Category: Communism

Chapter 8 – Blood-Money

Now let’s turn back to Europe , to time when England and France
went to war also known as the Napoleonic war.



Remember this from chapter 3 :

“After that the merchants quickly adopted the custom
of depositing their riches with the goldsmiths who
in exchange issued deposits reciepts called “goldsmith notes”
, then when the goldsmiths began calling themselves “bankers”
they call them ” bank notes”

Ok now we have a look at a family who started as a money changer and became
not only Bankers but Bankers who control national Economic.

The Rothschild family
known as The House of Rothschild,
or more simpel the Rothschilds.
A European family of German Jewish origin that established European banking and
finance houses from the late eighteenth century.

The family’s rise to European prominence began with Mayer Amschel Rothschild.
Born Frankfurt am Main, Germany 1744,
the son of Amschel Moses Rothschild,a money changer.
Born in the ghetto called Judengasse of Frankfurt,

He developed a finance house and spread his empire by installing each of
his five sons in European cities to conduct business.
He trained them on the skills of money creation.
He then sending them to the cities to open Bank’s.

Nathan Mayer Rothschild

Nathan Mayer Rothschild

His sons were:

Amschel Mayer Rothschild (1773–1855) : Frankfurt
( He took care of the hometown bank )

Salomon Mayer Rothschild (1774–1855) : Vienna
( Secondary Bank )

Calmann Mayer Rothschild (1788–1855) : Naples
( Third Bank )

Jakob Mayer Rothschild (1792–1868) : Paris
( Fourth Bank )
(He supported the French part of the war with loans )

Nathan Mayer Rothschild (1777–1836) : London
( He came to london in 1798 )
( He supported the Brittish with loan to the war )

Nathan Mayer Rotschild helped Prince William of Germany speculate in coins.
The Rothschilds already possessed a very significant fortune
before the start of Napoleonic Wars.
When Napoleon forced prince William in Exile he send 555.000 £
to Nathan with orders to buy British Government Stock’s.
From 1813 to 1815,
Nathan Mayer Rothschild in London was instrumental in the financing of the
British war effort, financing the shipment of bullion to the
Duke of Wellington’s army in Portugal and Spain, as well as arranging the
payment of British financial subsidies to their Continental allies.
In 1815 alone, the Rothschilds provided £9.8 million (in 1815 currency prices)
in subsidy loans to Britain’s continental allies.

Mayer Rothschild successfully kept the fortune in the family with carefully
arranged marriages, including between first or second cousins, although
by the later 19th century, almost all Rothschilds had started to marry outside
the family, usually into the aristocracy or other financial dynasties.

An essential part of Mayer Rothschild’s strategy for future success
was to keep control of their businesses in family hands, allowing them to
maintain full discretion about the size of their wealth and their business
Following a technique used by the aristocracy, which was also later copied
by business dynasties such as the Du Pont family,

The basis for the Rothschild’s most famously profitable move was made after
the news of British victory had been made public.
Nathan Rothschild calculated that the future reduction in government borrowing
brought about by the peace would create a bounce in British government bonds after
a two year stabilisation, which would finalise the post-war re-structuring of the
domestic economy.
In what has been described as one of the most audacious moves in financial history,
Nathan immediately bought up the government bond market, for what at the time seemed
an excessively high price, before waiting two years, then selling the bonds on the
crest of short bounce in the market in 1817 for a 40% profit.
Given the sheer power of leverage the Rothschild family had at its disposal,
this profit was an enormous sum.

As we can see here the rich Capitalistic Bourgoises have the power to finance wars.

Before Nathan and he’s family there was others and there will came not many but new
families in the future who get the power to control wars with their financial values.

But, but ,but it’s not ending there , no those families they own at the same time the
industry who make everything from weapons ( Dupont ) to producing Rails , newspapers
( yes they sit on the media as well ) , Food ect ect.

When they leand money to the Government’s they at the same time sell them the nessesary
equipment to their wars , Hm does this smell like a BIG BIG rat eating the Government’s ?
The answer is yes it is , the Government’s pay for their needs to the Capitalistic’s
Bourgoises who lend them the money and this bring the National debt up and up.
Who pay for this ? The taxpayers , they enslaves by their own Government’s to produce
more and more value there end up in those families pockets.

