Examples of Sound Fiat Money

 

In this chapter, we will review some historical examples of the use of sound fiat money not backed by precious metals. The pattern that arises is always the same. When true sound fiat money is used, the economy works efficiently and there is no inflation. However, if the government starts issuing more fiat money than there is backing (a commodity or, more generally, human labour) for it, then inflation sets in and the economy gets into trouble. This last phenomenon usually has its origin in wars for which the government needs more money than actually exists.

Spartan Iron Money

For the first example let’s look way back to the foundation of the ancient Spartan way of life originated by its king Lycurgus in 800 BC.

Lycurgus had travelled widely, visiting India, Spain, Libya and the island of Crete. When he returned to Sparta, he took control of the government and established a constitution based on the Cretan model. He took several measures aimed at cleaning up a corrupt society “whose wealth had centred upon a very few”, according to Plutarch.

Lycurgus began with a decree that outlawed all gold and silver coinage and declared that all Spartan coins must be made of iron. He let the coin units be of low value and heavy so they were difficult to store and transport. He had the hot iron doused with vinegar to make the metal weak and fragile.

Lycurgus’ money was a sound fiat money because the total amount of money in circulation was regulated by law and the value of the symbols serving as money, called Pelanors, depended on limiting the number in circulation.

This monetary system seems to have worked well for three and a half centuries. It was abandoned around 415 BC, after Sparta started a series of campaigns to conquest foreign territories and captured large amounts of gold and silver.

The following quote is from Plutarch’s Lives of Noble Grecians and Romans, Lycurgus chapter, and gives his reason for the end of this money system.

“For five hundred years, Sparta kept the laws of Lycurgus and was the strongest and most famous city in Greece. But eventually gold and silver were allowed in, and along with them came all of the evils spawned by the love of money. Lysander must take the blame, because he brought home rich spoils from the wars. Although not corrupt himself, Lysander infected Sparta with greed and luxury, and thus subverted the laws of Lycurgus.”

Rome Bronze Nomisma

When Numa Pompilius (716-762 BC), Rome’s second King, came to power most of the gold and silver that he could use as money was stored away in eastern temple establishments. However, copper was abundant and would be much easier to obtain.

Numa came from Rome’s Sabine territory and considered himself a descendant of the Spartans. He was renowned for his high intelligence. He reasoned that if he would institutionalize bronze - an alloy composed of mainly copper, some tin and a bit of lead - as money, the ability of the eastern temples or merchants to control or disrupt Rome’s money would be greatly reduced.

Thus, Numa formulated an ingenious plan. He would decree that gold and silver would merely be commodities in his kingdom. They could be traded as unmarked coins or bars, but the real money would be bronze.

This bronze money was clearly a fiat token money. It was called nummi or nomisma at a later point in Numa’s reign. Because his name was so close to nummi, some historians think Numa was named after his monetary innovations rather than the money being named after him.

The following quote from Alexander del Mar[6] describes what the Romans had to do in his opinion for the system to function properly or, in our terminology, for the money to be sound fiat money.

“Therefore, the means necessary to secure and maintain such a money were for the State to monopolize the copper mines, restrict the commerce in copper, strike copper pieces of high artistic merit in order to defeat counterfeiting, stamp them with the mark of the State, render them the sole legal tenders for the payment of domestic contracts, taxes, fines and debts, limit their emission until their value (from universal demand for them and their comparative scarcity) rose to more than that of the metal of which they were composed, and maintain such restriction and over-valuation as the permanent policy of the State. For foreign trade or diplomacy, a supply of gold and silver, coined and uncoined, could be kept in the treasury.”

The system worked well, first domestically and then internationally, until the Punic wars with Carthage.

China: The First Fiat Paper Money

China is not only credited with having invented paper but it is also generally recognized to have been the first country in the world to use fiat paper money.

The inspiration for China’s paper money actually came from the “white deerskin” money (bai lu pi bi) issued under the reign of Emperor Wu (141-87 BC) of the Han Dynasty, and the “flying money” (fei qian) of the Tang Dynasty (618-907 AD). These were bills of exchange that were traded in private exchanging booths (jufang or jifupu), and in official exchange houses (bianqianwu). In addition to that, textile fabric was also common as a means of payment, as it was part of the tax system. True paper money became a major form of currency during the Northern Song Dynasty (960-1127) with the issuance of the Jiao Zi and Qian Yin, and paper currency then continued under the Southern Song Dynasty (1127-1279) which issued the Hui Zi and Guan Zi.

