
= 
June 23, 1923] 
erroneous theories the economists had formulated and 
taught about the intrinsic value of gold as the basis of 
currency, is no proof that the initiators of the financial 
system, whoever they may have been, laboured under 
the same absurd delusion. The reasons why a 
particular kind of currency came into use are fairly 
obvious to any one who has thought about it in 

relation to different stages of civilisation and human 
development. The problem of counterfeit money has 
also to be considered in this connexion. Our present 
system is an evolution of the Italian banking system 
bequeathed to that nation from a former civilisa- 
tion. Since the founding of the Bank of England in 
1694, industry and the financial system have expanded 
together on the basis of personal integrity and national 
credit. The fundamental principle of the system has 
never changed as far back as we can trace it into 
the remote past. It is founded on the permanent 
principle in human nature described as a sense of 
responsibility (individuality) and a desire for action 
(progress and evolution), and it is this which has 
guided the granting of credit and the use of a nation’s 
currency. Individuals who obtain the use of the 
community’s credit at any time are those who are able 
to produce what mankind desires, or is taught to 
desire, whether goods, ideas or adventures. It isa 
fact that gold alone did not finance the first factories 
erected and operated mechanically in this country, 
and credit has been issued ever since in increasing 
amounts on the basis of the ability of industrial 
concerns to produce what men desire to consume. 
(3) Prof. Soddy says of the financial system that 
“Such a system as the present has never even been 
attempted before.’ This is not correct, as I have 
tried to indicate briefly above. He says, further, 
that ‘It is an absolute innovation.”’ An absolute 
innovation is impossible under the laws of evolution 
and is not known in all the annals of human history, 
with the single exception of revolution, which is 
always followed by a restoration of tradition in a 
modified form. But the innovation here referred to 
is evidently the alteration in the class of persons to 
whom credit was granted after the introduction of 
mechanical power. It appears to have been a funda- 
mental innovation because mankind then entered 
upon a new stage of evolution under new economic 
methods and new incentives and desires; and, 
therefore, the ostensible basis of credit was gradually 
transferred from land to the more productive industrial 
plant. The use of mechanical energy made it possible 
to satisfy growing desires, and the financial adapta- 
tion took place naturally as an “‘inflation’’ of 
currency necessary for the distribution of the increased 
products. This was not a fundamental change in the 
financial system as such ; it was a change in economic 
methods: a new form or symbol of credit came into use. 
The century or more since then has afforded ample 
time for the evolutionary process to complete the 
cycle of existence of this form so that the signs of 
age are apparent, as I suggested in a previous com- 
munication. The reasons are obviously that— 
1. Machines are becoming more and more perfect 
and human labour less and less necessary for 
the production of the means of existence. 
2. Most countries, even into the East, are becoming 
industrialised and their products cannot be 
marketed abroad as readily as in the nineteenth 
century. 
3. Credit facilities have become too concentrated in 
the extension of industrial production, and the 
desires of those devoted to learning and the fine 
arts have been comparatively neglected under 
a democratic regime. 
NO. 2799, VOL. III | 
NATURE 

| or development which evolution implies. 
847 
The results of 1 and 2 will gradually operate to 
inaugurate a new modification in the use of credit, 
because a wider base, another symbol or form of 
credit, must be found by which the means of human 
evolution and of existence under new conditions can 
be more adequately distributed. As machines now 
erform so much of the world’s work, an extensive 
‘unearned”’ distribution of currency would be pos- 
sible and would benefit the skilled staffs of industries 
because of the increased expenditure of the people. 
*The “ out-of-work ’’ allowance, however, is admitted 
to be an undesirable method, as the recognition 
of the mere “right to live”’ is not sufficient for 
those who realise the responsibilities of human 
government. The ethical effects cannot be dis- 
regarded, and the problem in this age of transition 
is to find suitable occupations for certain types. The 
latent powers in human beings are developed by 
individual effort, and it is evident that the financial 
system and social laws were originally formed with the 
view of inspiring and rewarding such effort. It is 
in this respect that our present methods require 
modification, and doubtless many new, and exten- 
sions of old, occupations would suggest themselves 
were the standards of character and attainment 
different. The scholarship method of encouraging 
self-development and distributing currency could be 
extended in other directions and to other occupations, 
and incentives devised for human endeavour toward 
worthier ends than now attract the majority. But 
it would be unsafe to attempt a change on a wide 
scale until the principles which should guide the 
innovation are clearer. 
(4) Finally, Prof. Soddy describes the present 
system as “counterfeit.” I presume (under correc- 
tion) that he has in mind the “ interest ’’ on credit- 
loans. The philosophy of ‘usury ’’ is very interest- 
ing, as it involves the polar principle which science 
has demonstrated, and also the principle of growth 
Interest is 
roughly the measure of the increased productive 
capacity from year to year, and this increase is 
returned immediately to industry as new “loans”’ 
and distributed as currency in wages, salaries and 
dividends, according to the ability of industry to 
absorb and use it. Interest or “‘usury’’ acts as an 
automatic regulator and indicator; it shows where 
the energy and desires of man are expended. It also 
acts as a check and restraining influence on im- 
petuous individuals, although to economists who 
may not realise the polar principle of “ debt” and 
‘credit '’ it is rather of the nature of the red flag. 
Greed and selfishness (concomitants of the evolu- 
tionary process) would be even more in evidence were 
human beings not automatically controlled and 
regulated by the laws of its own credit system, which 
at the same time fulfils the human function of provid- 
ing for changing conditions, growing desires and the 
development of individuality—otherwise we might, 
indeed, perish. Even as things are, honest intention 
to meet “ promises to pay ’’ and ability to perform 
what this industrial age and its ideals demand (Mr. 
Lane Fox Pitt’s ‘‘ practical instruction,’’ May 19, 
p. 670) underlie our credit system, and any one who 
has the “‘ credulity '* to evade these conditions comes 
sooner or later to the end of his rope and his character. 
In conclusion, my object is elucidation and is not 
to prove any person wrong, least of all Prof, Soddy, 
whose courageous tilting at economic conditions has 
stimulated thought and will help to hasten a most 
urgent readjustment of methods and conditions 
which, in my opinion, can be brought about only by 
a change of ideals. W. Witson LEISENRING. 
May 22. 