Ps : The family supported both part in the war with loans and sold them goods.

Next chapter – The road to destruction.

Part 7 – Blood-Money.

Ok so far so good.
Now that you know a little about the Banks and how they started
( the principles of modern Banking , the history of banks can be traced longer back
in time than the Roman Empire )

Remember this from Chapter 6 :

1: A real currency depreciation caused by the enormous expenditure on arms and war,
( Isn’t it what we do right now in a little smaller scale )
Togeather with a constantly growing in public debt.

Ok have this in your head when we turn our time to the First World War :

The First World War started with the murder in Sarajevo 28. jun 1914
Jugoslavia and Hungary, long bitter enemies, were almost at each other’s throats.
Italy was ready to jump in. But France was waiting. So was Czechoslovakia.
Ect Ect…
All of them are looking ahead to war.
But who does relly start wars ?
We all know the story from the school-books but do you know this story ?
Well listen now carefully :

In the First World War a handful of people garnered the big profits of the conflict.
At least 21,000 new millionaires and billionaires were made in the United States during the World War.
That many admitted their huge blood gains in their income tax returns.
How was that possible ? Well who makes the profits ?

The World War, has cost the United States some 52,000,000,000 $ .
The normal profits of a business concern in the United States are 6, to 12 percent.
But war-time profits – That is another matter – 60 , 120 , 200 and even 900 per cent clear income
to their own pockets.
But who was those people ? Industrial owners , yes the rich capitalists bourgeoisie , those private
people own all the materials and rescources used in the war ( It’s the same in Europe )

Dupont powder

Dupont powder

The du Ponts (weapon company),
Before the War period – 1910 to 1914 were $6,000,000 a year.
Within the War period – 1914 to 1918. 58.000.000 $ a year profit.
An increase in profits of more than 950 per cent.

Bethlehem (Steel company),
Well, their 1910-1914 yearly earnings averaged $8,000,000.
Then came the war. And, like loyal citizens, they turned to War Machine making.
Well, their 1914-1918 average was 49.000.000 $ a year!

United States Steel.
The normal earnings during the five-year period prior to the war were
105.000.000 $ a year. Then came the war and up went the profits.
The average yearly profit for the period 1914-1918 was 240.000.000 $ .

Anaconda, ( Copper Company ).
Average yearly earnings during the pre-war years 1910-1914 of 10.000.000 $ .
During the war years 1914-1918 profits went up to 34.000.000 $ per year.

Utah Copper. ( Copper Company )
Average of 5.000.000 $ per year ( 1910-1914 ).
Jumped to an average of 21.000.000 $ yearly profits for the war period.

Let’s group these five companies ,with three smaller
The total yearly average profits of the pre-war period (1910-1914) were 137.480.000 $ .
Then came the war. The average yearly profits for this group grow to 408.300.000 $ .

Central Leather Company were 3.500.000 $ .
That was approximately 1.167.000 $ a year.
Well, in 1916 Central Leather returned a profit of 15.000.000 $ .
Just a small increase of 1,100 per cent. That’s all.

The General Chemical Company averaged a profit for the three years before the war of a
little over 800.000 $ a year. Then came the war, and the profits jumped to
12.000.000 $ . Oh only an increase in about 1,400 per cent.

International Nickel Company.
from a average of 4.000.000 $ a year to 73.000.000 $ yearly.
Not bad ? An increase of more than 1,700 per cent.

American Sugar Refining Company
2.000.000 $ a year for the three years before the war.
In 1916 a profit of only 6.000.000 $ was recorded.

It has been estimated by statisticians and economists and researchers that the war
cost United States $ . Of this sum, $ was expended
in the actual war itself. This expenditure yielded $ in profits
This $ profits It is quite a tidy sum. And it went to a very few.
Ok every time the countries go to war some very rich people gain a lot of value ,
The capitalists bourgeoisie own all the worlds rescources and they have so much value
that they even control the worlds Government’s.

In the next chapter we will have a close look at how they do this.

Part 6 The western countries.