In ancient China they used iron coins that were circular with a rectangular hole in the middle. Several coins could be strung together in a rope. Merchants soon realized that these strings of coins were too heavy to carry around. It was much more convenient to leave the coins with a trustworthy person and carry a receipt instead. The money could be regained using this receipt. This gave rise to the first fiat paper money, the Jiao Zi.

The Jiao Zi was first issued in 1023 together by 16 merchant princes by order of the Song prefect, Xue Tian, at Chengdu, in the Sichuan Province. This fiat paper money was a piece of paper printed with houses, trees, men and cipher to avoid counterfeiting, and it was sound because it was redeemable in coins. It worked well as long as it remained sound, i.e. backed by an appropriate amount of coins. However, there was eventually a point in time in which the state started issuing more paper money than was covered by coins and prices began to increase.

For this reason, Emperor Huizong (1100-1125) decided in 1105 to replace the Jiao Zi notes by a new fiat paper currency, the Qian Yin. This new paper money, and the subsequent ones, had also problems with inflation because they were not truly sound money[7].

The Tally Sticks

Tally sticks initially served in England as record keeping devices, from at least the twelfth century. But the English tally system originated with King Henry I, son of William the Conqueror, who ascended to the throne in 1100 AD. At that time, taxes were paid directly with goods and services produced by the people. According to the new innovative system, payment was recorded with a piece of wood that had been notched and split in half lengthwise. One half was kept by the treasury and the other by the recipient. Payment could be confirmed by matching the two halves to make sure they “tallied.” Given that no stick splits in an even manner and the notches tallying the sums were cut right through both pieces of wood, counterfeiting was virtually impossible.

Tally sticks were in use for 726 years. They were accepted as legal proof in medieval courts and the Napoleonic Code of 1804 still makes reference to the tally stick in Article 1333.

They were used by the government not only as receipts for the payment of taxes but to pay soldiers for their service, farmers for their wheat, and labourers for their labour. At tax time, tallies were accepted by the treasurer in payment of taxes.

It wasn’t long before the value of tally sticks in circulation far exceeded gold and silver money. It is estimated that by the end of the seventeenth century the tallies in circulation had a value of about fourteen million pounds, yet the coined metals at the time never exceeded a half million pounds in value. By 1694 the tally sticks evolved into being represented by paper bills and by 1697 they circulated interchangeably as money with banknotes and bank bills.

Tally sticks were a sound fiat money system for the following reasons.

1.  They were really bills of exchange, but they were interest free. They were backed by goods and services that did not exist at the time of issue, but would be produced in a short time when taxes were paid. Thus, they could be used like money because they had the King’s approval.

2.  They were virtually impossible to counterfeit.

3.  They could not be produced in unlimited amounts. The number of tallies made would be limited by the estimated production of the people. When the tallies were turned in for taxes, they were retired from the system and new ones had to be created. There could only be an increase in tally sticks if there was a corresponding increase in anticipated production. In this way, inflation was avoided.

Tally sticks are an example of how the government can increase the money supply using sound fiat money when there is no sufficient gold or silver to issue the necessary coins for a prosperous commerce.

Colonial Scrip

The thirteen American Colonies had trouble with England, the home country, over money from the beginning. This is primarily due to the fact that England wanted the colonists to send raw materials back home, but not to trade with each other. In addition, English laws forbade sending coinage to America, while at the same time the Colonies were short of it because they lacked an indigenous supply of gold or silver from which to mint coins. The scant coinage that found its way to the Colonies came from pirates or trade with the Spanish West Indies.

During the period 1632-1692, many agricultural products were legally declared to be money. However, everybody wanted to pay with the least desirable commodities and this caused inefficiencies. Another problem was seen when Virginia and Maryland made tobacco a legal tender in 1633. There was a bumper crop in 1639 and one half of the crop had to be burned to avoid inflation. After some other unsuccessful experiments with different forms of money, the West’s first fiat paper money was issued by Massachusetts in 1690 to pay for a military expedition during King William’s War. They printed paper bills from copper plates, which were called bills of credit.

The way they were used was that the colonial government first issued bills of credit to pay goods and services and later accepted these bills as payment of taxes, at which time they were retired from circulation.

