The Prussian Bank Question

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Note from MECW vol. 6, 1976 :

The article was supplied with an editorial introduction beginning with the following words: “Again, rumours are rife in Germany, that the long projected Prussian Constitution is at last framed, and will be immediately published. For ourselves, we will believe when we see. The King of Prussia is such a liar that none but asses would repose faith in his most solemn promises. One thing is certain that, if a Constitution is granted, it will be so worthless as to be utterly inadequate to satisfy the popular demands. From our ‘German correspondent’ we have received the following brief but interesting communication which exhibits his Prussian kingship in a new but not very respectable character. He is about to turn swindler on a large scale. He will borrow, and then ‘repudiate’.”

You will probably have already heard that the King of Prussia’s plan of making money out of paper has been found impracticable. Two of the administrators of the State Debts refused to sign the new banknotes, as they considered them to be a new public debt, therefore subject to the guarantee of the States-General. Frederick William IV, to show that he ‘ can make as much money as he likes, has now hit upon a far better plan. Instead of making ten millions, he makes thirty-twenty millions of paper-money and ten of good, solid gold and silver coin. He proposes that ten millions of capital be raised by shares, “which shares it appears shall bring no dividends, but merely 3 1/2 per cent. interest and which shall not be transferable unless at the owner’s death, in order to keep them out of the reach of speculation"!!! Now would you call such things shares? Why not? His Majesty of Prussia decrees that they are shares, and fosters the fond hope that he will find a lot of capitalists stupid enough to invest ten millions of dollars in such not transferable, leaden, three-and-a-half Bank Stock! And that at a time, too, when by speculating in railway shares they can make quite another percentage. When the King will have found the parcel of fools he is in want of, and thus borrowed ten millions in coin, he will issue twenty millions in banknotes, making “a sum total of thirty millions” increase of the national liabilities. Really this is raising the wind with a vengeance. Raising thirty millions, because one can’t get ten.