The necesary “Socially ” currency stock.
The pyramid of the bank-money is therefore
built up on basis of papermoney.
Private fiducery currency is exately the same.
All credit money needs a definite amount of
In reality this is a question of a mass of bills which after clearing have to be honnored financially.
The mass of currency thrown in circulation in a capitalist society has two roles ,
That of constituting the equivalent of the comodities it enters in to this circulation
( value defined by money here and the money acts as means of circulation)
and that of representing the values of the bills which ,taking into account neutralice each other
( here value , money acts as means of payment ) here we see the two functions of money
already described. Money as means of payment effecting the payment of bills like money acts
as means of circulation has a definite velocity of circulation.
Bank-money is based on public paper-money and as long as it’s latter is convertible and remains
based on the stock of metal-currency in the bank of issue , the use of paper tokens sholdent
give any problems regarding the currency.
The fact that only a fraction of the bank-notes are covered by metal in hand and that only
a fraction of the bank-money are covered by bank-notes meerly represent a “social” saving
in circulation devises . Made possible by the behavior of the public which was discovered
In order for the currency mechanisms working to function proberly it’s suffiicient to keep
the use of convertible fiducery currency whitin the limits of the necessary “socially”
stock of currency.
In earlier times some of the biggest writers have seen in this a sort of proof that money
has never being a commodity with it’s own value but always had a rate determined by
the public authorities.
In reality the transition from money based on gold/silver standard to partly inconvertible
money after the first world war lead to two quite different phenomenas.

1: A real currency depreciation caused by the enormous expenditure on arms and war,
( Isn’t it what we do right now in a little smaller scale )
Togeather with a constantly growing in public debt.
2: The increasing intervention of the state in economical life , the growing organisations
of certan sectors of the economy of the capitalistic ( bourgouis ) class as a whole.

A currency with an intrinsic value is essential to a pure market economy based on exchange.
The more element’s of economis organisations there are introduced into the economy even
more completely can an abstract form of currency a value , money of account be
substituted for this currency of intrinsic value.
As long as a country has a normally balance of payments the convertibility of it’s
paper currency is secured by a relative modest stock of currency-metal.
But when the ballance of payments begin to regulary became a debit ballance
only a substantial stock of metal-coins can maintain the convertibility of
the paper currency otherwise the outflow of gold can cause speculation and panic.
Therefore if the majority of importent countries abandom the metal as a currency
value ( gold-stanard ) the other countries had to follow ( It happend in the 1930 ties )
otherwise their national currencies will became the object of international speculation
and withdrawn from circulation.

Part 5 The western countries.

Finally banks are able to increase their loans on current account
and thus create “Bank Money” , to the extent that the other
banks grant them credit or the central bank allows them to
increase their debit accounts with it.
As mentioned earlier experience had shown the bankers that
in normal times the public does not withdrawn it’s cash from
the bank excess of a relativily small fraction of the total
amount of deposited.
It is suificent that those deposits does not not exceed a definite
relationship with the liquid assets called the cash ratio or
liquidity ratio for the banks to be able in normal circumstances
to give loans on current account and thus create Bank Money.
At exceptional moments the central bank has to step in to prevent
the collapse of this credit system from entailing the collapse of the
entire currency system.
In order to avoid rashness the majority of advanced countries lay
down a cover ratio fixed by the government.
It is now clear that Bank Money makes up a large share of the stock
of currency that is of the totally means of exchange and payment
circulating in a particulary country.

The public fiducery currency created by discounting or by
overdrafts corresponds to needs ( for credit , exchange ,
payment ) inherent in the the economic system.
This fact that the state regulates the creation of this
fiducery currency coresponds to the “social character
of money” wich became more and more marked as
exhange relations became increasingly interlocked and
complex in modern capitalism.
But this regulation wich is indispensable for prober
functioning of the economy can at the same time
lead to many disturbanses .
The state wich regulate the issue of paper money
and ultimately determines the volume of the stock
of currency as a whole is at the same time both seller
and buyer and so needs means of exhange and payment.
From the absolute beginnings of the public fiducery the
government there regulate its issue have being subjected
to the temptations to use it at the same time to meet it’s
own needs.
The first experiments to made paper money had created
very big inflationary dissasters all around the world.
Even in a bourgeois state conducted according to the
principles of the strictes monetary orthodoxy it is
inevitable that a seasonal and cyclic movement of
increased need for disposable funds lead the treassury
to increase it’s debt to the central bank wich in turn
increase the stock of currency.
This extra currency is normally re absorbable in time , BUT
when the state increases the circulating of currency in order
to finance it’s long therm expresses or much worse it’s
budgetary deflict , risks of loss of value of the currency arise
in so far as no extra commodities corresponds to this extra
mass of currency in circulation.

