“Millions a year?” queried the Duchess.
“Yes, Your Grace,” said the Count. “Millions a year. For this is just the start. Each year we can expect more profits from the gum. And our people, having once taken that money to spend as they wish, are not likely at another time to turn it away and say they do not want it. We are seeing the last days of Grand Fenwick as it used to be—a sturdy, self-sufficient, independent nation with a heritage of which any country in the world could be proud. We are likely to become, now that Bentner is having his way, a nation of ne’er-do-wells, of slackers and idlers.
“There is the workingman’s dream come to its logical fruition—no work, plenty of pay and rule by ignorance.” He paused and added solemnly, “We may even produce some kind of group like the Beatles, noted for complaining to the accompaniment of guitars.” This thought was so painful that the Count of Mountjoy, having uttered the words, closed his eyes as a man in an agony of shame.
“You’re kidding,” said the Duchess, herself so deeply shaken that she was guilty of an Americanism.
Bentner, summoned later to the Ducal presence, took a more cheerful view. Since he was leader of the Labor party, which was opposed to titles, he could not bring himself to call Gloriana Your Grace, as did the Count of Mountjoy. But he called her “Ma’am,” which delighted Gloriana as being cozier. She was quite as fond of Bentner, rotund, stubborn, plodding, as she was of the graceful and agile Count of Mountjoy.
“Don’t you fret about it, Ma’am,” said Bentner, when she mentioned the Count’s fears to him. “The upper classes are always afraid of what the lower classes will do if they get their hands on some money. You’d think money was dynamite, the way they want to keep it away from people.”
“If you should win the election, Mr. Bentner, what will you propose doing with the money?” asked Gloriana.
“Give some to Kokintz for what he needs. And divide the rest of it among the voters.”
“Which will give most of them the equivalent of a year’s wages for nothing,” said the Duchess. “Do you think that is wise? Will they work if they get money so freely?”
“Of course they’ll work,” said Bentner. “They’re used to working. It is the rich who are used to idleness. They’ll work, Ma’am. You can be sure of that. But they’ll live in better houses and have better clothing. That’s what most of the money will go on. They’ll have now the things that otherwise they would have to save twenty years to get.”
“And what happens next year—and the year after?” asked the Duchess.
“That’ll have to take care of itself, Ma’am,” said Bentner. “We haven’t any guarantee that there will be any money from America next year. The Americans might start smoking again.” A brilliant idea occurred to him suddenly. “One of the first things we should do when we have a new government is to write to the Surgeon General of the United States and congratulate him on his courageous war against the perils of nicotine.”
“Mr. Bentner,” said Gloriana primly, “I believe you smoke yourself.”
“A pipe, Ma’am,” said Bentner piously. “No harm in a pipe.”
Mountjoy waged as staunch a campaign as he could for the return of his party to power, but he had no chance of winning the election. He found that everybody was prepared to listen to his warnings against the evils of inflation. But nobody seemed to think that these warnings applied to themselves. Places like Britain, France, Germany, Italy and the United States, they agreed, might contract the sophisticated financial disease called inflation, but not Grand Fenwick, where people were far too sensible and too self-controlled for such afflictions.
Bentner, promising hundreds in cash and no taxation, was swept into office in a landslide vote that left Mountjoy with but three supporters in the new Council of Freemen. Indeed, he scarcely saved his party from extinction and to do so even dragged Dr. Kokintz into politics by making the great scientist speak out against dividing the Gum Money among the voters.
After the election, which made Bentner Prime Minister of the Duchy, Mountjoy grimly awaited the passing of the new budget and its effect on the economy of the Duchy.
The effects were not entirely what he had expected.
Most of the money divided among the voters immediately left the Duchy. It was spent on things the Duchy did not produce—bicycles, as noted, also washing machines and dishwashers and television sets (though reception in the Duchy was abominable due both to the mountains and to the electrical conditions which enveloped them). The money slipped through people’s hands very fast. It made life in Grand Fenwick infinitely more exciting and glamorous for a while. There were great discussions among the housewives on the virtues of particular washing machines and tremendous pressure on the government to start generating electricity immediately (for the Duchy was without electric power and so, of course, the washing machines could not be worked—the television sets were battery-operated).
Unfortunately, Bentner had not thought that one result of the dollar windfall would be a demand for electricity in Grand Fenwick. There were no funds in the Treasury for establishing a generating plant. However, the demand was such (for the housewives of the Duchy, not unnaturally, wanted to see their washing machines, in whose possession they took such pride, actually working) that a bill was rushed through the Council of Freemen, permitting the Duchy to borrow from the Home Bank sufficient funds to start a power station. The money, of course, would have to be repaid out of taxes; so hidden in the electricity bill was a clause calling for an increase in the income tax of 3 percent.