Soon, other colonial governments followed suit and issued their own bills of credit to serve as a convenient medium of exchange. When they issued too many bills or failed to tax them out of circulation, inflation resulted. This happened especially in New England and the southern Colonies. Pennsylvania, however, controlled the amount of currency in circulation and it remains a prime example in history as a successful fiat paper monetary system. Pennsylvania’s fiat paper currency, secured by land, was reported to have generally maintained its value against gold from 1723 until the Revolution broke out in 1775. During this period there was little or no inflation.

Explaining in 1763 to Bank of England directors his ideas on why the colonies were so prosperous, Benjamin Franklin is quoted as saying:

“That is simple. In the Colonies we issue our own money. It is called Colonial Scrip. We issue it in proper proportion to the demands of trade and industry to make the products pass easily from the producers to the consumers. In this manner, creating for ourselves our own paper money, we control its purchasing power, and we have no interest to pay no one”

After Benjamin Franklin gave explanations on the true cause of the prosperity of the Colonies, the Parliament exacted laws forbidding the use of paper money as payment of taxes. This decision brought so many drawbacks and so much poverty to the people in the colonies that it is seen by many as the main cause of the Revolution. The suppression of the Colonial paper money was a much more important factor for the general uprising than the Tea and Stamp Act.

The Greenbacks

Before the Civil War in the United States, the only money issued by the government was gold and silver coins, and only such coins (“specie”) were legal tender.

Paper currency in the form of banknotes was issued by privately owned banks, and these notes were redeemable for specie at the bank’s office. They were not legal tender, however, and they had value only if the bank was capable of redeeming them. If a bank failed, its notes became worthless.

When the war broke out, neither side had the supplies of gold and silver coin necessary to wage such a challenge.

The Lincoln Administration sought loans from major banks, mostly in New York City. The banks demanded very high interest rates of 24 to 36 percent. Lincoln was outraged, refused to borrow on such terms, and called for other solutions.

The following passage appears in a letter from President Abraham Lincoln to Colonel William F. Elkins.[8] It gives some insight into the feelings that the President may have had with regard to the money powers, as he called them.

“The money powers prey upon the nation in times of peace and conspire against it in times of adversity. The banking powers are more despotic than a monarchy, more insolent than autocracy, more selfish than bureaucracy. They denounce as public enemies all who question their methods or throw light upon their crimes. I have two great enemies, the Southern Army in front of me and the bankers in the rear. Of the two, the one at my rear is my greatest foe.”

The solution found by the Lincoln Administration was to bypass the bankers by issuing fiat paper money to pay for the war expenses. A legal tender law was passed on February 25, 1862. Congress at first authorized the Treasury to issue $150 million of so called Greenbacks, with a total of $450 million being put into circulation as the war continued. The Greenbacks were legal tender for all debts public and private, except duties on import and interest on the public debt, which were payable in coin. They were receivable in payment of all loans made to the U.S.

A letter written by President Lincoln to Colonel E D Taylor, considered the father of the Greenbacks, can be found in the Appendix to this book.

The Greenbacks were very difficult to counterfeit because they used a proprietary green chromium tint invented by a Canadian, Dr. Thomas Sterry Hunt, to combat photo duplication. The notes got their name from this “green” ink on their “back”. The name did not come from the Lincoln Administration but from the ordinary people, who started calling them Greenbacks.

As regards inflation during the Civil War, the American historian J. G. Randall wrote that “The threat of inflation was more effectively curbed during the Civil War than during the First World War.” Also, the American economist John K. Galbraith observed:

“It is remarkable that without rationing, price controls, or central banking, Chase (the Secretary of the Treasury at the time) could have managed the federal economy so well during the Civil War.”

The fact that the Greenbacks were not legal tender for duties on import and interest on the public debt may have been an important negative factor against the currency. In reference to this, the American financial historian Davis R. Dewey wrote:

“Hence it has been argued that the Greenback circulation issued in 1862 might have kept at par with gold if it, too, had been made receivable for all payments to the Government.”

After the war and the assassination of Lincoln, there was a concerted attack of various social groups led by the bankers against the Greenbacks until they were retired from circulation.

The German MEFO Bills

The MEFO bills were a financial instrument created by the National Socialist Government of Germany in 1933 to allow for the activation of the economy, which lay in shambles.

When Adolf Hitler was appointed Chancellor on January 30th, 1933, there were six and a half million people unemployed, there was no gold, and the country was in ruins. To make matters worse, astronomically high war reparations had still to be paid to the victors of World War One.

If the country was to have some economic independence, it could not loan from international banks because this would increase the financial burden even more. Thus, some new monetary device had to be found to get out of the dilemma.

