No, we don’t think that President Obama has gone around the
bend and now thinks he’s the Emperor Napoleon, or even a pastry or snifter of
cognac. It’s just that someone asked us
recently whether there were any parallels in history to the way the Russians
and the Chinese seem to be moving in a way almost calculated to force Obama to
act out of ego and pride instead of reason.
While Chancellor of Prussia, Prince Otto von Bismarck egged
Napoleon III of France on to declare war by doing deliberately provocative acts
and forging telegrams. Napoleon’s pride
and ego got involved, especially since the Mexican venture under Maximilian had
gone very badly, the economy was in a downturn, and he needed something to
restore his prestige. Having Napoleon I,
one of the greatest military geniuses ever, as his uncle didn’t help any.
Similarly, Russia and China, by this time convinced that the
U.S. is a paper lion, economically, militarily, and politically, are being
provocative by sending in military vessels, using very sound psychology on
Obama. Like Henry VIII Tudor (whom he in
some ways resembles), Obama is very easy to manipulate due to his gigantic ego
and need to divert public attention away from a rather long list of disasters that
he and his supporters desperately need to spin into successes.
Fortunately, there is an epilog to the story. Following the defeat of France and the rise
of the Paris Commune as the “solution” to the country’s troubles — that only made
matters worse — Bismarck imposed a gigantic indemnity on France, deliberately
designed to destroy France economically forever — Fr 5 billion, the equivalent
of U.S. $1 billion at the time.
At the same time, the French economy was in ruins, both as a
result of the war, and the fact that anthrax was decimating the sheep and
cattle, and bacterial infestation was crippling the wine, silk, and poultry
industries. Fortunately France had a
secret weapon: Louis Pasteur. Some
historians credit the value of his discoveries alone as generating enough to
pay off the entire indemnity in less than three years (!), and ushering in a
virtual golden age of French culture.
There are two things historians neglect in their analyses of
how France was able to go from total defeat to prosperity in less than three
years, recovering from a disastrous war and a wrecked economy to prosperity,
even opulence. This was in addition to
the growing demand throughout the world for French products, especially in the
United States:
1) The indemnity was payable in coined money, both gold and
silver, as well as in bills of credit redeemable in coined gold and
silver. This was due to Bismarck’s
limited understanding of money as limited to currency, whether backed by gold
and silver, or government debt. The Iron
Chancellor didn’t understand that private sector bills of exchange and
mortgages have always made up the bulk of the money supply in a free market
economy.
At the same time, the price of silver was in the cellar and
falling rapidly. Not only was the
Comstock Lode pouring silver into the market, the mines of Central and South
America were in full operation as silver was their chief export until fruit
took over toward the end of the 19th century.
There was so much silver that its utility as a monetary
standard was greatly diminished. Many
countries — including Germany — abandoned silver and went with gold as being
more stable in value. Then the British
abandoned their efforts to develop India, which (due to their misunderstanding
of money) they had been trying to finance with massive purchases of silver
instead of through the (non-existent) commercial banking system. During the 1860s the British had in some
years bought more silver than the world mined in a self-defeating effort to
finance growth with past savings.
The world was awash in a flood of cheap silver. Bismarck, however, had specified in the
treaty that the indemnity could be paid or the bills of credit redeemed at face
value with silver French five franc pieces — with a silver content now far
below face value, and at a time when the new German Reich was trying to drain
the formerly legal tender silver out of circulation and replace the silver Convention
and Reichs Thalers with the gold Reichsmark.
In and of itself the fall in silver may have reduced the real value of
the indemnity paid by France by as much as Fr 2 billion.
2) Key French industries tended to be family owned. French wine, cheese, silk, and other products
were produced by workers who owned, not by hirelings. Taxes were high to pay for the war and the
indemnity, but the French were patriotic — and productive. Everything they produced went either to their
own benefit or that of France.
Worker-owners, not big commercial or industrial interests or
inflationary government debt, saved France.
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