THE

SOVIET UNION AND

THE CLASS WAR

• BY

Dr. KARL F. M SANDBERG

Chicago

•

Price 25 Cents 5 for $1.00

THE

SOVIET UNION AND

THE CLASS WAR

• BY

Dr. KARL F. M SANDBERG

Chicago

•

1. Introduction.

2. The Soviet Union. What is it?

3. Accomplishments.

4. The Five Year Plan.

5. Collective Farms.

6. Taxation Reform.

7. The Money Reform.

8. Federal Reserve Panics.

9. Conclusions.

INTRODUCTION It is now more than three years since the end of the l.lst

war: that is the open, warm war. The hidden cold war goes on uninterrupted.

The only difference is a shifting of the roles. Formerly it was the United States, Britain, France and the

Soviet Union, against the aggressor nations, Germany, Italy and Japan. Now, after the aggressor nations have been crushed, it is the United States, Britain and France, with a possible aid froD" a restored Germany, against the Soviet Union.

And the cold war goes on. Only now newspapers and the radio have taken the place of the soldiers and their guns. All we hear, and read, is about the Soviet Union and its communistic form of government. how bad and dangerous they are. They are the ones, that are threatening us, that aim to capture us, and that we must protect ourselves against, and choose our friends and co-defenders against.

Can we believe our ears and eyes? The Soviet Union was our ally in the war. We were fighting

on the same side. She fought more and greater battles, lost more men, and bJd more of her territory destroyed than any on our side. And she finished the war in the capital of the main enemy, Germany. Is that all forgotten? Or did it never count? Wasn't it according to plan?

\Ve were innocent enough to think, we all were fighting for the same, to prevent Hitler's fascist army from conquering the world.

We were delighted, when it was crushed, and felt gratitude and admiration for the power, that contributed most to this victory.

But now we are told, that is our greatest enemy. How can it be?

It is THE CLASS WAR. Now we know it. The Soviet Union is not supposed to be in our class, not fit

for our company. It is ruled by simple working men; and that is no company for us of the upper class.

Now we know it. That is the reason we did not save Czechoslovakia or Poland,

nor fought very long for Norway. And that is the reason we

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hesitated so long gtvmg the Soviet armv the help she needed so badly. the second front against the German army.

There were powerful forces on our side, who would have preferred a German victory.

Now we know it. Cheerful news for our soldiers. We, at least our southerners. ought to understand the class

feeling. That is the feeling they have towards their negroes. And that is the feeling the old upper Russian classes have towards the new government.

As an example of the persistence and intenseness of these feelings. I may mention an experience of my own. ten years after 191 7.

I was visiting friends in Jugoslavia, and had to report to the police of the town. The chief examined my passport. and when he discovered, that I had been in the Soviet Union, he became quite excited. and wanted to know. what I had been doing there. I told him, I had been studying tuberculosis. To check up on this he called in a doctor. And then he. the chief of the police of the town, made the following expression:

Those in there. who are sick, should die. and those who are not sick, should be hanged.

He was a former upper class Russian. There are a number of them scattered around in other coun­

tries, and a good many of them meet class sympathizers and conspire with them against their former native land.

Their influence undoubtedly has had, and still has a great effect upon the sentiment towards the Soviet in other countries.

2 8 50 Logan Boulevard, Chicago 4 7, Ill., U.S.A.

October, 1948.

KARL F. M. SANDBERG.

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THE SOVIET UNION WHAT IS IT? ,,

The Soviet Union is a federation of 185 nations, some very large, some very small, of different lan­guage, race, history, culture, religion, and way of living, that voluntarily have joined together, and harmoniously work together for mutual benefit. A most attractive and convincing picture of a United Nations.

It was created, the same as the United States, by a revolution of the Russian people, who were greatly dissatisfied with their government. As a result the Russian workers on farms, in factories, and in the army assumed the power of government, and carried it out by soviets (councils) of workers, farmers and soldiers.

Russia, the same as other lands, had had many revolutions before; but nothing like this. The lower class had always been kept in its place after the revo­lution. But in this case the classes had changed places. The lower had become the higher, and seemed able to keep the new place. That was shocking, and could not be tolerated.

