it meant that she had to . . . well, best draw a veil of graceful ambiguity across THAT one . . . not that I ever had a four-dot --- or that many girlfriends, come to that --- but an anonymous can of Oly still ranks among the best beers I've ever had . . ."

http://alumnisandstorm.com/htm2000/2000-11-Nov.htm "Oly Labels (4 dots indicated a particular production code). Two most popular rumors (totally unsupported by Olympia Brewing Co): (1) If you saved up enough labels with the 4 dots on back, Olympia would provide you with a a free case/keg/lifetime supply (depends on who's telling the story); (2) If you could get a gal to sign the back of the 4 dot label, you were just about, almost, pretty near, but not quite assured of . . ."

Harry "Kid" Matthews

Beginning in 1964 my family was living in Everett. Later, I got my hands on a used 1963 Chevrolet Corvair. It had four cylinders. Well, there's not much a guy can do to "soup up" a Corvair. That is-- except maybe get louder exhaust pipes. But pipes never go on easily. A guy might have to have some modifications done by a welder. So, that's what I did. I found a welding shop in Everett.




I told my Dad about my plans and he said "That guy was a professional boxer." Huh? "Harry 'Kid' Matthews."





Sure enough, the welder said he was Harry "Kid" Matthews. He said little more than that. He simply fixed the exhaust. I paid him $10 or so. He wrote a receipt. I should have kept it.

Before WWII Matthews came from Idaho and ended up in the Seattle area, where he established himself as a respectable "main event" fighter. He was a contender in the middleweight division. Then he joined the US Army and didn't box again until 1946. Despite winning regularly after the war, Matthews was unable to make much progress with his career.

Meanwhile, Jack Hurley had managed fighters in Chicago in the 1930s, and also promoted fights for the Chicago Colesium in the 1940s. He eventually came to the Seattle area and set up a long residence at the downtown Olympic Hotel.




In 1949 Hurley discovered Harry "Kid" Matthews. Hurley refined Matthews's style and used his cunning public relation skills to build up Matthews. Matthhews appeared on the October 1951 cover of "The Ring" boxing magazine.

Hurley was known as a perfectionist and would drill his fighters to do exactly what he expected of them. As a result, knowledgable people could tell a Hurley-trained fighter from others. http://www.boxrec.com/media/index.php/Harry_(Kid)_Matthews





Hurley kept Matthews busy in the Northwest in 1950 before sending him off to New York City in 1951. In July 1952, Matthews was matched against heavyweight Rocky Marciano in Yankee Stadium. After winning the first round in the eyes of most, he was knocked out by Marciano in the second round.

After that Harry "Kid" Matthews fought primarily in the Northwest. He retired in 1956 with a respectable career (1937 - 1956) record of 90 wins (KO 61), 7 losses (KO 3) and 6 draws. http://www.boxrec.com/list_bouts.php?human_id=012220&cat=boxer&pageID=1

After his boxing career ended, Matthews owned and operated a welding shop in Everett, Washington. He also began training Everett Heavyweight Ibar Arrington 1978. Born in 1922, he died in Everett in 2003 at age 81.

Japanese Gulch

The Mukilteo Lumber Company was started in 1903 and its name was changed to Crown Lumber Company in 1909. It was closed in 1930. (See my other post about Mukilteo).

The photographs shown here primarily come from http://www.rootsweb.ancestry.com/~wasigs/SOUNDER0806JapanTownPhotos.htm .

Many of the lumber company workers were Japanese immigrants whose families lived in company housing in an area called “Jap Gulch,” later changed to “Japan Gulch” and “Japanese Gulch.” "Although Everett’s strong labor force held no quarter for cheap labor and other towns in the area drove out Japanese workers, Mukilteo residents came to terms with their Japanese neighbors and were able to live in harmony." http://www.historylink.org/index.cfm?DisplayPage=output.cfm&file_id=8422

Nearby Everett Washington was a strong

"union town" and those union members probably disapproved of workers who worked for less. There were many incidents of violence surrounding the Everett unions, lumber mills and strikes during that time period. (See my other post about the "Everett Massacre" of 1916). Still, it appears that Japanese Americans and the other residents of Mukilteo got along well.

