Scurvy Notions

By Edward Minton, September 2016.

The most dangerous and threatening things on earth are not tigers or mosquitos, diseases or atomic bombs, nor are they malicious motives or vindictive terrorists. They are mischief enough to be sure, but compared with slavish adherence to incorrect abstract ideas their menace is puny.

“Wrongheadedness” is the chief enemy of human satisfaction; the most tenacious, persistent and injurious of all things to be feared. The motive behind one’s holding of an erroneous abstract theory may be innocuous, benign or even tenaciously virtuous, and still kill millions.

This is very humiliating to a species who hold themselves to be intelligent, but the highest form of intelligence is cognisant of it. Still, this idea should not be accepted either, without objective example. We will examine just one before hypothesising another.

The first use of lemon juice to cure scurvy is attributed to the buccaneer Sir Richard Hawkins, and was recorded in 1593. In 1601 Captain James Lancaster sailed his ship Red Dragon from England to Batavia (Indonesia) and returned without scurvy casualties by using bottled lemon water. From 1601 into the 1630’s “lemon water” was a common scurvy preventative in use on East India Company voyages.

Even earlier, in 1535 Captain Jacques Cartier and about 100 mariners were frozen into the St Lawrence River and dying of scurvy. On native Indian advice they made a brew from certain tree leaves, and fully recovered in six days.

From then until 1795 when Sir Gilbert Blane persuaded the British Admiralty to issue a daily ration of lemon juice to all sailors, up to two million sailors died of scurvy.  So what happened?

The early success of practical men was lost through the Admiralty handing responsibility for medical matters over to physicians who were themselves the purveyors of that most deadly malady, an almost romantic adherence to fancied abstract conjectures, each proved by nothing. Dozens of tracts were written proclaiming the cause of scurvy as foul vapours, dampness and cold, excessive black bile, laziness, inherent predisposition, blocked perspiration, an imbalance in the bodily humours and divine disfavour, all amongst them.

At last in 1747 a most junior member of the Naval Surgeons (a mere Assistant) James Lind, conducted a trial. Each two of twelve afflicted men were given a different alleged cure. Each pair was given either cider, elixir of vitriol, vinegar, sea water, oranges and lemons or “the bigness of a nutmeg”. And alone among these the citrus worked.

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Lind published his Treatise on the Scurvy in 1753 and was ignored, and a second edition in 1757. The following year, through the support of Commodore George Anson who in a voyage of 1740-44 had lost 1,800 of his fleet’s crew of 2,000 to scurvy in the Pacific, Lind was appointed as head of Haslar Hospital. In 1762 Anson died and Lind lost his support in the Admiralty, which thereafter drifted into supporting wort of malt as its scurvy cure without objective testing. It was useless.

James Lind resigned as head of his hospital in 1783, having cured thousands of cases of scurvy, but having made few converts. The Admiralty was oblivious, but one of Lind’s converts was Gilbert Blane, and he would prevail.

Blane was appointed as physician to the British West Indies fleet in 1780. He was appointed because he was an aristocrat, and not in consideration of his views on scurvy, but he soon set to work. The West Indies abounds in limes and he put lime juice in the rum ration of all his seamen. The improvement in the mariner’s health was astonishing.

It was another fifteen years, in spite of his prestigious work and rank, and only under the pressure of the Napoleonic war and the naval blockade of the French Ports, and as a member of a Navy Medical Board, that he persuaded the Admiralty at last, to issue lime juice in 1795. They eventually sacrificed the noble abstractions of prestigious physicians for a dull idea which had nothing to recommend it except that it happened to work.

Given that men have such difficulty in disassociating from the lofty pronouncements of those to whom they have given exalted status, it was quite expeditious. Only 260 years after Cartier, 202 after Hawkins, 194 after Lancaster, 48 after Lind’s experiment, 25 after Captain Cook’s voyage, and 15 years after Blane’s astonishing improvement to Seaman’s health in the Caribbean, and the thing was done.

By way of comparison, the time between the first known depreciating statement of chattel slavery in history, made by St Paul in his Epistle to Philemon, until the abolition of slavery was almost 1800 years. One would hope that our rate of learning is not, as this may indicate, in direct proportions to the evils we accept and perpetrate. 

While we are truly blessed that these travails are behind us, there are more I fear, and more difficult ones to understand before us. We could not understand the cause of scurvy, and when we had the cure we could not accept it until the coming of Baconian thought (the scientific method) had permeated society. Nor could we understand that it was possible to maintain civilisation without slavery, and although Christ established a religion which insisted that every individuals should be seen as a child of God and of unique worth, it took 1800 years to apply this to ending slavery. When we ask in retrospect, “How could people have been so slow on the uptake?” the answer is “Because they then, were just as we are now!”