Part 4 The western countries.

Banks and MONEY :

When the bank discounts ( or rediscount) a merchant’s bill
it pays the owner of the bill ( or he/she’s bank ) the face
value less the interest’s , it thus put into circulation banknotes
for a value equal to this amount.
When time come to pay the bill , it recieves this sum back , the
same amount in banknotes is withdrawn from circulation.
The fluctuations in the volume of it’s collection off bills wil thus
determine the amount of paper money in circulation.
As the merchants volume of bills presented for discounting
increases in periods of crisis ( ok got it ) and depression , the issue
of papermoney covered by the discounted bills constitute a flexible
( in fact very flexible ) currency instrument , wich makes it possible
to adobt the stock of currency to the economy need of means of
One might suppose that this bank money originates from payments
in of cash by the depositors , but this is only partly thrue ( this is
in fact a very smal part ).
A large share of bank deposits do not originate from payments in
actually made by the banks clients , but from the advances on
current account ( overdraft’s ) granted by the bank to capitalist’s.
Those are the loan that make deposits.
The bulk of the deposits arise out of the actions out of the banks
themselves , for by granting loans , allowing money to be drawn
on overdraft or by purcasing securities, ok a bank create a credit
in it’s books wich is equivalent to a deposit.
First the bank deposits thus created or at least the currency accounts,
They “relly represent currency” , since they can be used for any
transactions of purcase or payment within the country.
They represent a fiducery currency because in the last resort
their circulation depend of the management and solvery of the
banks and not the intrinsic value of the universal eqivalent , and
Second the they represent a public fiducery currency because in all
the advanced countries all the importent deposit banks are linked
to the central bank of issue by a special designed system wich
ensures that the bank money is covered by banknotes
of the central bank.

If a bank by granting a loan on current account
to Mr Capitalist (we call him Mr C ) increases he’s deposit
from 10 to 12 million ( pound/kroner/value ok got it ? )
Mr C will use these 12 million to pay a debt with
Mr Also capitalist ( we call him Mr Ac ) and / or buy good’s
from Mr Super capitalist ( we call him Mr Sc ).
These other capitalists also have bank accounts .
If there bank accounts are in the same bank as Mr C
all these trancsactions will take place by comparison to
entries and will not require a transfer of any banknotes.
The deposit of Mr C ‘s 12 million will be transfered to
Mr Sc and/or Mr Ac ‘s accounts directly.
If there accounts are with other banks , the transfers
in question will require a transfer in cash only the the extend
that these other banks do not have to transfer an equal
amount to Mr C’s bank.
Actually clearing houses ( or what they call them ) specifically
set up to this purpose reduce the amount of cash transfered
from any bank to any other to an absolute minimum.

Part 3 The western countries.

This lead to a reaction in the production and dristributing sector
In desperation those private capitalistic sectors ower-flow
segments with more cash / value than other sectors and the
sectors with lower cash / value are forced to the production
sector as capitalistic socialistic slaves.

Vladimir I Lenin

In a diskussion with Josef Stalin ,
Lenin came with those word’s
( I dont member the year and date )

Our one class-based system isn’t a thrue one class system
It’s a two level based system , those working towards the
system and those working against us.
In fact we must face that value / cash flow out of our system.

In a typicalli western industrial country this mean , the production
accumulate to a limit where the market has no need , this again
leads to a reaction in the production and distributing sector and
Value “papers” decreese in value ( mentioned in cash )

In a communistic central based system this means with other
words : somebody is stealing the society’s value.

In the western socalled socialistic countries this means :
Finanicial crisis ……… Yes the same old story again and again.

Before we can understand this we must understand the
Principles behind the capitalists bourgeoisie ,
the class of modern capitalists , Industrial owners , landowners
and up in the classbased system.