And the class war started at once. First in Russia itself, where the former higher class started civil war in a number of places. And later as an international war, when the different capitalist nations sent inter­fering counterrevolutionary armies across the border, and joined in the civil war against the new govern­ment. This war kept on for a number of years; but as the Soviet was able to repel all attacks, it finally came to an end. That is the open warm military war. But the cold non-military war has gone on ever since, and is more violent today than ever.

It is not a question about, how the Soviet is doing, or how it is behaving. That is not considered. It is

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run by the lower class. That is its unpardonable crime. That is the crime that cannot be forgiven.

WHAT HAS IT ACCOMPLISHED? First of all it attempted to stop the war. An

appeal was sent to the other warring nations to: Stop the war, and conclude peace without annexa­tions or indemnities. They wanted to stop the war spirit.

Next all land was declared state property. There should be no more land, privately owned by some, who hired, or enslaved, others to work it. The land was to belong to those who worked it.

All state power was placed in the hands of the working people. And it was made a duty for every­one able to work, to do his part.

Every one was entitled to a job, and to receive his pay for his work, according to its value.

Any one refusing to take part in the common work, was not considered entitled to his food.

No one was allowed to exploit any other. The aim was to form a peaceable commonwealth,

where all were to work together for the common good, and no one taking any advantage of any other.

All were to have equal privileges, as well as duties, regardless of sex, race, color, nationality, religion or education.

All over 18 years of age were entitled to a vote at elections.

All were entitled to full free education. All were entitled to free medical care. All natural resources, means of production, trans­

portation and communication were made common public property.

Such was the start of the Soviet Union. And -what it might have accomplished, if left alone, un-

8

disturbed, is difficult to estimate. But as it, in addition to its inexperience in both domestic and international affairs, has had to fight a continuous class war with both internal and external class enemies, it is a wonder, that it has accomplished what it has. Its progress has really been more rapid and thorough than that of any other nation. This has been accomplished by the introduction of different socialist reforms, of which the most important ones shall be considered.

THE FIVE YEARS PLAN The five years plan was adopted in 1928. It had

taken the Soviet 11 years to be allowed sufficient peace and non-interference to be able to sit down quietly and consider future plans. It shows the dreadful effect of the class war.

An elected committee takes a survey of the nation as a whole, as to what it needs, or desires, for its daily wants , or its future plans, and as to what it is able to produce.

On the basis of this survey they lay the plans for the whole, and for each single part, as to how much to produce for the next year, and for the next five years.

This then becomes their goal , and as a general rule they have managed to fulfill it, and even to exceed it. Several times the five years goal has been fulfilled in four years.

The plan has proved itself a fine business plan, far superior to the capitalist planless system, where each enterprise makes its own individual plan, and interferes one with another, to the extent, that out of 1 00 enterprises started, it is claimed 5 only succeed. Under the Soviet system, all are working together, under one management, for the common good, so there is no excuse for 9 5 per cent failures.

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THE COLLECTIVE FARMS The collectivization of the farms in Russia was

not such a big change, as it would have been in some other lands, for the reason that the farms, even before the revolution, were to a degree collectivized. Even though each peasant cultivated only his own little piece of ground, their houses were generally grouped together in villages, with an open space in the middle as a common and safe place for the cattle, and the individual farms radiating out from the village.

The cooperative spirit even went so far, that the individual peasant-holds from time to time would change hands in order to equalize the benefit of the land as to its qll2lity and usefulness.

At first the state started large state farms, with all kinds of agricultural machinery and skilled scientific management. Then the little peasant-holds began to join together, and work their land together. The state aided this by establishing stations with modern farm machinery and trained operators to do the machine work for the farmers. This gradually prov­ing its superiority induced the farmers to join to­gether into collective farms, and now they are practically all so collected.

In the collective farms the work is all organized in branches with a head for each branch.

The land they get for the asking, without any payment, and it belongs to them forever; but it can not be sold or mortgaged. Should they leave the land, it returns to the state. The state collects a certain proportion of the crops as taxes, or rent of the land. The part of the crops, which is not needed for the support of the members, nor taken for taxes, may be sold in the open market, and the proceeds divided between the members, in accordance with the work contributed by each one.

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Each family gets a small household of its own for its own private use.

The planning of crops is in accordance with the plans of the general planning board which lays its plans for the entire nation, and makes its assignment for each farm.

The size of the farms is that of a very great­several thousand acres-but not too great farm.