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Our greatest difficulties go back to fallacious, though accepted abstract theorising. The famous physician Hermann Boerhaave’s contention that scurvy resulted from an imbalance of bodily humours goes right back to the ancient Greek theories of Hippocrates. 

Our current dysfunctional economy with its recessions, wars over oil, financial collapses, the unempayment of many through their being unemployed, depressions and poverty in a world of plenty, goes back to an abstract theory too. It is called Say’s Law.

Say’s Law was promulgated in 1803 by a French economist Jean-Baptiste Say. It is often summarised as “Supply creates its own demand” though what he actually said was that “..a product is no sooner created than it, from that instant, affords a market for other products to the full extent of its own value.” Further he said “Sales cannot be said to be dull because money is scarce, but because other products are so ….people have bought less, because they have made less profit.”

So money, it is easy to suspect, is irrelevant. If one farmer produces cabbages to a certain value, and another potatoes, and a cobbler boots and so on, money will just appear where, when and in the amount required. The most prominent economists of the 19th Century, David Ricardo and James Mill accepted this, though Thomas Malthus and John Stuart Mill had doubts. An abstract theory par excellence was established.

Say’s Law survived through the recessions of the 1890s as sacrosanct, but in 1917 C. H. Douglas, an engineer, studying the books of account of over 100 companies, discovered that the payments made to consumers from these entities was consistently less than the prices which they had to levy on their products. He was still predicting the coming of financial crisis into 1929. Then the Great Depression happened, and the world went into a flap. The impossible was here, now, and hurtful.

Many Governments around the world held enquiries to try to puzzle it out. A British Parliamentary Enquiry (the MacMillan Enquiry) took written and oral evidence from C.H. Douglas on the 1st of May, 1930. John Maynard Keynes was a Member of this Committee, read Douglas’s written submission, and personally questioned Douglas. A full transcript is available from the advanced library at 

Five years later Keynes published his General Theory of Employment, Interest and Money. In this, probably plagiarising Douglas, he asserted that a country could go into recession because of a “lack of aggregate demand”, as did Douglas. Further, Keynes was unaccepting of  Say’s assumption “that the whole of the costs of production must necessarily be spent … …on purchasing the product” (from Chapter 2 of his General Theory). 

In summation of Keynesian economics, he saw “excess savings” as reducing investment and employment and in a multiplying process progressively worsening the lack of aggregate demand and thus causing the depression. While a critical step away from adherence to Say’s Law, Keynes’s ideas which allowed decades of prosperity, mainly through lower interest rates (many are now negative) and stimulating the economy with government spending (recently massive quantitative easing), eight years after the Global Financial Crisis we are still struggling out of recession. Keynes too has disappointed.

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While the obstructive force in the quest for a scurvy cure was the Admiralty’s physicians, in the muddle after the Great Depression this role was played by prominent bankers. Douglas suggested that the deficiency of effective purchasing power in the economy be calculated, that money be treated rather as a ticket system, and that the deficiency of money be issued against a National Balance Sheet as a National Dividend going to all in equally parts (with some being used to fund reduced consumer prices). 

This money (carefully calculated to the right and necessary amount) would bring the economy into equilibrium as to product prices as against a sufficiency of purchasing power to consume that product. The rub was that this money would find its way into reducing our debts to the banks, cancelling both bank assets (our debts), and reducing prices caused by servicing these debts. Our bankers wanted done of it, but Keynes’s proposal that they lend more to Governments was highly regarded. Round One went to Keynes.

Just as the Admiralty’s Officers neglected the true interests of the Navy until the challenge from Napoleon threatened everything, and all for some ill-perceived short term considerations (the cost, and the bother of mental activity), the larger consideration of a properly balanced and prosperous economy in which Banks might operate was little valued when the short term increased indebtedness of Governments to them was on offer.

Just as the answer to accepting the cure for scurvy was two million deaths, so also only horrendous hurt and destruction of mankind and his environment will pay the tribute to end our finance/economic disequilibrium. No man dies in vain, but each is a human sacrifice demanded by the anti-gods as a stimulant to thinking with integrity. Before I explain what has already come and what is still to come, let me explain why it has come.

It is, and there is no other way of saying it, all a technical misunderstanding! Man’s inhumanity to man and his destructive presence in the environment is not endemic, it can be ended. The enigma of our dilemma may be as difficult to perceive as was the cure for scurvy or the reason to end chattel slavery, but all things are given to those who ask.

