THE ideas expressed and the conclusions arrived at in this work, are the result of many years of careful thought and study, coupled with the practical and varied experience of a very busy life in connection with industrial, commercial, and financial affairs, both here and abroad.

It is now nearly a quarter of a century, since I first called attention in my book entitled A Scientific Solution of the Money Question (published in 1894 by the Arena Co., Boston, U.S.A.) to the fraudulent character of the so-called “ Gold Standard of Value,” and to the impossibility of any commodity functioning in its commodity capacity, as either a just measure or an honest expression of Exchange-values.  I endeavoured at the same time, to point out a method, by which an invariable monetary unit might be established and maintained :  viz., by definitely fixing the purchasing power of gold or of any other commodity, in relation to wealth generally with reference to time and place, just as the unit of length is fixed by temperature and pressure, and the unit of weight by altitude and atmospheric conditions.  I showed how most of our financial authorities had confused themselves and their readers, by confounding money with the material with which it has hitherto been chiefly associated.

Further study and experience have served only to strengthen the conviction therein expressed, that the root of the world’s economic troubles is to be traced to the false and fraudulent money and credit systems existing.

When the above work first made its appearance, the United States was in the throes of the great bi-metallic controversy, which ended in the overthrow of free silver coinage and the establishment of the gold basis—much to the openly-expressed joy and satisfaction of every usurer and money­lender in America.  This measure constituted the remaining link in the chain which the financiers had been forging for thirty years previously, for controlling the industries and trade of the world under the reign of the gold standard.  But although bi-metallism offered a far more honest and saner method of financing trade and enterprise than its rival, gold monometallism, both systems are relics of barbarism, which education and civilization are bound sooner or later to consign to oblivion.

The appearance of A Solution of the Money Question, led to several long and interesting discussions in various American journals, the chief criticism being (as expressed by the Philadelphia Evening Bulletin) that although “ Mr. Kitson has got hold of the truth and his theory cannot be permanently subverted,” its application necessitates “ ideal conditions.”

In the present work, I have endeavoured to show that no higher “ ideal ” conditions than those now prevailing, or those which will most likely prevail after the war, are necessary to make the system practicable.

Incidentally, as illustrating the intolerance of those who benefit by the present system, I may mention that one of the unfortunate effects of that publication, was to procure the dismissal of two well-known professors of Economics from their respective Colleges, at the instigation of their chief financial supporters, for having introduced and endorsed “ Kitson’s heresies ” in their College lectures !

The majority of books on Finance are closed to the average reader, many being only intelligible to those having a knowledge of the higher mathematics.  I have striven in the present work to write so that any one at all conversant with the mere elements of trade and banking, will be able to grasp the main principles of Finance.  It is high time that knowledge of this subject—hitherto confined to experts and professors—became popularized, owing to its vast importance to every member of the community.  The ramifications of finance are so extensive, it would be impossible to deal with it exhaustively in one, two, or even a dozen ordinary volumes.  I have therefore merely attempted to deal in a general manner with the main problem, in the hope that it may arouse the attention of the general public to a subject which, although of such vital interest, is still shrouded in mystery.

Readers of my former works may notice the reappearance of certain passages already published.  I have not hesitated to reproduce one or two illustrations and quotations contained in Trade Fallacies, The Money Problem, An Open Letter to the Chancellor, and other of my works, for the reason that they tend to strengthen the line of argument and serve to make the book complete to those who may not have read my former writings.  I consider that Sir Edward Holden’s address delivered in December, 1907, before the Liverpool Association of Bankers, on the Depreciation of Securities in Relation to Gold, from which I have often quoted, is one of the most luminous exposures and most damaging criticisms of the gold basis ever written, notwithstanding that the address was delivered for a very different purpose.  Coming from so eminent a source—the greatest banker in the world—I know of no better evidence than Sir Edward’s triangles, in the support of my contention that the gold standard is a legalized fraud, a delusion and a snare !

In striving to make this somewhat difficult subject quite clear, it may seem to some that I have explained various points with unnecessary prolixity, and have indulged in the literary weakness of repetition.  My defence to such criticism is that in my judgment the fault of repetition is far less heinous than the sin of ambiguity, and in trying to avoid the greater I may have fallen into the lesser evil.  The reiteration of a truth will harm no one.  The evil to be shunned in a subject of this nature and importance is obscurity.

Just here, it may be convenient to explain what some readers of my former books may regard as my change of attitude towards the banking question.  Prior to the war I advocated both free and mutual banking.  I believed that if our banks were permitted to issue their own notes freely against the wealth or securities offered them, by the industrial and commercial classes for productive purposes, subject of course to certain rules—as to the proportion of credit issued to the amount of wealth held as security, and to reasonable State supervision—the results would work out satisfactorily, and through healthy competition, the public interests would on the whole, be better served than by a State monopoly.  But I also pointed out, that our present system is neither freely competitive nor even State-controlled.  To use an Americanism, it is neither “ fish, flesh, fowl, nor good red herring ” !  Competition exists, it is true, but this does not result in any particular cheapening of money or credit.  It is merely a friendly rivalry to see who can secure the greatest number of depositors.  Peel’s stupid Bank Charter Act, has made progress and enterprise in the banking world a very dangerous undertaking, and the only chance for growth with comparative safety, has been through the process of amalgamation.  Hence we are rapidly approaching the most dangerous financial condition possible to any nation, viz., a privately owned and controlled banking monopoly.  Unless Parliament interferes, the whole of our British banks will be under the control of a single board of directors within the next twenty years—if not sooner.  And this board will have no responsibilities to any but its depositors and shareholders !  I cannot imagine a more dangerous menace to the public interests !  All our trade and commerce, our industries, our economic and social well-being, rest at present with the proper, honest, and efficient administration of the banks, which provide and control the nation’s currency.