THE TAXATION REFORM In the matter of taxes, the Soviet system, in two

important ways differ from the usual. Our American farmers have to pay their taxes in

money, and at an inconvenient time of the year. The Russian farmers pay their taxes in farm products, and at the time these are being harvested.

A great reform in the general taxation system was also made in 1930. Before this .the way of taxation was the usual. The one who happened to be the owner of the goods was taxed for it; and when it changed hands, the next possessor was taxed again. Goods was taxed from the producer all the way down the line of its handling, to the final con­sumer or user. There was taxation and collection for each instance.

This was all changed. Instead of this a one tax was introduced. The goods is now taxed at the point of production, and there is no further tax on it. And instead of a tax on each article was also placed a tax on the entire production.

Supposing for instance a shoefactory, producing 50,000 pair of shoes a month, and that the cost in labor and material was 5 rubles a pair. Then a tax of 5 ruble a pair might be placed right at the factory, and the price set at 10 rubles a pair. And there would be no further tax down along the line.

This tax then takes the place of a number of smaller taxes, is assessed at one place, and immediate-

! 1

ly after the goods is produced. In this way the collected tax can at once be used for further industrial investment.

The change has been a great improvement, and has done away with, or reduced, a number of smaller nuisance taxes. It has become the main tax.

THE MONEY REFORM The Russian workers had a fairly clear under­

standing of the evil influence of the banks, and right after the revolution they closed them all. But they did not have the know ledge, nor did they get the opportunity, to change them into the power for good, that they now have become.

I shall never forget my first visit to the state bank of the Soviet Union in 1922. Outside the front door a soldier with a bayonetted gun. Inside the door anothet: one. Then a long table with 8 bearded · farmerlooking men along it, counting paper rubles, tying them together in bundles and putting them down in potato sacks. Next a few men, looking like bank clerks, doing nothing particular. Next, in the back of the room a small door \Vith a working-class woman seated outside of it.

She got up and opened the door for me, and here were two elderly men, evidently the former bankers. now her prisoners.

I had a brief conversation \Vith them, and they reassured me that eventually everything would come back to the same as it had been.

Now here was a most revealing picture. Could I read it? I did not try at the time. I may try now, 2 6 years later.

Here were 8 men, 1 woman and 2 soldiers of the working class, the class that now had assumed the mastery of the nation. They felt that the money had not been made to serve them, but rather to exploit them, and that the banks and the bankers

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were working against them. So naturally the first thing, they closed them, so they should do no more harm. But what to do after that they evidently did not know, nor did not get any chance to try.

The European war, the civil war and the famine prevented them from introducing their new money, the chervonetz, until 1923. And after that the inability to fully socialize industry, commerce and agriculture prevented them from socializing the money system until 1930.

Up to this time all the enterprises, even the social­ized ones, were run according to the usual commercial system. They all sold goods to one another on credit, and the usual trade papers passed from one to an­other, for so as a rule to harbor in the bank. All were indebted to one another, and to the bank, just as in a capitalist country.

Under the new reform law this isentirely changed. The banking system has been nationalized.

The state bank now keeps the account of all enterprises, without these needing to, or even being permitted to, keeping account between themselves.

When a business sells goods to another, it notifies the bank, and gets credit for it on the books of the bank, and the receiver of the goods is debited the same amount on the books of the bank. The bank in that way has a constant supervision and control of all the business.

While it formerly paid attention only to the guarantee, upon which each single loan was resting, without any cdnsideration of the clients general financial standing, it now bases its credit on the industrial or commercial plan of the client. In the first place the limit for the credit of the client for a certain space of time is set in accordance with the general plan for his business.

By keeping the credit within the set limit, the state bank has supervision of the financial standing

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of the client as a whole, and ascertains, if he follows the direction of the plan.

Formerly the client was watched in different ways. Now all his settlements and cash transactions are gathered in one running account. This account shows all the receipts and expenditures of the client, both in cash and in bank accounts. In case the credit is exceeded, the bank at once has to step in to repair the damage.

The activities of the state bank can be divided in three groups:

1. Clearing of the checks and accounts of the economic organizations.

2. Granting of loans. 3. Regulation of the circulation of the money. The economic enterprises, which all now are na-

tionalized, and run by the state, do not use cash money in their transactions between themselves. All payments are made with checks or orders to the bank, transferring the sum from one account to another.