It was only after the passing of several weeks that the secondary and more lasting effects of the windfall became apparent in Grand Fenwick. They were all surprising. One was an increase in income tax to pay for the cost of a power station. Another was an increase in the private debts of individual citizens. Householders found themselves pressed by their families to make many purchases and decided to borrow money, since the bonus they had received would not cover all that was needed. They went to Mr. Davis at the Home Bank and he explained that if they would open an account with him and make a substantial deposit he might be able to lend them quite a bit more than they had in their accounts.
(Sid Cromer, who had added banking to his bicycle-repairing business, was also able to make some loans, but since he was borrowing money from Davis, he had to charge a higher rate of interest and so got as clients only those of dubious credit who had been turned down by the banker.)
Side by side with this increase in private debt there was an increase in prices throughout the Duchy. Landlords, finding they now had to make monthly payments for their purchases financed by the bank, raised their rents. Farmers, finding their rented land higher in price, raised the price of milk and vegetables. Laborers and working people, finding they had to pay more for food and for rent of their homes, demanded an increase of earnings.
Six months, then, after the overthrow of the Mountjoy government and the sharing of the Gum Money among the people there were ugly rumors of strikes among the agricultural workers of Grand Fenwick. A small hydroelectric generating plant had been installed and the people found that, having had to pay for its erection in the first place, they now had to pay for its product in the second. To their regular bills was now added an electricity bill. And to provide the hot water for their washing machines and dishwashers they had to go further into debt in installing water heaters. Many had no plumbing other than a kitchen pump, so there were more bills for plumbing. Indeed, in the Duchy only two men prospered—Mr. Davis, the bank manager, and Sid Cromer, the bicycle-repair man.
Sid, however, had found that banking was beyond him. His loans went sour and he was burdened with debts. But his bicycle business picked up enormously. And he found a completely new field of endeavor in repairing dishwashers and washing machines. He made far more money than he had made before, despite his debts. But he worked far harder than he had worked before.
By the following summer, then, the people of Grand Fenwick had
achieved an enormously higher standard of living, with hot and cold running water in every house, with electric light, television, washing machines, and new bicycles. (They liked the commercials, telling them of products they had never seen, rather more than the programs, which were dull by comparison. Puffing their cigarettes, they cheered those which warned of the dangers of smoking.)
However, for the first time in the Duchy’s history, everybody had money troubles. Only Dr. Kokintz, who had managed to get three gross of colored marbles out of the Gum Money, was unperturbed. He worked away happily constructing his curious models with his marbles, smoking his big Oompaul pipe, chatting with his birds and obligingly repairing television sets whenever required. If he thought anything about the money crisis, he said nothing.
Mountjoy, like Achilles, remained in his tent. But with this difference—as the Duchy’s troubles mounted, he was smiling.
CHAPTER VI
Demands for payment of estimated income tax in Grand Fenwick went out each midsummer, dropping their little dollop of gloom into the holiday period (as they do in other nations). The Grand Fenwick tax, before the arrival and disbursal of the Gum Money, had been paid in advance only by those who were self-employed. It was now levied on all who had received a share of the money and these were outraged to discover that they were required to pay taxes on the unexpected bonus they had received.
None had put aside any portion of the money to pay taxes. A cry of wrath swept from one end of the Duchy to the other. The people remembered that Bentner had promised during the election to abolish income tax. To a man they announced that they were hanged if they were going to pay a penny in tax on money which had been received as an outright gift. It was in vain for Bentner to argue that the decision whether a sum of money was a gift or an earning depended not on its nature but on the government’s need for funds. If the government needed money, then life itself was not a gift but an earning and must be taxed. The people of Grand Fenwick would not hear of such arguments. They refused to pay any tax on the bonus they had received and through their representatives in the Council of Freemen they demanded that these funds be always and forever tax-free.
Bentner tried to reason with them. He addressed a meeting of voters and taxpayers in the Common Hall of the castle and put the matter to them bluntly.
“Whether you like it or not,” he said, “the government has to repay the loan made to finance the power plant. The money to do that cannot come out of thin air. It has to be provided by you, the taxpayer. So you’ll just have to divvy up and console yourselves with the thought that there will be more money coming to you later on. My information is,” he added cautiously, “that perhaps twice the amount of Gum Money will be available this year as last.”
He should not have made this statement for the fact of the matter was that he had no such information at all. But the temptation to appear in a good light before the voters was too strong to overcome. The statement was made and it was met with such cheers that Bentner himself grew a little frightened and Mountjoy was completely aghast.
When the cheering had subsided there still remained the matter of paying the tax on the money already received. Mr. Jack Derby, father of that famous family of Derby children responsible for most of the breakage in the Duchy, returned to this question. He had not a penny left of the money he had got. He had instead debts, unpaid taxes, ten broken bicycles, four television sets of which only one worked and that spasmodically, and a great number of household appliances which his children in their enthusiasm had reduced largely to wreckage.
“If twice as much money is coming as has already been received,” he said, “then let the government hold out the back taxes and the current taxes on that money before dividing it up among us. No sense giving us money and then making us hand some of it back, to my way of thinking.”