OK lets talk MONEY.
Member this from part 1
Trade has always existed in some kind of valuebased
system , between humans.
Trade was born of the uneven deployment of production
in different communities.
Credit was born of the uneven development of production
among different producers within the same community.
We start in relative new time on a timeline about
“sort of money” compared to humans existence.
We turn ourselves to Europe 1600 -and to our time.

Banks :
It was in England eah Britain that public fiduciary
The bank note received it’s classic form.
In this country it also originated from private
fiduciary currency , the goldsmith notes , .
The British merchants at first deposited their jewels , gold
other “value ” ect . With the King.
But in some 16..something in the middle. Charles 1
Came up with some wider financial idears .
He confiscated their financial deposits .
After that the merchants quickly adopted the custom
of depositing their riches withb the goldsmiths who
in exchange issued deposits reciepts called “goldsmith notes”
, then when the goldsmiths began calling themselves “bankers”
they call them ” bank notes”

Money , Cash , Value

Before we can understand the class of modern
capitalists the ,bourgeoisie we must understand

At first these notes were issued for the total
amount of the deposit ;
if the depositor withdraw a part of this deposit
the note was given an aditional inscripton
recording this withdrawal.
Later the bills were drawn up in fixed sums and
a depositor received a number of notes with
a total value of what was in deposit.
Now the bankers / goldsmiths found new
tecniques to expand their “buisness “.
They started up and began lending to
third parties the stock of metal currency
which did not belong to them.
In exchange for those loans they was given
acknowledments of debt.
From that time the fiducery currency circulating
among the public was covered not only by a
stock of metal coins but also by acknowledments
of debt from third parties.
When the bank of england was founded in
the end of the 16 hundred something it issued
notes covered by it’s stock of metal coins and
by a state debt owed to it.
Experience thaught the bankers that banknotes
covered by third parties can be issued up to a
definite limit the value of the stock of metal currency.
For example 3 to 4 times the stock value , because
the public newer all at once try to convert their
banknotes to metal curency.
Slowly during the 18 hundred century
The Bank of England established a procedure by
which the issues of banknotes was regulated
both by the stock of metal currency in it’s
position and by the discounting.
First of government bonds only and later
above all the rediscounting of merchants
bills was during the 19 hundred century
the chief sources of creation af banknotes
of public fiducery currency not only in
Britain but in all capitalist countries in
the whole Europe.

Part 2 The western countries.

Here we face the socialistic capitalism’s paradox.
When the amount of value in cash are held low
( in paper and coins ) the value should be increased
but it decrease in value at the same time.
The only difference in countries increasing
versus decreasing is the amount of time to the value
had to be stabilized by the central bank.
In other words when the amount of value leave the
bank and circulate so dristibution of productions flow
more easily , but here again in a socialistic capitalistic
system the flow of value depend of the value owners
and the distribution of work they need.
In a capitalistic so called socialistic system this will always
expand and accumulate until the capitalistic control of
value are on it’s collaps.

For capitalistic accumulation to begin :
Those prerequisites are needed.

1 : A preliminary accomulation of capital in particular hands
to an extent sufficient for the application of a higher
technique or of a higher degree of divission of labour
with the same technique .
2 : The presence of body or wage workers , industrial workers
ect . ect.
3 : A suifficient development of the system of commodity
economy in general to serve as a base for capitalist
commodity production and accumulation.

The basis of the production of commodities can admit of
production on a large scale in the capitalistic form alone.
A certain accumulation of capital in large scale in the hands
of individual producers of commoditives forms therefore the
nescessary preliminary of the specifically capitalist mode
of production.
This is called primitive accumulation and this forms the
starting point when the socialistic capitalistic accumulation
expands in it’s early stage.
A second powerful lever of primitive accumulation is the
monopoly of the banking system.
Monopolly ownership in the private sector put the banks
in control of the private capialistic sector within the
socialistic system.

As mentioned in the first chapter :

“It need not to be total ownership and small private sectors can exist
in minor sectors of the economy , but there are strict limits on
the abillity to command labour other than one’s own .”

Those minor sectors will grow to a limit where the owertake the
controll inside the socialistic capitalistic system.

In the first chapter we remember :

“The Socialist countries represent nearly one third of the
world’s population and industrial output.”