Mas Odoi, shown here, (reported by author Margaret Riddle to be in his mid-80s when she quoted him in her 2007 essay) "was born in Japanese Gulch and has returned to visit many times. In Mas’s words, 'When we moved away, we never found a place as nice to live.' Odoi was responsible for creating a monument in memory of the Japanese community at Mukilteo and their harmonious relationship with other Mukilteo residents." The monument is shown above. Here is the link to Riddle's essay-- http://www.historylink.org/index.cfm?DisplayPage=output.cfm&file_id=8422

The following information and excerpts come from an article written by Mark Higgins, a reporter for Seattle Post-Intelligencer, titled "Japanese Settlers Played Key Role in Town's History." I'm not sure of the date of the article. Here is the site-- http://seattlepi.nwsource.com/neighbors/mukilteo/jpn17.html

"Mas Odoi grew up in the gulch and has fond memories of the woods, creek and shoreline where he and his friends would play and picnic. The families raised vegetables, fished and stocked trout ponds. By the 1920s, about 150 people of Japanese descent lived in Mukilteo along with about 220 whites. Both races got along well, Odoi recalls."

"When the Great Depression hit and the mill closed, most of the Japanese-American families left Mukilteo, only to return years later as tourists. His own family moved to the Long Beach Peninsula where his father went to work at an oyster farm."

The following information is from an article written by Herald Writer Yoshiaki Hohara titled "War Takes Innocence from Japanese Gulch" at http://www.saveourgulch.com/history.htm. (It's difficult to find a date of the article, but it does state that in 2006 Mas Odoi was 84 years old. So, that means that Mas Odoi was born in 1922).

When Japan attacked Pearl Harbor, Mas Odoi was a student at the University of Washington, and like most of his classmates he wanted to enlist immediately to fight for his country. But Mas wasn't allowed to join the military because "Japanese-Americans weren't let into the military the same way German-Americans and Italian-Americans were."

"President Franklin D. Roosevelt issued an executive order to remove Japanese immigrants and their families from the West Coast. That forced Mas and his twin brother, Hiro, to abandon their UW studies and join their parents at Minidoka Relocation Center in southern Idaho in August 1942. They were among the camp's first inhabitants. The camp reunited them with many of their friends and neighbors from Mukilteo's Japanese Gulch."

Here is a photograph of some of the "cabins" at Minidoka. Notice the tar paper on the sides of the buildings.

"As World War II escalated, Japanese Americans started to be allowed into the Army. All Japanese-Americans in Minidoka 17 and older were given a questionnaire. Do you swear loyalty to America? Do you forswear loyalty to the Japanese Emperor? Will you serve in combat with the U.S. Army? Many balked at the questions. Some people at the camp decided to fight prejudice by not fighting. Mas answered the same questions as a boy years ago in Japanese Gulch, where he played and studied with white children. He still had no intention to side with the foreign emperor. Yet he couldn't help but feel that America made a mistake by bringing Japanese-Americans to the camp."

"The brothers decided to prove their loyalty, to show they were red-blooded American boys like anyone else. Mas (top right) and Hiro (top left) joined the 442nd Regimental Combat Team, a segregated unit of Japanese-Americans in the U.S. Army. The 442nd's slogan was "Go for broke." Combined with the 100th Infantry Battalion from Hawaii, the unit had the highest casualty rate for its size and length of service: 9,846 lives lost in pitched battles across North Africa, France and Italy."

On April 5, 1945 Mas Odoi was on the front line of the Italian battle zone some place north of Florence. The German line was half a mile away. Mas was ordered to run through the minefield along a narrow trail. A mortar dropped behind him, blowing him through the air. He landed on the dirt. He'd suffered a deep bleeding wound to his throat. He was finally able to stop the bleeding. His brother Hiro saw that Mas was wounded but continued on towards the battle line. Mas spent a month recovering in a hospital. While his injuries weren't serious enough to send him home, he didn't have another chance to fight because Germany surrendered a few days before Mas was returned to his unit.

"After the war, Mas married, raised two sons, repaired TVs and held down a series of jobs in Illinois and California. When Mas retired, he returned to the Pacific Northwest with Frances, his bride of 51 years. Mas always missed the woods and the brisk, clean air. He would love to move back to Mukilteo. He can't afford the rent. Instead, the couple lives in Renton, where things are more affordable. Sometimes he walks through Japanese Gulch. Nobody lives there anymore."

In 2000, Mas and others from the Mukilteo Historical Society dedicated the sculpture to always remember the lives and friendships that existed in Japanese Gulch before World War II.

http://www.saveourgulch.com/history.htm