The undertakings of the Soviet operate under a prearranged plan, with certain quota of goods to be produced by each concern. In accordance with the plan, the bank advances them money to,buy natural raw products, fuel and other necessary articles, or for a needed reserve.

The bank grants loans exclusively against real material values as security, and sends its inspectors to examine the goods, and also to ascertain if the goods is needed to complete the plan, and further to find out about packhouse facilities.

The credit of the bank runs into scores of billions of rubles. The loans as a rule are not granted for more than three months, and require prompt repay­ment. That forces the business to finish its quota punctually. It is called the control of the ruble, and is a highly important factor in the production.

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The bank collects interest on 1ts loans - 5 per cent after 6 months -; part of this goes to the depositors, part is kept in the bank, and is again put into circulation through economic enterprises, collective farms, labor unions or private individuals. In this way the bank takes care of the third, and very important, part of its functions, the regulation of the circulation of the money.

There must always be enough of money in circu­lation for exchange and settlements.

That the state has mastered this function is proven by the decreasing prices and increasing saving bank deposits.

In addition to the state bank there is an industrial bank, a commercial bank, an agricultural bank, a commune bank and a bank for foreign trade. All belong to the state. All have their central offices, regional offices and district branches.

THE INDUSTRIAL BANK grants loans to building enterprises for the acquisition of materials and equipment. These loans are repaid as and when the enterprises are launched and begin to pay the builders. The government entrusts to the industrial bank control over expenditures in all industrial and transport construction-an important task, in view of the fact that the government appropriates scores of billions of rubles for such construction annually.

THE AGRICULTURAL BANK advances credits to agricultural building concerns, for building irri­gation systems, stockfarms and power plants for agriculture. The bank advances long-term loans to collective farms to buy cattle and to plant orchards or industrial crops. Large credits are advanced to col­lective farmers moving from densely populated dis­tricts to Siberia and the Far East. These long-term credits run for three, five, seven and even ten years. Along with its credit operations the bank also checks expenditures of funds of all capital construction in agriculture.

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THE TRADING BANK. Trading and coopera­tive organizations receive loans for construction from the trade bank, which advances loans for the opening of new stores and warehouses, for vegetable stores and grain elevators. Particularly numerous loans are re­ceived by cooperative organizations in districts, which have suffered as a result of the German invasion.

THE COMMUNAL BANK is a very important factor in the nation's economy. Its clients include street carlines, bath houses, laundries, buss lines, housing administrations and a host of other com­munal organizations. This bank also advances con­siderable credit to private individuals, who want to build or make additions to their houses. Anyone working for a salary has the right to come to the bank for a loan. The bank checks on whether the applicant has land on which to build, and demands a guarantee from the director of the enterprise or organization, in which the applicant works. If these conditions are fulfilled to the bank's satisfaction, it advances credit for a term up to ten years. The loan is issued in installments as the building work pro-gresses. The communal bank is at present advancing loans to demobilized soldiers who wish to build houses or other buildings.

THE FOREIGN TRADE BANK advances loans to importers to pay for shipments. Exporters are given credit to tide them over until they receive pay- ~ ment for the shipments they send out. V

Soviet banks are of the highest significance as ~ centers for the study of the national economy, and !J for help in its planning. They keep a watchful eye on the affairs of their clients, study bookkeeping accounts, compare the work and popularize the ex-perience of the best. The administration of the bank receives information from its branches all over the country, and report to the government on matters which require its attention.

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The banks have the right to suggest amendments to bills on economic matters, and send their recom­mendations to ministries on measures which they feel should be taken.

I have given you a fairly complete picture of the financial system of the Soviet, because I consider it the most important part of its social system, and the one that clearest sho\vs the spirit of the nation. The financial system of the Soviet, more than any other part, sho\vs the spirit of the cooperative common­wealth, the spirit of all working together. It is a new kind of a financial system, a nationalized sys­tem, a socialist system, similar to that introduced by President Lincoln.

For comparison I shall now draw a picture of a capitalist financial system, and shall take our own as the most perfect one.

Our present financial system got its start in 18 6 3. In that year congress introduced the national bank­ing system. Just a year before Lincoln had introduced his nationalized financial system, under which the government printed its own public money for its own use. To this the bankers objected strongly, and stated, that it would not do to allow the Greenbacks -that was the name they gave Lincoln's money-to circulate for any length of time, for we can not con­trol them. They refused to tolerate money they could not control, not even Governments own money. And congress gave them what they wanted.