Redristributing from private economy into the socialist sector
can occour directly only when the resources of private economy
accumulated by the banking system through deposits , are
redristributed through private economy by means of loans ,
at higher rate of interests and the difference between the sums
paid into the bank as deposits and the sum received by the bank
as loan interests and other forms of payment for its service.

Again in the socialistic capitalistic
countries the capitalistic
private economy can expand
to an unlimited level and the
value of capital became unstable.

Introduction to socialistic economics

Part 1 : The western countries.

Trade has always existed in some kind of valuebased
system , between humans.
Trade was born of the uneven deployment of production
in different communities.
Credit was born of the uneven development of production
among different producers within the same community.
The uneven development of production as between different
producers within the same nation does not automatically
lead to the development of credit.

The private mode of exploration of developments within
primitive communities wich are slowly breaking up the small
private individuals production and combine them to
international multi compagnies with reduction in the ammount
of valuebased cash. This by mean put the workers in orders
of slaves for the private sector.
The amount of value owned by the state controlled system
depend of the degree of socialistic influrence on the economical
structure and the ammount of private investors ownership.
In the socalled socialistic countries the capitalism exist in
different amounts inside the state controlled system itself.

Lets face one thing her at start and make it clear.

One thing is socialism and liberalistic socialistic influrences.
One other is Communistic Centralized democratic controll
of the values and the means of production.

As mentioned in the about communism section

Phase 2:
A dictator or elite leader (or leaders) must gain
absolute control over the proletariat.
Collectivization of property and wealth must take place.
The government would control all means of production
so that the one-class system would remain constant,
with no possibility of any middle class citizens
rising back to the top.

The development of production should in the
ideal system ( as it should have been )
Belong to the state and by state controlled agencies
be distributed to where it is in demand.

But all the socalled socialistic countries are in
different kind of degree owned by the private
landowners , bankiers rich people ( you name it )
This makes the state controlled system without
controll of the mass of production and the production’s
value in form of cash will have big influences on the
workers life.This uncontrolled flow in cash and values
combined with the mass production of different product’s
lead the capitalistic liberalistic socialistic system towards
the always comming inflation and at the end of this task the
economic structure collapse.

In the socialistic capitalistic system the proletariat will be
controlled by the private banking system who always
own the major part of the socalled national bank.
The countries national bankingsystem controll the amount
of cash circulating between the proletariat and the state.
This makes the private owners the dominating factor when
the production level versus the proletariat and the living
standard are defined.
The proletariat and others in the class based system are
always being controlled by the amount of money avaliable
in circulation , when smaller amount of money are circulating
the bigger value and thereby bigger amount of production
can be forced out of the individual worker.

Hello and welcome.
In the customary division of the world into 3 parts –
1 : The western countries
2 : The East Block
3 : The Third world
The Socialist countries represent nearly one third of the
world’s population and industrial output.
Despite wide differences in the economic instutions of these
countries and their respective stage of development , fairly
similary patterns of economic organisations have emerged.
Here are the main common features.

1 : Public ownership of the means of production :
This takes the form of state , cooperative or collective
ownership and , by no means implies social ( as opposed as elitist )
It need not to be total ownership and small private sectors can exist
in minor sectors of the economy , but there are strict limits on
the abillity to command labour other than one’s own .
The banking system and foreing trade are also nationalized.

2 : Centralized control of the rate of accumulation and the principles
guarding the directions of economic growth.

3 : The existence of a market for consumption goods and for labour.
Collective consumption is in the range of 10 to 15 percent of
national income and the rest of the consumption goods are
exchanged in the market , wages are paid and transactions take
place in cash.
The market for production goods if exists are seperated to greater
or lesser extent from the market for consumption goods.

4 : Prices , price limits or price fixing criteria for all goods sold by the
state are decided by the planning authorities .
The prices are locked and not subject to change spontaneously.

The main economic differences between these countries and the stage
of development they represent depend of the degree of central control
over the functioning of the economy and are concerned with the
desision making agencies and their relations.
The use of money and value indicators the relative scope of plan and
markets and the nature of incentives and of plan implementation.
Ref : Alec Nove 1972

This blog will try to explain how socialistic economy
function in different ways and how the ideal Marxistic
system should behave.

Page will be updated regulary .
Thanks for reading.