To leave this entirely in the hands of men whose duty is first—if not last—to heap up profits for a few shareholders, is, from the national standpoint, almost suicidal.  The question as to the future of our banking business is, whether it is to continue to be a private monopoly or become a nationalized institution ?  There appears to be no other alternative.

Since the midsummer of 1914, entirely new conditions have arisen.  The disclosures regarding Germany’s economic methods of “ peaceful penetration ” have opened our eyes to the fact that industrial and financial competition is no longer confined to private firms and individuals, but that the entire German nation, under the direction of the most highly efficient, most brutal and unscrupulous Government the world has ever known, is organized as a unit to destroy every branch of foreign trade and industry that either competes with those of Germany, or refuses to accept such terms as she chooses to offer.  Against this solid front, the free industrial nations will have to oppose an organization of equal, if not greater strength.  And in no branch of business is the truth of the adage that “ Organization is strength,” more apparent than in the banking world.  Our future place in the industrial and commercial struggle that is approaching, will largely depend upon the proper organization of our financial resources.

Some readers who may agree with the following indictment against the gold standard, may possibly object to my criticisms of our Free Import Policy, and especially to Chapter XIII.  I have been a Freetrader all my life, and I fought and worked for the cause when it was regarded as almost treason to do so, during a prolonged residence of some twenty years in the U.S.A.  But, like thousands of others, I believed that the welfare of my own country was bound up in the welfare of all others.  With Edmund Burke, I rejoiced in the prosperity of foreign States, believing that such prosperity would materially assist our own.  Belief in the essential “ brotherhood of all mankind,” under the blissful reign of peace and prosperity seemed to have become the generally accepted creed of all civilized races.  Under such conditions, Free Trade seemed the only sane and natural trade policy.  The outbreak of the great war, which revealed the diabolical plottings of the Germans and their Allies to conquer the world, dispelled this beautiful dream and brought us all to a stern sense of realities.  We can no longer afford to indulge in such visions as “ brotherly ” or “ friendly ” alliances and intercourse with the bloodthirsty and inhuman race of trained savages the Huns are now known to be.  We cannot afford to endanger our national and political safety for the sake of mere commercial gains.  Moreover, Free Trade, like cricket, has its rules and regulations, and as our enemy has shown that he respects neither God nor man, neither treaties nor moral obligations of any nature whatsoever, any attempt to resume our former trade relations either with Germany or her Allies, or with those neutrals who have been supporting them, would be sheer madness.  What would the world have said if our ancestors had offered Free Trade privileges to the Barbary pirates, who at their worst were white angels in comparison with the Huns ?  It will also be found that Freetraders-at-any-price are usually Pacifists-at-any-price as well as the chief supporters of the gold standard.  To such people the war has taught nothing.  They are simply wedded to their idols.  So it is probably best to follow the Scriptural advice, and “let them alone ” !  I would earnestly advise those who have not time to wade through the whole fifteen chapters of this book to read carefully the first two chapters for their own as well as their country’s interests.  They will then learn something of the nature of the two great financial conspiracies, the first, in which, by wrecking our financial system (and for which purpose branches of the three greatest German Banks were originally established in London) the Germans hoped to keep England neutral, and the second now being planned by Cosmopolitan Financiers, which is for the purpose of doubling the values of the great War Loans at the expense of the British taxpayers as soon as peace is declared !

I desire to express my thanks and indebtedness to Mr. Harold A. Grimshaw, B.A., (B.Sc.Econ.,) of the London School of Economics, for reading the proof of this work and for having made some valuable suggestions and criticisms.

To Mr. Grimshaw I am entirely indebted for the diagrams in Chapter VI, showing the variations in the purchasing power of gold, and their effect on the conditions of bankruptcy, which he both suggested and prepared.

My object in writing the story of the “ No-­Money Islands ” (Chapter XV of this book) was merely to illustrate the practical utility of an invariable unit of value.  The monetary and banking systems mentioned in that story, were first suggested by me in 1894, in my first work on finance, already mentioned.  Although this unit and the systems described were, so far as I was then aware, entirely novel and original, the well-known American Economist, Mr. M.C. Walsh, pointed out in a letter to me a few years ago, that these ideas bore a likeness to those expressed by Lowe in 1822, and G. Poulett Scrope a few years later.  I have not been able to obtain copies of either Lowe’s or Scrope’s pamphlet, and from the rather short and vague descriptions given by the few modern writers who mention them, I am unable to find any near resemblance.

My suggestions for establishing and maintaining an invariable unit, as herein described, as well as those contained in my former works, I believe to be quite original.  Certainly, I have never seen any reference to any similar ideas or methods in any of the hundreds of books I have read on this branch of Economics.  Nevertheless, it would be a great satisfaction to me to learn that other and far abler minds than mine, had discovered the same solutions to problems that have puzzled the brains of thousands of the world’s greatest thinkers for centuries.


     October, 1917.