OF TRUTH AND MONfcY

OSWALD SPENGLER called money "a form of thought." Tolstoy condemned it as "a new form of slavery." While Thoreau figured that "the more money, the less virtue," Schopenhauer argued that "money alone is absolutely good" and Samuel Johnson declared: "There are few ways in which a man can be more innocently employed than in getting money." The New Testament holds that love of money is the root of all evil, but Mark Twain reversed that adage into "lack of money is the root of all evil." Socrates said: "Virtue does not come from money, but from virtue comes money." Gertrude Stein remarked: "As a cousin of mine once said about money, money is always there but the pockets change."

These and a thousand other truisms or semi-truisms are readily recalled in times of financial trouble to bolster this or that point. But money is also something very simple beyond all those definitions. It is one reliable means of keeping score on the accomplishments of a person, a company or a country. Money gives its possessor a range of choices, and the way that a nation chooses to handle its money sharply illuminates its character. When the world tumbles into a financial crisis, the problem reflects the deeds and misdeeds of the principal governments, and at least in part the aspirations of their people. In the sense that money mirrors reality, money is truth.

In Gold We Trust

Not only does the current international monetary crisis reinforce cliches about national character; it also reveals that Germany is even stronger and France is weaker than many observers had previously believed. The French government is paying the price for giving in last spring to striking workers' demands for big wage increases. Those demands had been caused largely by the De Gaulle government's past policies of creating prosperity by holding down wages and skimping on social needs. In addition, France has long suffered from the tendency of many of its people to distrust their own currency, to put profit above patriotism and to have as their motto "In gold we trust." The crisis of the franc is basically a crisis of national confidence. Too many Frenchmen have been buying bullion and foreign money and transferring their savings to foreign countries in hopes of eluding an increase in taxes and a decrease in the franc's value. It is too easy for self-righteous Americans to condemn this behavior. Anybody who has not seen his own fortunes dissipated by recurrent invasions, inflations and devaluations cannot fully understand the miser mentality of many Frenchmen and other Europeans.

Money tells much about a nation's character because it is so closely entwined with a nation's history, psychology and destiny. Ever since Stone Age men began bartering with furs, and the ancient Lydians introduced metal money, practically every dominant civilization has risen to power partly through its ability to create and maintain a stable, widely valued currency. If money has not always bought happiness, it has often cured ignorance and illness, supported the arts and established productive cultures.

Borrowing Trouble

Even ancient Greece owed much of its glory to money. After Solon drastically devalued the drachma in 594 B.C., it became the standard medium of trade throughout the Mediterranean and carried Greek commerce and culture well into Asia.

On the other side of the coin, the ruination of Rome closely followed the debasing of its own denarius; when the people started borrowing extravagantly, the inevitable consequence was devaluation, depression and downfall. After that, Constantinople was able to control much of the world for centuries, largely because it had a solid, incorruptible currency. In the 16th and 17th centuries, Spain enjoyed her "Golden Age," as explorers brought back gold and silver from colonies in the New World. Using this treasure, Spain was able to finance a culture that, for all its cruelty, nurtured Cervantes, El Greco and Velazquez.

With almost no natural resources, states from ancient Phoenicia to modern Switzerland have prospered because their people mastered the mysteries of trading, banking and other means of handling money. More than any other nation, Britain rose to power by managing its money and commerce with a shrewd combination of prudence and daring. Economist Robert Heilbroner has calculated: "With the share received as a stockholder of Sir Francis Drake's voyage of the Golden Hynd, Queen Elizabeth paid off all England's foreign debts, balanced its budget and invested abroad a sum large enough, at compound interest, to account for Britain's entire overseas wealth in 1930." Britain was forced to sell off most of those investments to pay for two world wars, and she has been in a bind ever since. She might have recovered were it not for a more basic problem: the British are capable of incredible bursts of energy and dedication for brief periods when the kingdom is endangered, but they seem less inclined to work and sacrifice over the longer course. In the land of retrogressive unions and perpetual tea breaks, productivity is low and sterling is no longer quite as good as gold. The pound could become much stronger if the government were more willing to reduce its debts by cutting back on social programs, or to increase productivity by allowing a slight rise in the rate of unemployment.

Eternal Realities

While Britons tend to worry excessively about unemployment, Germans fret about inflation. Older Germans shudder at memories of Weimar-era inflation, when a wheelbarrowful of nearly worthless marks might buy half a dozen eggs; most young Germans can recall when a day's wages were worth less than one American Lucky Strike on the black market.

Germany's postwar economic recovery dates from the currency reform of 1948, when the discredited old Reichsmark was replaced by the new, solid Deutsche Mark. Overnight, empty stores became full to overflowing as retailers brought clothes and groceries out of the warehouses, where they had been hidden until they could be sold for something of value. Since then, the Germans have kept their currency strong by employing the old-fashioned virtues --sometimes to excess. Work is the national pastime, frugality is highly regarded and the word debt (Schuld) retains its Biblical meaning of "guilt."

Hard work is also an American passion, in part because of the Puritan tradition. Even so, the supposedly money-mad U.S. may actually be less careful about money itself than any other nation that has come to world power. Every now and then, the U.S. stumbles. It suffered eleven financial crises in the 19th century; in 1929, an excessively casual attitude about speculation helped bring on history's classic crash. Since then, practically all the received wisdom about Government controls, budgets, banking and trade has been scrapped or substantially revised. Americans are still far from the world's most prudent people.

They tend to spend lavishly and save much less than Europeans, or the Japanese, who lead all other people in the share of national income saved or reinvested (about one-third). Since easy credit helps to grease the U.S. economy, some economists regard excessive thrift as an absolute danger to American prosperity. The Federal Government has balanced its budget in only about one of every five years since 1940. In the postwar era, the U.S. balance of payments has rarely been in surplus, and that situation has weakened the U.S. dollar's once almighty position in world markets.

Priorities Needed

If the U.S. can be faulted for profligacy, it can also be lauded for international generosity. In many ways, the U.S. has been penalized in foreign-money markets for doing all the right things --extending $115 billion in foreign aid since 1945, helping capital-starved nations by making loans and investments, permitting American tourists to spend freely abroad. All this has led to the transfer of billions in U.S. gold to the Europeans. Only in very recent years has the U.S. begun to realize the inescapable need to bring its accounts into balance by means that economists call "fiscal discipline."

Unless the U.S. maintains a strong balance of payments position, its dollar may suffer many of the same pressures that now fracture the franc. Sooner or later a nation has to pay for the way it lives--and wants to live. As the U.S. approaches a trillion-dollar economy, it ought to have enough resources to respond to social needs without necessarily sacrificing sound money. One of the first jobs facing President-elect Nixon is to establish a set of priorities so that the U.S. can live within its means, yet not so meanly that some people will be shortchanged while others enjoy ever-mounting affluence. In that sense, how America spends its money in the next few years will also reflect the truth and strength of its aspirations.

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