 Time was when our money systems were simpler, and this root, the love of which is said to be the beginning of all evil, was more benign. But then this thing, innocuous in itself, construed a nonsense in our understandings. 

In earlier times various commodities were used as money. Wheat, salt, cattle and honey were sometimes used but silver and gold were the most enduring commodity moneys. Metal coins would sometimes stay in circulation for centuries. But there was never enough gold to represent the value of everything that was traded. No single commodity could do that, and nor could any few commodities do it either. Paper IOU’s to claim gold were also used, and this allowed the volume of money to be increased. Later still you could be given a bank account which would allow you to claim so many notes (IOU’s) which would allow you to claim that much gold. In time there were at least fifty times more bank deposits created than there was gold, and the gold standard by this time was a myth, and was quietly abandoned.

Money which was once (at least in theory) a claim upon gold, was by now a claim upon the disposable goods and services of others. This type of money is called fiat money.

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When gold was loaned to industry for a productive purpose, a debt and a cost upon the resulting production were created. Upon repayment the debt was liquidated, but the gold still existed somewhere to meet the cost of consuming the production so generated.

When fiat money was loaned to industry for a productive purpose, again a debt and a cost upon that production were created. Upon repayment of the debt, however, this form of money is no longer in existence to meet the cost of the production so generated. This form of money is simply a claim upon wealth, and once the claim is met by repayment, there is no residual money existent.

Now debt and costs have different lifespans. Fiat money lasts only until the debt which created it is repaid. Costs are passed forward from their occurrence through all intermediate stages of production until at last, they are part of an end consumer product. Only proper person consumers bring an end to costs, as they, and they alone, cannot pass them on.

Banks will always insist upon loan repayment within a definite period. Costs, on the other hand are in part, and potentially, eternal. It all depends upon the lead times of the production of the various inputs into the final proper person’s consumer item.

Corporations can and do consume electricity, but they do not consume its cost. They transfer its cost on to the next stage towards an ultimate personal consumption. A mine may pass it forward with its ore to the refinery, the refinery with its metal to building an industrial shed, which passes it on to a machine manufactured in the shed, which passes it on to the cost of the machine digging a ditch, ad infinitum.

Depreciation may usually only last on average for say, five years, but here we are talking about depreciation upon depreciation, upon depreciation, upon depreciation etc. where every generation has an average life span of about 2½ years.

Anybody paid a wage for performing part of this long chain of economic processes, and who has used it to pay off his mortgage, doesn’t have it years later for buying the consumer item when it is eventually offered for sale, and nor does anyone else have it. Some of this aggregate of fait money disappeared before (or partially during) the period from its creation until consumer products were offered, and some (especially in large capital long leads-time projects) was paid to consumers in wages and salaries years before product eventuated.

This has brought into play the prospect of a disequilibrium between the rate at which money is being created and destroyed, and the rate at which costs are flowing from producers to consumers. This is the conundrum which Central Banks have now to deal with in maintaining an operative system. Quantifying this may only be done with the establishment of National Balance Sheets and National Profit and Loss Accounts, but these are nowhere done.

The evidence of disequilibrium is obvious in such as depressions and recessions, in the acceptance by industry that advertising is so necessary in competing for insufficient purchasing power for their products, and in inflation during “booms”, and much else.

Until some money (and the right amount too) is created without debt, thus cancelling debt, enabling purchasing power to be adequate to meet the cost of production, and eliminating the cost-push inflation coming from excessive debt, there can be no resolution.

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It is not rocket science, nor of itself threatening, but it seems that we will do anything, absolutely anything, to alleviate the situation rather than create the little money needed for equilibrium and give it to people. So what have we done instead?

Over a hundred years ago everyone was trying to solve their shortage of money to buy what they had produced, by selling some of their production via exports to get the money to buy what they had left, from themselves. This became a tussle for export markets amongst Nations of greater and greater urgency. The main contenders in 1900 were England and Germany. If one country sold more than they bought, then another must have bought more than they sold. Economic war eventually burgeoned into other acrimonious forms, and at last to the great joy of whole populations (led of course by their media), war was declared.

War was even more fortuitous. Unprecedented amounts of money were created to finance the discomfort of one’s neighbour (read enemy), and he took our exports of bombs and bullets whether he bloody well wanted to or not. With five million people in uniform and more than that providing their needs, Britain’s standard of living actually rose. More production with many fewer people proved easy, distributing more money tickets without war was unthinkable.