Hitler describes in his book Mein Kampf that he once attended a small meeting in which Gottfried Feder’s monetary views made a deep impression on him. According to Feder (1883-1941), a former construction engineer turned economist, the money supply should be created and controlled by the state through a nationalized central bank rather than by privately owned banks, to whom interest would have to be paid.

Since Feder’s ideas were in principle too innovative and risky, Hitler decided to appoint Hjalmar Schacht, a well-known and experienced German banker at the time, as head of the Reichsbank to carry out a somewhat attenuated version of the monetary reform proposed by Feder.

After denouncing the Treaty of Versailles because the other countries had not met their obligations, the government decided that Germany would create its own sound fiat money, free of debt, through an extensive program of repairs in housing, factories and machines, and through the construction of autobahns.

Hjalmar Schacht himself describes the process in his book The Magic of Money:[9]

“The system worked in the following way: a company with a paid-up capital of one million Marks was formed. A quarter of the capital was subscribed by each of the four firms Siemens, A. G. Gutehoffnungshütte, Rheinstahl and Krupps. Suppliers who fulfilled state orders drew up bills of exchange for their goods, and these bills were accepted by the company. This company was given the registered title of Metallforschungsgesellschaft (Metal Research Company, ‘MEFO’ for short), and for this reason the bills drawn on it were called MEFO bills. The Reich guaranteed all obligations entered into by MEFO, and thus also guaranteed the MEFO bills in full. In essence all the Reichsbank’s formal requirements were met by this scheme. It was a question of financing the delivery of goods; MEFO bills were therefore commodity bills. ...

The Reichsbank declared itself ready to prolong the bills, which true to the form laid down were drawn on three months’ credit, to a maximum of five years if so required, and this point was new and unusual. Each bill could thus be extended by a further three months, nineteen times running. This was necessary, because the planned economic reconstruction could not be accomplished in three months, but would take a number of years. By and large such extensions by themselves were nothing new with the Reichsbank; it was quite common to prolong agricultural bills, but an extension over five years, together with a firm declaration that such extensions would be granted, that was most unusual. One other aspect was even more unusual. The Reichsbank undertook to accept all MEFO bills at all times, irrespective of their size, number, and due date, and change them into money. The bills were discounted at a uniform rate of four per cent. By these means the MEFO bills were almost given the character of money, and interest-carrying money at that. Banks, savings banks, and firms could hold them in their safes exactly as if they were cash. Over and above this they proved to be the best of all interest-bearing liquid investments, in contrast to long-dated securities. In all, MEFO bill credit transactions took place over a period of four years, and had by 1938 reached a total volume of twelve billion Marks.”

The Reichsbank officials were entrusted with the task of examining all bills to ensure that they were issued only against deliveries of goods, and not for any other purposes. Bills which did not meet this requirement were rejected. Thus, the MEFO bills acted like sound fiat money and were non-inflationary because they were backed by human labour.

The following words are part of a speech given by Hitler on February 20th, 1938, in which he addresses the question of the role of money in Germany at the time. (A more extensive part of this speech is given in English in the Appendix to this book.)

“It will also be our task in the future to warn the German people against all kinds of illusions. The worst illusion is to think that one can enjoy something in life that has not been previously created and produced.

It will also be our duty in the future to make clear to all German people, in the city as well as in the land, that the value of their labour is and should always be equal to their salary.

That is, the countryman can only receive for his products what the man in the city has previously produced, and the man in the city can only get what the countryman has previously obtained from his land, and all of them can only make interchanges while they are producing, and money can only play an intermediary role in this process.

Money cannot have an intrinsic value. Each new Mark that is paid in Germany presupposes an additional human labour valued one Mark. Otherwise, this Mark is an empty piece of paper that has no purchasing power.

We want however our Reichsmark to be an honourable banknote, an honourable receipt for the result of an equally honourable human labour.

This is the only real and authentic backing of a currency. In this way we have made it possible, without gold and foreign currencies, to keep the value of the German Mark stable, and we have also kept our savings stable, in times in which those countries that were swimming in gold and foreign currencies had to devalue their currencies.”

After two years of using this sound fiat money, unemployment had almost disappeared and in five years Germany was the greatest economic power in the European continent. The situation in Germany during the period 1933-1939 should be compared with that of the United States during the same period, which were mired in a depression and only got out of it when the events of World War Two forced them to mobilize the economy for the war effort.

