Book Reviews

Wolfe's biggest mistake was to take a most important part in founding the American Communist Party. The story of how he got into this is one of inadvertences and serendipitous happenings that defy all logic yet are entirely understandable in terms of feeling. The young Wolfe took the atmosphere of the stable years pre ceding World War I quite seriously. He believed in the Nineteenth Cen506 tury, which had been one of pro longed peace after sensible men named Metternich and Castlereigh and Talleyrand had thrashed out an enduring treaty at Vienna in 1815. When Woodrow Wilson went back on his campaign promises and took us into the war, Wolfe was outraged. And when a compulsory draft was instituted, giving the state the power to command young men's bodies, it seemed a violation of everything that America, in contrast to the Old World, had symbolized. Wolfe's pacifism could find no place in the Democratic and Republican parties, but socialism, particularly left-wing socialism, made room for pacifists. So Wolfe joined the Social ist Party with no interest whatso ever in its economic theory. He be came a socialist street corner orator with no particular knowledge of Marx. The big thing was to oppose the war.

A LIFE IN TWO CENTURIES 507 The MarxistYears Contact with Marxism as a liter ature came slowly. When right-wing socialists began to buy and sell Lib erty bonds, Wolfe found himself pushed to the socialist left by an other of those serendipitous circum stances that were to govern his life. Came the Russian Revolution, and left-wing socialism, which to Wolfe was pacifism, merged into Commu nism. Wolfe found himself editing a journal called Facts: The People's Peace Paper. It couldn't last, for when the Espionage Act was passed, send ing people to jail for daring even so much as to question the good faith of America's allies, Wolfe had to kill his own magazine merely to protect those who had been his contributors. Wolfe soon found himself mixed up with what Lenin, the new star on the radical horizon, called «splits, splits, splits," glorying in their pur gative value. The left wing of the Socialist Party split with the right wing. With John Reed, Wolfe wrote a left-wing manifesto. Then the left wing itself began to split. Going with his feelings, Wolfe found himself working with the founders of the so called twin parties, the Communist Labor Party and the Communist Party. As splintering continued, communists of all stripes, including those who were mainly pacifists, had to go underground.

Bert Wolfe never liked the fac tionalism tha t had engulfed the «movement." But he put up with it while he edited something called the Communist World. One day, as he was putting his paper to bed, he got wind of the fact that seventeen of his friends had been arrested. Knowing that he would be the eigh teenth if he were to be caught, he simply failed to go home to Brook lyn. He wound up in California with a changed name and a Van Dyke beard. As «Arthur Albright," he be came a West Coast labor leader and Communist. His wife Ella joined him for an (tidyllic" period that came to an end when, as a·delegate to the underground Communist conven tion at Bridgeman, Michigan, he was almost trapped by an F.B.I. raid on the assembled Leninists. Escaping by a Ford car in the darkness while his wife stumbled through the woods in her own separate escape, he had to give up the name of Albright. He went to Boston where, by an inad vertence, he ran into a man who was recruiting English teachers for Mexico. What the man really wanted was a ghost writer to help extol the wonders of the Mexican revolution.

Thinking they were hired to teach English to Mexican girls, Wolfe and his wife settled down in Mexico City. Mexican socialism did not seem to be a paradise to Wolfe-there were too many homeless boys, thrown into the streets to become beggars and pickpockets. So he refused to take Carleton Beals' place as ghost wri508 THE FREEMAN August ter for the school recruiter. On their own, the Wolfes stayed in Mexico, becoming local communists in a so cialist state that tended more and more to return to capitalism as re tiring presidents departed with funds which they used to float themselves off as influential tycoons. On to Moscow Meanwhile, back in the United States, Communism in the East pursued its futile bickering ways. By removing himself to California and then Mexico, Wolfe escaped the dreary factional infighting. He still had his illusions when the Mexicans sent him to Moscow as a delegate. It was the first of Wolfe's trips to the CCHoly Land," and he wasn't disillu sioned all at once. His final rejection of Communism had to wait until 1929 when, with Jay Lovestone, Ben Gitlow and other American Com munists, he had the temerity-and the sublime innocence-to chal lenge and oppose Joseph Stalin, who retaliated by ordering a minority of subservient hacks to take the Amer ican party away from its democrati cally elected leaders.