There was, you see, a high moral principle involved. Nobody must have anything without pain, or for nothing. Issuing vast amount of credit and adding to the national debt was acceptable so long as some were paid to kill or be killed, and others were paid to supply them with the means to do it. Paying a National Dividend so we could stay home in leisure a little more; play with the kids, work in the garden, read or play music was a degeneracy not to be borne. Not of course that it was quite considered in this way. Of course we must finance the war was in one compartment of thought, while something for nothing (dividends are only for rich people) are a sin and would corrupt us, was fully isolated in another thought compartment.

Having limped away from that debacle, the next was not long in coming. Giving people enough money to enable them to buy what they had produced was immoral, but lending them even more so that they could bid against each other in the stock market was as American as apple pie. Every week more people with more borrowed money bid up stock prices more and more. Ain’t America great! With increased money in circulation everyone prospered. But it was not a National Dividend, it was all debt issued in an inflating market, for items of finite worth.

The result come 1929 was horrendous poverty and deprivation, and years of suffering in which the demagogues would rise. Of course this was very bad, but at least nobody got a dividend which would have corrupted them.

With the rise of the demagogues, fortunately war could recommence, and vastly increased debt to finance it was virtuously called for, and of course produced. Oh good, prosperity in our time. Pity about the bloodshed, but you get that.

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By 1945 at last the 2nd World War was over. And it really was a new world. What followed was probably a once only. Until then most households had daily delivery of ice for ice chests in which to keep food, but household refrigerators were now on offer. Most households were lucky to have one motor vehicle, whilst now we have two , three or more. Vacuum cleaners, electric and gas stoves, power tools, bulldozers and excavators, better tractors, mix masters, and later a bewildering array of silicon chip based technology came into play.

In funding the production of all this by creating more money (IOU’s to our bankers), we could keep enough money in circulation to buy current production. Government also excelled themselves in borrowing money into existence to fund infrastructure such as roads and highways for our vehicles, airports for air travel, office buildings and hospitals for public administration and health. This was the golden age of Keynesianism. We could and did borrow enough new and extra money into existence, to enable enough money to be present in the market place just now, to buy the product of our amazing productiveness. 

But it all came to an end.  In time we all pretty much had enough iPhones, computers, cars, household knickknacks and industrial machinery for the moment, thank you. Hitherto the last resort of a scoundrel was held to be patriotism. Now only lending ever increasing credit for house purchases, inflating prices, and exacerbating the price of shelter could save us from a defaulting deficiency of purchasing power. In Britain 65% of all pounds in existence by 2010 had been issued to buy residential property. This was done with all necessary exacerbation in the USA also.  The prime asset debacle in residential housing took place in 2007 in the United States. Back to depression.

The age of consumerism, of raping the environment to create a means of continually increasing the supply of money in existence (though only temporarily in existence) had run its course. What was at issue was not whether we would borrow from the banks in order that enough money might exist, we had no alternative to obtain any of it, but whether we would  borrow enough of it, and in a timely fashion. And we wouldn’t. So what to do?

Enter quantitative easing. The US Reserve Bank created and spent money to buy financial paper such as bonds or debentures from any entities public or private which were large enough to be noticed, at a rate of $80 billion per month.

And this state was reached despite the worship of growth and every effort being made to sustain it. Indiscriminate immigration was everywhere practiced, not because of any productive contribution that migrants might make, but because in housing, educating and feeding them and providing all manner of infrastructure for increased population such as roads, schools and electricity and water supply, economic growth was attained. We imported consumers in preference to funding our own to consume.

We turned our Universities increasingly over to foreign students, turning many of our own away, because this too enabled us to fund some of our otherwise inability to consume.

We imposed regulatory inhibitions upon industry for any and every “good” reason, (workplace health and safety was often an ostensible one) mainly to increase the payments necessary in production. But more than any other thing Banks financed people to bid against each other for housing, inflating “values” and the size of mortgages for all. If debt were expanding quickly enough, the market would function adequately enough for today. And tomorrow?  More of the same of course.

But technology is an incoming tide. Many mundane jobs have gone, and even the professions are now being hollowed out. We are ultimately as powerless as King Canute to hold this tide back. We may contort our cultures and distort our economies, we may denigrate the very idea of a National Dividend, disparaging it as “helicopter money” and liken it to throwing jelly beans to starving children…. but no wheel works for long without grease!

Tomorrow is the first day of the future history of the world. A National Dividend in right measure is as essential to the health of our modern economy, as is vitamin C as it were, and its deficiency is as lethal.

A healthy organic culture is available to all. A future of scarcely imaginable splendour in terms of human satisfaction is on offer. But … and it is a large but, we have first to dispense with scurvy ideas.

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