Some historians have maintained that the economic success of Germany in the years 1933-1939 was primarily due to defence spending. However, the following table shows that this is not the case.

YearDefence Expenditure RMNational Inco

me

1933/341.9 billion4%

1934/351.9 billion4%

1935/364.0 billion7%

1936/375.8 billion9%

1937/388.2 billion11%

1938/3918.4 billion22%

The Hidden Tyranny Of Our Money

What Most Economists Don’t Know

And Few Wish To Tell

Víctor Gómez-Enríquez

On Ernst Jünger

 Conservative Revolutionary

Junger’s writings about the war quickly earned him the status of a celebrity during the Weimar period. Battle as Inner Experience contained the prescient suggestion that the young men who had

experienced the greatest war the world had yet to see at that point could never be successfully re-integrated into the old bourgeoisie order from which they came. For these fighters, the war had been a spiritual experience. Having endured so much only to see their side lose on such seemingly humiliating terms, the veterans of the war were aliens to the rationalistic, anti-militarist, liberal republic that emerged in 1918 at the close of the war. Junger was at his parents’ home recovering from war wounds during the time of the attempted coup by the leftist workers’ and soldiers’ councils and subsequent suppression of these by the Freikorps. He experimented with psychoactive drugs such as cocaine and opium during this time, something that he would continue to do much later in life. Upon recovery, he went back into active duty in the much diminished German army. Junger’s earliest works, such as In Storms of Steel, were published during this time and he also wrote for military journals on the more technical and specialized aspects of combat and military technology. Interestingly, Junger attributed Germany’s defeat in the war simply to poor leadership, both military and civilian, and rejected the “stab in the back” legend that consoled less keen veterans.

After leaving the army in 1923, Junger continued to write; producing a novella about a soldier during the war titled Sturm, and also began to study the philosophy of Oswald Spengler. His first work as a philosopher of nationalism appeared in the Nazi paper Volkischer Beobachter in September, 1923. Critiquing the failed Marxist revolution of 1918, Junger argued that the leftist coup failed because of its lacking of fresh ideas. It was simply a regurgitation of the egalitarian outlook of the French Revolution. The revolutionary left appealed only to the material wants of the German people in Junger’s views. A successful revolution would have to be much more than that. It would have to appeal to their spiritual or “folkish” instincts as well. Over the next few years Junger studied the natural sciences at the University of Leipzig and in 1925, at age thirty, he married nineteen-year-old Gretha von Jeinsen. Around this time, he also became a full-time political writer. Junger was hostile to Weimar democracy and its commercial bourgeoisie society. His emerging political ideal was one of an elite warrior caste that stood above petty partisan politics and the middle class obsession with material acquisition. Junger became involved with the the Stahlhelm, a right-wing veterans group, and was a contributor to its paper, Die Standardite.

He associated himself with the younger, more militant members of the organization who favored an uncompromised nationalist revolution and eschewed the parliamentary system. Junger’s weekly column in Die Standardite disseminated his nationalist ideology to his less educated readers. Junger’s views at this point were a mixture of Spengler, Social Darwinism, and the traditionalist philosophy of the French rightist Maurice Barrès, opposition to the internationalism of the left that had seemingly been discredited by the events of 1914, irrationalism and anti-parliamentarianism. He took a favorable view of the working class and praised the Nazis’ efforts to win proletarian sympathies. Junger also argued that a nationalist outlook need not be attached to one particular form of government, even suggesting that a liberal monarchy would be inferior to a nationalist republic.[37]

In an essay for Die Standardite titled “The Machine,” Junger argued that the principal struggle was not between social classes or political parties but between man and technology. He was not anti-technological in a Luddite sense, but regarded the technological apparatus of modernity to have achieved a position of superiority over mankind which needed to be reversed. He was concerned that the mechanized efficiency of modern life produced a corrosive effect on the human spirit. Junger considered the Nazis’ glorification of peasant life to be antiquated. Ever the realist, he believed the world of the rural people to be in a state of irreversible decline. Instead, Junger espoused a “metropolitan nationalism” centered on the urban working class. Nationalism was the antidote to the anti-particularist materialism of the Marxists who, in Junger’s views, simply mirrored the liberals in their efforts to reduce the individual to a component of a mechanized mass society. The humanitarian rhetoric of the left Junger dismissed as the hypocritical cant of power-seekers feigning benevolence. He began to pin his hopes for a nationalist revolution on the younger veterans who comprised much of the urban working class.