Wolfe, Lovestone and Gitlow, among others, found themselves trapped in Moscow when Stalin was completing his theft of the Ameri can party. How they managed to get out makes for some spine-tingling reading. Disillusionment with Stalin didn't turn Bert Wolfe to the right all at once. He became a member of the Lovestone Communist cCopposition." But by degrees he was rescued for common sense. He went to Spain, where he sided with John Dos Pas sos against Ernest Hemingway in condemning the treatment of anar cho-syndicalists, socialists and plain republicans by the Stalinists who had taken command of the anti Franco armIes. Back home, he pur sued linked careers as a teacher and wri ter. A most tenacious researcher, he wrote some great books. Two that stand out particularly are Three Who Made a Revolution: Lenin, Trotsky, Stalin and The Fabulous Life of Di ego Rivera. But the most exciting of all is this autobiographical A Life in Two Centuries.

How is it that such a chronicle of mistaken allegiances and foolish po litical choices can be so compelling? Partly it is a matter of Bertram Wolfe's ability to make you see, hear and feel. Much has been written about the horrors of Stalinism, but Wolfe excels all others in making you feel the malevolence of the man. He is just as compelling in his pre sentation of the crazy, tender and fundamentally loving Diego Rivera, whose murals, though propagandis tic in intention, have the authentic ity of great art. In spite of a lifetime devoted to collectivist causes, Wolfe remained an individual. The truth is that he 1981 OTHER BOOKS 509 was never really a communist. What he liked about Russia in the early Twenties were its NEP peasant farmers, all individualist to the core. What he liked about the Mexican ((revolution" was that it gave wall space to great painters. Eventually, after four decades of belief in Buk harin's version of Marxian econom ics, Wolfe stumbled on the truths of the Austrian marginal utility school.

In the last twist of a breathlessly ad venturous life Wolfe saw the light as it was vouchsafed to him by Lud wig von Mises. Could anything be more deliciously ironic? ® THE PENNILESS BILLIONAIRES by Max Shapiro (Times Books, 3 Park Avenue, New York, N.V: 10016) 308 pages - $15.00 cloth Reviewed by Lawrence W. Reed INFLATION-the debasement of moneyis almost as old as money itself. What civilization of the past has resisted the temptation to cheapen its money? What German Chancellor Erhard once called a ((burning, destructive, unpardona ble' mortal sin of modern society" dates back to the first time some profligate monarch seized control of his kingdom's medium of exchange. Coinage was invented in the an cient province of Lydia (in Asia Mi nor) around 650 B.C. It represented a substantial improvement over primitive media of exchange and greatly accelerated the economic progress of the ancient world.

It wasn't long, however, before the Lydian kings discovered that they could reduce the precious metal con tent of their coins, manufacture great quantities ofthese debauched pieces, and spend the new money them selves before the unsuspecting pub lic caught on. If prices rose, so what; more money could be manufactured. Weakened by inflation, Lydia was conquered by Cyrus the Great of Persia around 550 B.C. The ancient Greeks, and the Ro mans after them, practiced the fine art of inflation, too. From Solon's 27 per cent devaluation of the mina in 594 B.C. to Diocletian's Edict of A.D. 301, only brief periods of monetary stability interrupted centuries of State-fostered inflation. The Chinese were the first to de velop paper money, crudely de signed slips of paper backed-at first-by precious metals. The gov ernment gradually removed the backing, inaugurating what we call today ((fiat money." The money be came worth whatever the emperor said it was worth-at least in the ory. The rest of the story is what any good historian might expect-rapid depreciation.

510 THE FREEMAN August Four of the most interesting infla tions of history are the subjects of a fascinating new book, The Penniless Billionaires, by Max Shapiro. For the non-specialist interested in an entertaining and instructive ac count of man's inflation follies, this book more than makes the grade. It is chock full offacts and quotes which leave the reader in today's inflation ary times with a disturbing sense of deja VUe The four experiences discussed are those of 5th-century Imperial Rome, 18th-century Revolutionary France, 19th-century Civil War America, and 20th-century Weimar Republic Ger many. When each inflation began, officials scoffed at the thought that things might someday get out of control. They argued that, in any event, the inflation was necessary to pay for foreign adventures, to build public projects, to fight poverty, to stimulate the economy, or to keep the government's creditors at bay.