While the Lincoln money was real national money, this bankers money, which was given the name of national, was not national at all, but strictly private; and it was introduced for the very purpose of forcing the Lincoln national money out of the field and leav­ing this clear to the bankers and their private money.

These 'national' banks were a new kind of banks, for whom the government printed national bank notes, to pass as government public money. To get

17

these the bank had to furnish security in government bonds. but were still keeping the ownership of the bonds, and drawing the interest these were yielding. So the banks in reality were doubling their money, getting new money, and still keeping their bonds.

From that time up to this day our private banks, and especially the largest ones. have received so many favors from our congress, that I shall find space only to record the greatest of them.

Demonetization of silver was the next favor. Peo­ple liked the silver dollar, but the bankers would rather have them use their bank notes, which cost them nothing. and brought them good profit by be­ing loaned out. So they put the silver dollar out of the way. But they did it in such a way, that it was not noticed. They got congress to pass a coinage bill that left the dollar out.

The scheme, it is reported, was planned in Eng­land, where most of the U. S. Bonds were held. $500,000, it is claimed, was raised and sent across the Atlantic with a Mr. Ernest Seyd, and the scheme was carried out with the assistance of the New York Chamber of Commerce. the Comptroller of the Cur­rency and the chairman of the committee on finance of the senate.

But the people were not ready to desert their old dollar, or their own national money. The Green­back Labor Party took up the fight, and in 18 7 8 it polled 1,400,000 votes, and elected 20 congressmen. And in 1890 congress passed a law providing for the coinage of standard silver dollars. The congress did not dare to pass any more la\vs against silver, not even at the command of their president, Cleve­land. And that it in 1900 passed the Gold Standard Act, making the gold dollar, instead of the silver dol­lar, the unit of value, did not even satisfy them, so they brought on the panic and depression of the 90's, And was that an awful one? Banks quarrelled among

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themselves and failed. Big ones ruined smaller ones. Prices tumbled, businesses went bankrupt, mortgages were foreclosed, unemployment was great, horses were turned loose, because the owners could not feed them.

And why did we have to go through all this misery? Just because the bankers could make more profit, when silver dollars were not to circulate. And congress now, Oct. 30, 1893, repealed the silver pur­chasing and coinage act.

The depression lasted until it was broken by the Spanish-American war in 18 9 8.

Then we come to the next financial crime, the fi­nancial lockout of 1907.

On orders from the big banks, all the banks were closed, and the small banks were requested to turn over their cash to the big ones. You could not get your own money out of your O\.Vn bank. Some gov­ernors of states even ordered all safety vaults closed, to prevent people from removing their money from these.

It was a forcible move to impress people and the congress of the need for a new bank bill providing more bank notes for the banks. Such a bill was also passed by congress May 30, 1908.

But it only wetted their appetite for more, and in 1912 came the biggest of all the financial conspiracies. The Federal Reserve Act. The bankers claimed that our financial system lacked elasticity, and that it was subject to panics. But they did not inform us, that they. themselves were creating the panics, and that they wanted more bank notes to increase their profit.

They took great pains in their preparations for the bill, even tried to make it appear, as if they did not favor it. And as a result of their great efforts, and in spite of strong opposition, the bill was passed by congress and signed by President Wilson Dec. 2 3, 1913.

What has so been the effect of the law? The effect has been revolutionary.

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It is considered a criminal offence to advocate the overthrow of the government by force and violence. But here was a real overthrow of the government, and at that by perfectly legal means, by a law passed by congress and signed by the president.

The law created a new kind of money, not for the use and benefit of the government and the people, but for the private use and private profit of private bank­ers and their clients.

The new kind of money, the federal reserve notes. are based, not on public work performed, or to be performed, for the nation, as the Soviet money, but on indebtedness, and not like Lincoln's notes on the indebtedness of the nation, but on the private indebt­edness of the banks and their clients, which simply is taken over by the government as the public debt of the nation.