In 1926, Junger became editor of Arminius, which also featured the writings of Nazi leaders like Alfred Rosenberg and Joseph Goebbels. In 1927, he contributed his final article to the Nazi paper, calling for a new definition of the “worker,” one not rooted in Marxist ideology but the idea of the worker as a civilian counterpart to the soldier who struggles fervently for the nationalist ideal. Junger and Hitler had exchanged copies of their respective writings and a scheduled meeting between the two was canceled due to a change in Hitler’s itinerary. Junger respected Hitler’s abilities as an orator, but came to feel he lacked the ability to become a true leader. He also found Nazi ideology to be intellectually shallow, many of the Nazi movement’s leaders to be talentless and was displeased by the vulgarity, crassly opportunistic and overly theatrical aspects of Nazi public rallies. Always an elitist, Junger considered the Nazis’ pandering to the common people to be debased. As he became more skeptical of the Nazis, Junger began writing for a wider circle of readers beyond that of the militant nationalist right-wing. His works began to appear in the Jewish liberal Leopold Schwarzchild’s Das Tagebuch and the “national-Bolshevik” Ernst Niekisch’s Widerstand.Junger began to assemble around himself an elite corps of bohemian, eccentric intellectuals who would meet regularly on Friday evenings. This group included some of the most interesting personalities of the Weimar period. Among them were the Freikorps veteran Ernst von Salomon, Otto von Strasser, who with his brother Gregor led a leftist anti-Hitler faction of the Nazi movement, the national-Bolshevik Niekisch, the Jewish anarchist Erich Muhsam who had figured prominently in the early phase of the failed leftist revolution of 1918, the American writer Thomas Wolfe and the expressionist writer Arnolt Bronnen. Many among this group espoused a type of revolutionary socialism based on nationalism rather than class, disdaining the Nazis’ opportunistic outreach efforts to the middle class. Some, like Niekisch, favored an alliance between Germany and Soviet Russia against the liberal-capitalist powers of the West. Occasionally, Joseph Goebbels would turn up at these meetings hoping to convert the group, particularly Junger himself, whose war writings he had admired, to the Nazi cause. These efforts by the Nazi propaganda master proved unsuccessful. Junger regarded Goebbels as a shallow ideologue who spoke in platitudes even in private conversation.[38]

The final break between Ernst Junger and the NSDAP occurred in September 1929. Junger published an article in Schwarzchild’s Tagebuch attacking and ridiculing the Nazis as sell outs for having reinvented themselves as a parliamentary party. He also dismissed their racism and anti-Semitism as ridiculous, stating that according to the Nazis a nationalist is simply someone who “eats three Jews for breakfast.” He condemned the Nazis for pandering to the liberal middle class and reactionary traditional conservatives “with lengthy tirades against the decline in morals, against abortion, strikes, lockouts, and the reduction of police and military forces.” Goebbels responded by attacking Junger in the Nazi press, accusing him being motivated by personal literary ambition, and insisting this had caused him “to vilify the national socialist movement, probably so as to make himself popular in his new kosher surroundings” and dismissing Junger’s attacks by proclaiming the Nazis did not “debate with renegades who abuse us in the smutty press of Jewish traitors.”[39]Junger on the Jewish Question

Junger held complicated views on the question of German Jews. He considered anti-Semitism of the type espoused by Hitler to be crude and reactionary. Yet his own version of nationalism required a level of homogeneity that was difficult to reconcile with the sub national status of Germany Jewry. Junger suggested that Jews should assimilate and pledge their loyalty to Germany once and for all. Yet he expressed admiration for Orthodox Judaism and indifference to Zionism. Junger maintained personal friendships with Jews and wrote for a Jewish owned publication. During this time his Jewish publisher Schwarzchild published an article examining Junger’s views on the Jews of Germany. Schwarzchild insisted that Junger was nothing like his Nazi rivals on the far right. Junger’s nationalism was based on an aristocratic warrior ethos, while Hitler’s was more comparable to the criminal underworld. Hitler’s men were “plebian alley scum”. However, Schwarzchild also characterized Junger’s rendition of nationalism as motivated by little more than a fervent rejection of bourgeoisie society and lacking in attention to political realities and serious economic questions.[40]

The Worker

Other than In Storms of Steel, Junger’s The Worker: Mastery and Form was his most influential work from the Weimar era. Junger would later distance himself from this work, published in 1932, and it was reprinted in the 1950s only after Junger was prompted to do so by Martin Heidegger.