Manufacturing money is a great way for politicians to raise revenue with out visibly and directly raising taxes. Imperial Rome Shapiro's narrative of the Roman experience begins with Augustus, who embarked upon a massive pub lic works program (a la FDR's WPA of the 1930s). To finance the huge expenditures, the volume of money Augustus ((issued in the two decades between 27 B.C. and A.D. 6 was more than ten times the amount is sued by his predecessors in the twenty years before his reign!" Re current periods of inflation during the next several centuries so weak ened a once great civilization that 5th-century Rome fell an easy.prey to the barbarian invaders. Revolutionary France Ignorance of history has doomed many nations to stupidly repeat the most inexcusable of errors. The French should have learned their lesson in 1720 after John Law's pa per money scheme fell apart and im poverished the nation. Some did learn, but that didn't stop the ruin ous inflation of the assignats later in the century.

On December 19, 1789, the French Assembly authorized the creation of the first of the paper assignats. The notes were to be ((backed" by confis cated Catholic Church properties. Issue after issue poured forth as the Revolution gave way to the Reign of Terror. Prices soared and controls were imposed, to no avail. Blood flowed in the streets amid riots, pil laging, and the monstrous appetite of the guillotine. When Napoleon came to power in the coup d'etat of November 10,1799, he found the assignats worthless, the economy in shambles, and the people demanding a strongman to bring order out of chaos. ((While I live," he proclaimed, ((I will never 1981 OTHER BOOKS 511 resort to irredeemable paper." The promise was in vain. Civil War America Salmon P. Chase was the man en trusted by the newly-elected presi dent, Abraham Lincoln, to be Sec retary of the Treasury in 1861. With war preparations underway, Chase looked for a way to pay the bills. Un willing to bear the responsibility of proposing new taxes, he inched the administration in the direction of is suing unbacked paper money.

With the budget deficit zooming and banks suspending specie pay ments at the encouragement of the government, President Lincoln signed the bill creating the ((green_ backs" on February 25, 1862. What followed was a threefold rise of the money supply in the North by the end of the war. A hyperinflation and the complete destruction of the currency was prevented by the war's end and the subsequent restoration of hard money-one of the few infla tions in history which stopped short of the abyss. Weimar RepublicGermany The world saw its first modern day quadrillionaire with the incred ible inflation of Weimar Republic Germany. Starting with the out break of war in 1914, the printing press gathered steam until money ((slammed out ... in lunatic fury, prices roared upward in mad, quantum leaps." In November 1923, the wholesale price index stood at al most one trillion four hundred twenty-three billion times its 1913 level, resulting in the silen~ cruel, and demoralizing impoverishment of a whole people. The countless per sonal tragedies engendered by this financial debacle are the sum and substance of the book's title, The Penniless Billionaires.

Max Shapiro, a research partner in a securities firm, does more in this book than supply facts, figures and dates. He ties events, centuries apart, together in a coherent thesis. The reader is moved by the ominous parallels which emerge. One such common thread, he maintains, is the existence during inflations of a class of people who actually promote and profit from the process. These may be certain gov ernment officials or private entre preneurs. They amass fortunes be cause they understand the phenom enon of inflation and use this knowledge in all· their financial op erations. This observation brings to mind the words of a 20th-century architect of inflation, John Maynard Keynes: Lenin is said to have declared that the best way to destroy the Capitalist Sys tem was to debauch the currency. By a continuing process of inflation, govern ments can confiscate, secretly and unob served, an important part of the wealth of their citizens. By this method they not 512 THE FREEMAN only confiscate, but they confiscate arbi trarily; and, while the process impover ishes many, it actually enriches some.

The sight of this arbitrary rearrange ment of riches strikes not only at secu rity, bu't at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls ... become ~~profiteers," who are the object of hatred of ... those whom the inflation ism has impoverished .... As the infla tion proceeds ... the process of wealth getting degenerates ·into a gamble and a lottery. . Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than' to de bauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose... .. (The Economic Consequences of the Peace, 1920) In the closing chapters of the book, Shapiro traces the course of the present U.S. inflation. The Federal Reserve, he charges, is the chief cul prit in the dollar's plight. Corporate executives, labor union leaders, pol iticians, bankers, and others among the general public who pressure the Fed to manufacture money are ac complices in the crime. Time, he says, is running out. Failure to put a stop to printillg press madness soon will toss this country's currency on the same scrapheap with the denarius, the assignat, and the mark. ~~Noth ing can replace the dollar," some wit remarked, ~~and it almost has!" @ COMING ATTRACTIONS The September 1981 issue of The Freeman will be in special tribute to Ludwig von Mises on the centenary of his birth, September 29, 1881.

The issue will consist primarily of excerpts from Human Action, selected and arranged topically by George Koether, a former student of Professor Mises. Anyone who may want substantial quantities of that spe cial issue at the bulk rate of 25 cents a copy is urged to place an advance order.