Practically all taxes are now paid in federal reserve notes, and the government accepts them at their face value, regardless of the fact, that the government has handed these same notes over for nothing. Handing a billion dollars over to somPbody for nothing, and taking it back for a billion, to me looks like a prof­it of a billion for the taker, and a loss of a billion for the giver. And when the giver is the government, acting for you and me, it means the loss of a billion for you and me. Am I right?

This fundamental change in our financial system, no matter how revolutionary it really \Vas, came so slow and gradual, that most people did not notice its revolutionary character. Gradually however the supply of the ne\v private money gre\v, and by 19 3 2 there were about as many of those in circulation, as of all other money together. And during the last war they increased by several billions each year. By 1946 there were some $24,671,822,965 of them in circulation, or some 85 ~ of the total. They are now about all the money we see.

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That is our situation right now. Before the in­troduction of the federal reserve notes the amount of our money in circulation amounted to $3 5 . 00 a person, now it is over $190.00 a person. Over five times as much. The bankers have flooded the nation with these their private notes, that they get for noth­ing, and use as full value public money.

That is the cause of our present inflation and ex-. . cess1ve pnces.

No wonder they are loaded with money and run the country.

And no wonder they are trying to get other nations to value the gotten-for-nothing notes as highly as we do, so they can also get their goods for nothing the same as ours, and run them the same as us.

Their big aim is to make their federal reserve notes the money of the world, so the moneys of other na­tions get their value only by comparison with these , and at their dictation.

Now we come to the greatest of all their crimes.

THE FEDERAL RESERVE PANICS The federal reserve act was by the bankers promised

to prevent panics. But it did not take very long be­fore they started one themselves, the one of 1920.

The trouble was, that they had not succeeded getting enough banks to join the federal reserve banks to make it a solid trust.

The great majority of banks declined to join, and invitations. threats and intimidations could not per­suade them.

So a desperate resolution was taken. They, the declining banks, were to be destroyed,

by means of a panic, conducted by the member banks. The member banks felt that they, guarded by all

the privileges the new law granted them, could weather a panic, while the non-members, lacking this protection, would succumb.

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So the scheme was carried out, and worked fine. First a boom. Then a bust.

Some 10,000 non-member banks were put out of business.

That in addition thousands of farmers, stock­men and others were ruined, was too bad, but could not be helped.

The damage was dreadful. But the object was gained. The new legalized money and banking trust was

greatly strengthened. The 1920 panic however was mostly limited to

the farming districts. The larger cities had not been so much affected. And in these there still was a num­ber of non-member banks. So in 1929 another panic was created to purge these. Again first a boom; then a bust.

And this was some boom. Inflation was pushed to the limit. Bank credit loans were run up to some 60 billions. The banks loaned credit without security to anybody who had a job. Anybody who could give security, and wanted to borrow a thousand dollars, was induced to borrow two thousand. Stocks in corporations, that never paid a dividend, were bought and sold on the stock market, and accepted by the banks as collateral for loans, which again were used to buy more stock.

Banks were making loans on building plans to the full amount of the estimated cost of the ground and building, or even to the full amount of the capital, the calculated rental income from the building, when put up, could pay interest on, yea even higher. They then sold 6% gold building bonds to the public, with the prospective building as collateral.

Speculation was encouraged by the banks. Specula­tion got wild. New banks were started. There was going to be no limit to the prosperity.

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But then came the bust. The loans were being called. Stocks went down; could not be sold. Loans could not be paid. The whole inflated building col­lapsed. Debts to the banks were all you could dis­cover. More thousands of non-member banks were closed. The depression that followed was worse than any previous one, and again lasted until broken by a war, the last world war. But the object was again gained. The trust wc;ts still further strengthened, and its members continued running.

And still the popular uprising was so great, that even they themselves were threatened, and had to call for help.

But they also promptly got it. The president declared an emergency, and closed all

the banks, so the depositors could not withdraw any more of their deposits.

The national banks were also given authority to issue and sell preferred stock.

And the Reconstruction Finance Corporation was requested to subscribe for such stock.

And the government furnished it money for this purpose.

Their currency, the federal bank notes, which any­body could refuse to accept in payment, were also by congress made real public money, full legal tender, which nobody had the right to refuse. Futhermore the gold was turned into their possession.

All gold was ordered delivered to the U. S. Treasury. People delivered it to the banks, and in ex­change got federal reserve notes. But as the gold value of these had been reduced to about 5 9c. it was quite a loss to the people.