There was a great deal of support at the meeting for this suggestion, and Bentner was forced to promise to take it under advisement. Actually he began to sense dimly that the government was in serious financial trouble. Receipts of revenue had actually fallen off, for many in their enthusiasm for spending had neglected to pay their regular bills. Government expenditure had, of course, increased, for the power station, once built, had to be kept in operation and that called for a staff of operating and servicing employees. And the government was now required for the first time to pay interest on its operating funds.
The money problems, Bentner admitted, made his head buzz. And what made his head buzz even more was the look of almost angelic pleasure on the face of the Count of Mountjoy whenever they met.
“The Century of the Common Man indeed,” said the Count, quoting a favorite phrase of Bentner’s. “Money on every hand, a chicken in every pot and not a soul in the Duchy who isn’t burdened with debt, the government included. My dear Bentner, are you beginning now to see the wisdom of leaving the handling of money to the moneyed classes, who have generations of training in the field?”
“Can’t expect people who have been deprived of money for centuries by the privileged few to use it wisely when they first get it,” retorted Bentner. “Next year will see a difference, mark my words.”
Meanwhile something had to be done about getting money into the Treasury immediately to cover the government’s increased expenses. Also an arrangement had to be made with the bank to defer payment of the power station loan installment. Bentner went to the bank to explore the prospects of a further loan to the government against expected receipts both from taxes and from further gum earnings.
But the bank manager shook his head. “We’re overextended,” he said. “Between loans to the government and loans to private individuals, we have reached the end of our lending power. We can’t extend a penny more in credit. However, it might be possible to borrow from other banks—in France or in England. That has been done before, you know. Though you will have to expect a pretty high rate of interest.”
“How much?” asked Bentner.
“About eight percent.”
“That doesn’t bother me much,” said Bentner. “In a few months’ time we will have some more Gum Money coming in.”
“Which you will have to divide up once more among the taxpayers,” said Davis.
“After first paying off the government’s debts,” said Bentner.
“It seems to me, Mr. Bentner,” said Davis, “that you are on the first upward curve of the well-known inflationary spiral. You are borrowing money for more than the money is worth. You are further depreciating the value of the money by spreading it out among the people of the Duchy, who are spending it with very little regard to their own earnings. I have been going over my books and if there were no Gum Money coming in next year, it would take the average wage earner in Grand Fenwick three years to get himself out of debt to my bank, provided that he didn’t find in the interim that he had to borrow more money.
“As a banker I am, of course, interested in lending money at interest as a sound investment and a legitimate way of making money. But the craze for spending which these funds have set off in Grand Fenwick is not economically healthy. None of the spending increases the national product. The spending produces nothing, in fact, but the devaluation of our currency.
“It is my opinion—and I am so reporting to my directors in London—that Grand Fenwick is poised on the precipice of financial disaster and may plunge over at any moment.”
“But when the new money comes in, everything will straighten out,” said Bentner. “Surely you can see that if we collectively owe a million dollars and we have two million dollars coming to us, we are financially sound and have, in fact, a million-dollar capital free of debt.”
“What I can plainly see,” said Davis, “is that if another million dollars comes into the Duchy and is divided among the taxpayers, the present troubles will be four times as great by this time next year.”
“With the taxes paid first of all—before the money is divided?” asked Bentner.
“Even with the taxes
paid. For that money bears no relationship at all to work or to produce. It is gift money, which devalues earned money. You have already had a warning about this in the demands of the agricultural workers for higher pay. I might add that I have had to turn down requests for loans against next year’s wool clip and grape harvest—loans I would have been pleased to make in the past.”
“Why have you had to turn them down?” demanded Bentner.
“Because I have no guarantee whatever that laborers will clip the wool or gather the grapes at current wages, now devalued. And if their wages are raised, the margin of profit from wool and grapes will be smaller, and so the loan is too risky to make. I believe the needed money is being sought elsewhere.”
“You mean in foreign banks?”
“Precisely,” said Davis. “They will sometimes make loans which I cannot, having a wider operation which diminishes the risk of loss. Of course, if the creditors do not make good on the payments, then the banks involved would be able to take possession of the vineyards.”
“You mean foreigners would own the vineyards of Grand Fenwick?” asked Bentner, aghast.
“Precisely,” said the bank manager. “Now as to the payment which is now due on the power station loan . .
But Bentner was not listening. Nothing in the whole financial imbroglio had cut so sharply and painfully through the comforting maze of quasi-understanding in which he operated as the thought that foreign capital (two words which were equally repulsive to him) might own the precious vineyards of Grand Fenwick. He had heard of something of the sort happening in the Burgundy region of France—the taking over by foreign interests, in return for loans, of some of the great vineyards of the Cote d’Azur. There were rumors of the addition of synthetics to the mash to produce more wine more quickly, and horrifying stories of third-cutting grapes being added to the first cut to bulk them out. If Grand Fenwick lost her vineyards, then she lost both her livelihood and her pride.
The Mouse On Wall Street: eBook Edition (The Grand Fenwick Series 3) Page 5