In The Worker, Junger outlines his vision of a future state ordered as a technocracy based on workers and soldiers led by warrior elite. Workers are no longer simply components of an industrial machine, whether capitalist or communist, but have become a kind of civilian-soldier operating as an economic warrior. Just as the soldier glories in his accomplishments in battle, so does the worker glory in the achievements expressed through his work. Junger predicted that continued technological advancements would render the worker/capitalist dichotomy obsolete. He also incorporated the political philosophy of his friend Carl Schmitt into his worldview. As Schmitt saw international relations as a Hobbesian battle between rival powers, Junger believed each state would eventually adopt a system not unlike what he described in The Worker. Each state would maintain its own technocratic order with the workers and soldiers of each country playing essentially the same role on behalf of their respective nations. International affairs would be a crucible where the will to power of the different nations would be tested.

Junger’s vision contains a certain amount of prescience. The general trend in politics at the time was a movement towards the kind of technocratic state Junger described. These took on many varied forms including German National Socialism, Italian Fascism, Soviet Communism, the growing welfare states of Western Europe and America’s New Deal. Coming on the eve of World War Two, Junger’s prediction of a global Hobbesian struggle between national collectives possessing previously unimagined levels of technological sophistication also seems rather prophetic. Junger once again attacked the bourgeoisie as anachronistic. Its values of material luxury and safety he regarded as unfit for the violent world of the future.[41]

The National Socialist Era

By the time Hitler came to power in 1933, Junger’s war writings had become commonly used in high schools and universities as examples of wartime literature, and Junger enjoyed success within the context of German popular culture as well. Excerpts of Junger’s works were featured in military journals. The Nazis tried to co-opt his semi-celebrity status, but he was uncooperative. Junger was appointed to the Nazified German Academy of Poetry, but declined the position. When the Nazi Party’s paper published some of his work in 1934, Junger wrote a letter of protest. The Nazi regime, despite its best efforts to capitalize on his reputation, viewed Junger with suspicion. His past association with the national-Bolshevik Ersnt Niekisch, the Jewish anarchist Erich Muhsam and the anti-Hitler Nazi Otto

von Strasser, all of whom were either eventually killed or exiled by the Third Reich, led the Nazis to regard Junger as a potential subversive. On several occasions, Junger received visits from the Gestapo in search of some of his former friends. During the early years of the Nazi regime, Junger was in the fortunate economic position of being able to afford to travel outside of Germany. He journeyed to Norway, Brazil, Greece and Morocco during this time, and published several works based on his travels.[42]

Junger’s most significant work from the Nazi period is the novel On the Marble Cliffs. The book is an allegorical attack on the Hitler regime. It was written in 1939, the same year that Junger re-entered the German army. The book describes a mysterious villain that threatens a community, a sinister warlord called the “Head Ranger”. This character is never featured in the plot of the novel, but maintains a foreboding presence that is universal (much like “Big Brother” in George Orwell’s 1984). Another character in the novel, “Braquemart”, is described as having physical characteristics remarkably similar to those of Goebbels. The book sold fourteen thousand copies during its first two weeks in publication. Swiss reviewers immediately recognized the allegorical references to the Nazi state in the novel. The Nazi Party’s organ, Volkische Beobachter, stated that Ernst Jünger was flirting with a bullet to the head. Goebbels urged Hitler to ban the book, but Hitler refused, probably not wanting to show his hand. Indeed, Hitler gave orders that Junger not be harmed.[43]Junger was stationed in France for most of the Second World War. Once again, he kept diaries of the experience. Once again, he expressed concern that he might not get to see any action before the war was over. While Junger did not have the opportunity to experience the level of danger and daredevil heroics he had during the Great War, he did receive yet another medal, the Iron Cross, for retrieving the body of a dead corporal while under heavy fire. Junger also published some of his war diaries during this time. However, the German government took a dim view of these, viewing them as too sympathetic to the occupied French. Junger’s duties included censorship of the mail coming into France from German civilians. He took a rather liberal approach to this responsibility and simply disposed of incriminating documents rather than turning them over for investigation. In doing so, he probably saved lives. He also encountered members of France’s literary and cultural elite, among them the actor Louis Ferdinand Celine, a raving anti-Semite and pro-Vichyite who suggested Hitler’s harsh measures against the Jews had not been heavy handed enough. As rumors of the Nazi extermination programs began to spread, Junger wrote in his diary that the mechanization of the human spirit of the type he had written about in the past had apparently generated a higher level of human depravity. When he saw three young French-Jewish girls wearing the yellow stars required by the Nazis, he wrote that he felt embarrassed to be in the Nazi army. In July of 1942, Junger observed the mass arrest of French Jews, the beginning of implementation of the “Final Solution.” He described the scene as follows:

“Parents were first separated from their children, so there was wailing to be heard in the streets. At no moment may I forget that I am surrounded by the unfortunate, by those suffering to the very depths, else what sort of person, what sort of officer would I be? The uniform obliges one to grant protection wherever it goes. Of course one has the impression that one must also, like Don Quixote, take on millions.”[44]An entry into Junger’s diary from October 16, 1943 suggests that an unnamed army officer had told Junger about the use of crematoria and poison gas to murder Jews en masse. Rumors of plots against Hitler circulated among the officers with whom Junger maintained contact. His son, Ernst, was arrested after an informant claimed he had spoken critically of Hitler. Ernst Junger was imprisoned for three months then placed in a penal battalion where he was killed in action in Italy. On July 20, 1944 an unsuccessful assassination attempt was carried out against Hitler. It is still disputed as to whether or not Junger knew of the plot or had a role in its planning. Among those arrested for their role in the attempt on Hitler’s life were members of Junger’s immediate circle of associates and superior officers within the German army. Junger was dishonorably discharged shortly afterward.[45]

Following the close of the Second World War, Junger came under suspicion from the Allied occupational authorities because of his far right-wing nationalist and militarist past. He refused to cooperate with the Allies De-Nazification programs and was barred from publishing for four years. He would go on to live another half century, producing many more literary works, becoming a close friend of Albert Hoffman, the inventor of the hallucinogen LSD, with which he experimented. In a 1977 novel, Eumeswil, he took his tendency towards viewing the world around him with detachment to a newer, more clearly articulated level with his invention of the concept of the “Anarch”. This idea, heavily influenced by the writings of the early nineteenth century German philosopher Max Stirner, championed the solitary individual who remains true to himself within the context of whatever external circumstances happen to be present.

Some sample quotations from this work illustrate the philosophy and worldview of the elderly Junger quite well:

“For the anarch, if he remains free of being ruled, whether by sovereign or society, this does not mean he refuses to serve in any way. In general, he serves no worse than anyone else, and sometimes even better, if he likes the game. He only holds back from the pledge, the sacrifice, the ultimate devotion ... I serve in the Casbah; if, while doing this, I die for the Condor, it would be an accident, perhaps even an obliging gesture, but nothing more.”

“The egalitarian mania of demagogues is even more dangerous than the brutality of men in gallooned coats. For the anarch, this remains theoretical, because he avoids both sides. Anyone who has been oppressed can get back on his feet if the oppression did not cost him his life. A man who has been equalized is physically and morally ruined. Anyone who is different is not equal; that is one of the reasons why the Jews are so often targeted.”

“The anarch, recognizing no government, but not indulging in paradisal dreams as the anarchist does, is, for that very reason, a neutral observer.”

“Opposition is collaboration.”

“A basic theme for the anarch is how man, left to his own devices, can defy superior force - whether state, society or the elements - by making use of their rules without submitting to them.”

“... malcontents... prowl through the institutions eternally dissatisfied, always disappointed. Connected with this is their love of cellars and rooftops, exile and prisons, and also banishment, on which they actually pride themselves. When the structure finally caves in they are the first to be killed in the collapse. Why do they not know that the world remains inalterable in change? Because they never find their way down to its real depth, their own. That is the sole place of essence, safety. And so they do themselves in.”

“The anarch may not be spared prisons - as one fluke of existence among others. He will then find the fault in himself.”

“We are touching one a ... distinction between anarch and anarchist; the relation to authority, to legislative power. The anarchist is their mortal enemy, while the anarch refuses to acknowledge them. He seeks neither to gain hold of them, nor to topple them, nor to alter them - their impact bypasses him. He must resign himself only to the whirlwinds they generate.”

“The anarch is no individualist, either. He wishes to present himself neither as a Great Man nor as a Free Spirit. His own measure is enough for him; freedom is not his goal; it is his property. He does not come on as foe or reformer: one can get along nicely with him in shacks or in palaces. Life is too short and too beautiful to sacrifice for ideas, although contamination is not always avoidable. But hats off to the martyrs.”

“We can expect as little from society as from the state. Salvation lies in the individual.”[46]

Beyond the End of History: Rejecting the Washington Consensus

Keith Preston