The government claimed to have profited by the reduction to the extent of $2,800,000,000, but as the federal reserve banks now hold the certificates for most of this gold, it would rather seem that they have been the gainers.

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The federal reserve board was also given the privi­lege of dispensing with the reserve requirements.

With all this aid the banks again were able to open their doors at th2 old stand. And with the start and prosecution of the second world war they were able to absorb another 20 billion of our gift money and pronounce great prosperity. This again has created the highest inflation and the highest prices we ever had.

Conditions are well developed for another panic and depression, and a number of people are expecting one. But the big bankers got such a scare under the last one, that they may not attempt another.

I have now for comparison given you a fairly complete picture of our own financial system, because I also consider that the most important part of our social system, and the one that clearest shows the spirit of the nation.

The financial system of our country, more than any other part, shows our spirit of ruthless competi­tion, the spirit of everyone for himself, and the devil take the hindmost.

That is the spirit of opposing classes, the spirit of a ruling upper class, and a servant lower class, the old capitalist spirit, the spirit the Russian revolution knocked in the head, the spirit that is in a desperate war of defense of its old privileges.

We have long known of an upper ruling class, an invisible government, generally called Wall Street, which ruled mostly through ownership and control of our transportation system, the railroads.

But now, since the adoption of the federal reserve banking sytem, we have a new ruling upper class, the Board of Governors of this system, which has greater powers than any former ruling upper class. And which power we ourselves have nursed into its present perfection by billion dollar gifts from the government.

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We have in fact given a small bunch of private bankers complete ownership of our money and bank­ing, and have been stuffing them with government ~o?ey, like a farmer stuffs his turkeys for thanks­giving.

The study of the t\VO financial systems shows you mo~t clear I y the difference in the spirit of the two nat1ons.

Several members of our government profess to be worried over the present inflation and high prices; but they have it fully in their own hands to remedy it. They have it in their power, to reject in part, or entirely, any application for a loan of federal reserve notes, and can thereby regulate the money in circu­lation to the proper amount.

CONCLUSIONS We were innocent enough to believe, that when the

war was finished, it was over, and we would have peace.

But now, three years after its finish, the war still keeps on; only there is no more shooting and the partnerships have changed.

During the war the Soviet Union had several allies, now it is all alone, and with a crowd against it.

That it really was the Soviet army that won the war, and concluded the peace in the capital of the main enemy, that without its victories its allies would have fared badly, seems to be entirely forgotten.

Now the Soviet Union is the enemy, that must be crushed.

How has this come about? And why cannot we have peace? We are beginning to understand. The war wasn't anything separate by itself. It

was only a part of another still bigger war, the inter­national class war, the persistent war between the

_upper and lower class.

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Mussolini and Hitler were not independent revo­lutionaries. No, they were the field marshalls of the upper class in its war against the lower class.

That we did not know before. It was kept very secret. But now we know it. That was the reason the war did not end with

the victory of the "anti-fascist" armies. To some on our side this did not mean victory,

but on the very contrary, defeat, defeat in the class war.

They had helped Franco overthrow the Spanish government.

They had allowed Mussolini to overthrow the Ethiopean government.

They had allowed Hitler to crush one nation after another, and had helped him to build an "invincible" army.

They had counted on this crushing the Soviet lower class army.

That would have ended the war. But the lower class army was not crushed. Its

opponent was. Their disappointment was great. The bitterness of the class war increased, and the

war came out in the open. Couldn't the Russian upper class regain its former

privileged positions, at least the privileged positions of the upper classes in other countries had to be protected.

And on these premises the international class war goes on.

And the nation that has solved the class war in favor of the lower class, and has organized a classless society, is named as our worst enemy, the enemy of all humanity.

And the war against the lower class goes on. The privileges of labor are removed by laws like the

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Taft-Hartley one and the Mundt one. And the farmers cooperatives are attacked in congress.

Now in regard to this class war, the first question of course is: To what class do I belong? And in regard to this there is very little clearness. The aim seems to be to leave that question out of discussion. But without solution of that question, the whole class war is a muddle.

THE MEANS OF PRODUCTION That some big fellows belong to the upper class.

and some little fellows to the lower, seems to be generally agreed. But this leaves the bulk of the population without classification. Professionals, as scientists, professors, teachers, ministers, physicians, lawyers and others consider their work so important, that they class themselves with the upper class.

Officials, office workers, salesmen, salesladies, tele­phone operators, white collar '\Vorkers, high class organized and highly paid workers, all consider their work of too high rank to be classed as lower.

All these seem to have an idea, that it is a matter of choice, what class you want to belong to.

But it is neither a matter of choice nor of the importance of your work. It is a matter of the ownership of the main means of production. Then you may ask: Well, what then are the main means of production? And they may be different in different nations. But whatever happens to be the main means of production in a certain nation makes the owners or controllers of those the upper class of that nation. And the entire rest of the population, no matter of what character, form the lower class.

In old Russia, land was the main means of pro­duction, and the owners of the land were therefore the upper class, while the workers of the land be­longed to the lower class.

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In the former Germany, manufacturing was the main means of production, and the owners of the giant factories were therefore the upper class. In the old England, manufacturing had to share its position with world trade and world finance. The three were the main ones, and their owners were the upper class.

In our country the same three elements are the main ones, and their owners. as represented by the National Association of Manufacturers, the U. S. Chamber of Commerce and the Governors of the Federal Reserve Board make up the upper class. All the rest of us- whether we like it or not- belong to the lower class.

Unfortunately our education and our social spirit have given us the idea, that it is degrading to belong to the lower class. But when we realize, that within this class are all the parts of humanity, that have created the world as it is today, and keeps on feeding us, clothing us, sheltering us, and keeping things going, it should make us proud to belong to this class rather than to an idle exploiting upper class.

Once in a while a member of the lower class man­ages to work his way into the upper class. As Fritz Augustus Heinze in Montana cooper mines, Samuel Insull in the lllinoi.s electric field and the Van Sweringen Brothers in the railroad field , but these being individual efforts only, the individuals soon again were back as members of the lower class.

The reason the Russian landworkers, factory workers and soldiers still remain as the upper class of the Soviet, is that they realized that they all, no matter what their work was, belonged to one and the same class, and that their suppressors, no matter what their different titles might be, all belonged to one and the same class against them.

They also realized, that they consisted the great majority of the population, and that this made them the upper class, provided they stood together.

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This is generally well understood by the upper ruling class, and they are therefore always preaching, that there are no classes, and are very pleased to see the lower class divided, especially at the elections.

THE WORLD TODAY Now take a look at the world today. And what do you find? A big muddle. And not only in one land, but

in all lands. We have a United Nations. It is intended to bring

the nations together in one friendly and harmonious union. Has it, or will it succeed? No, it can not.

We had a similar one, The League of Nations, with the same object. Did it succeed? No, it could not. Neither can this one. And for good reasons. The required conditions are not present.

Before nations can come together in friendly and harmonious cooperation, there must be friendship and harmony between the people of each nation itself. As long as there are quarrels, fights and class war within the individual nations, no satisfactory United Nations can be built.

It was a pious wish, first of Wilson, then of Roosevelt, but the proper conditions were missing. Nations profess to want it, but they do not want it on equal terms, want it on their own terms, want to boss it, as they boss their lower class, and their colonies.

No, the matter of United Nations is a matter for the distant future. Each nation must first solve its own troubles, establish peace within its own nation. Must first have a United People. And the colonial and suppressed people and races must first secure their freedom and position of equality with all others.

And when will that be?

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The Socialist Soviet Union, with its 19 3 millions, its tremendous territory, and its immense natural resources, under its collective farm system, its im­proved taxation system, its correct financial system and its state monopoly on foreign trade, is undoubted­ly, not only the biggest, but also the best organized and orderly conducted business concern in the world. Granted peace and noninterference for a number of years, it is a safe prediction, that it will be the greatest of all nations, and that it will reach its goal of the establishment of a communistic state, with its motto : ' 'From each according to his ability, to each according to his need.''

Here we have a union of 18 5 nations, each one of whom has established friendly and harmonious relations within its own borders by finishing the class war and building a classless society.

These 18 5 are now working together as one in freedom, peace and harmony. Each one is free to leave the union whenever it so desires. Others might join them; but they would first have to settle their own troubles, would have to finish their own class war.

None of the 185 have left the union. The Soviet Union, in all its different act1v1tles,

shows the spirit of the cooperative commonwealth. Given such a spirit within all nations, the building of a United Nations would be an easy task.

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