We Invest More than They
In 2005, we, us, “the public”—via government—invested $1.82 in the economy for every dollar of private-sector investment. The actual figures: $2091.6 billion invested in the USA by local, state, and federal government in the economy; $1145 billion in private-sector investment in itself.
In 2010, the ratio was 2.33 to 1, while in 2000 it was only 1.34 to 1. But over the longer haul, 1.79/1 appears closer to “normal”. “We”, not “they”, are the majority investors in the US economy.1
But, that’s only the beginning of the investment story. “We” also more or less guarantee a profit-making environment for private investment through the actions of the Federal Reserve system—which acts as a “money pasture” providing whatever low-cost credit the private sector needs to stay profitable. Thus, “we” invest more than “they” and then underwrite private-sector investment too.
Where does all this leave “Economics” or, as professional economists may prefer, “Economic Science”? Economists of course focus on and deeply prefer “the private sector” whose mortal enemy, properly despised by all, is “government intervention”. One can see how baseless that is. The facts cry out that there is no longer such a thing as a stand-alone-selfcontained, self-regulating Free-Enterprise private-sector economy! Nor has there been for a very long time. The “economy” that professional econo-
1 See the data tables I’ve placed at the end of the chapter.
© The Author(s) 2017
J.F.M. McDermott, Employers’ Economics versus Employees’ Economy, DOI 10.1007/978-3-319-50149-9_1
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mists prioritize in their discipline is an ideological construct—just that— and does not constitute an integral domain of data, economic behavior, and institutions for study and analysis. It is but a special region of the integral economy, deeply dependent on public investment and “the money pasture”. It will be difficult for the profession to accept this, but the issue rests between fiction and fact, between the ideologist and the scientist.
But these facts also argue that we have to look again at the privileged role accorded to the private investor in our society. It is that private investor, it is said, who saves while others consume, who, unlike the rest of us, sacrifices “his” present consumption with a view—in an argot now favored—to “growing the economy”. Because we benefit from “his” sacrifices—unique and indispensable as they are—it is only right and just that we should defer to “him” and to “his” mastery of the Laws of Economics as to what should be infested in, with what priority and to what extent. Most important of all, that we should take care to guarantee the prosperity of “his” investments so that the fruitful cycle they initiate will continue, ideally uninterrupted and on an expanding scale. Which, of course, is what we do.
But what becomes of this special deference if the orthodox view is wrong and that it is our public investments which are one-sidedly important, both in their scale and in the sorts of things they produce? A generation ago, a then famous economist, John Kenneth Galbraith, worried that the US economy was too much marked by private opulence and public squalor. Galbraith didn’t then see that all that much could be done about it, but if we ourselves are the dominant investors, wouldn’t it be the case that we are inflicting that public squalor upon ourselves, unnecessarily so, wastefully so, and, as is so common now, at the expense of our common natural environment? Given the facts of public investment, these are not idle musings.
Some Background
Not very long ago I was led into this way of looking at the US economy by some TV-economists who were explaining the collapse and desolation of the City of Detroit. A familiar tale: “Looking for greater efficiency, the car makers had shifted elsewhere.” It was sad, our economists admitted, but then soulfully added that it would be the worst kind of economic wickedness to waste “scarce economic resources”.
But wait! Weren’t the investments in Detroit’s physical infrastructure just being thrown away, wasted? Roads and water mains? And those that
created its social infrastructure—schools, hospitals, concert halls, that sort of thing? And the investments embodied in its retail shops and services? Much less those of the many small auto firm suppliers now hung out to dry? And of course the investments in homes now deserted because their former owners lost work? And the accumulated skills of nurses and firefighters, teachers, and the rest?
I had conjectured on this in a 2004 book and mulled about it since. But now thoughts came to mind about those brand-new investments that would have to be made in South Carolina, or Mexico, or wherever they were now going to make their cars. Those for water systems and sewer lines! Schools and hospitals! Houses for workers—and shops, cops, and movie theaters! It looked as if for every dollar invested in Detroit, another dollar (or its equivalent in the new local currency) would have to be invested merely to replicate what was being thrown away back in Michigan.
Have we perhaps stumbled on a sort of perverse economic law, “The Rule of Two Times”? For every dollar wasted in the moving out, another has to be invested in the moving in. All in the name of “efficiency”!
A more systematic, searching look at these matters seemed in order.
Public Investment
“Private capital investment” is a vexed category, yet we do understand that private firms “invest”. But government? It just “spends”, and that is commonly thought the opposite of “invests” and, equally commonly, to be the wasteful opposite of “invests”.
With that Detroit example in mind, I propose that we ignore such foolishness. In what follows, I am going to look at three categories of government expenditure = investment. These categories of governmental expenditure are precisely investments because they consist of spending today to create, expand, and/or preserve productive factors and agents for tomorrow. The three are expenditures for Producing a Labor Force, for Creating Infrastructure, and for Public Co-investment in partnership with private investors.
Producing a Labor Force
In 2005, local, state, and federal government spent $1403.7 billion on producing and maintaining a labor force. The federal part of the expendi-
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ture took place under the budgetary categories: Education and Training, Health, Veteran’s Training, Unemployment Compensation, Housing, and Food and Nutrition. Those for state and local government appear under the categories Education, Public welfare, Health and Hospitals, and Parks and Recreation. This $1403.7 billion is the sum for all government expenditures in those areas in that year.2
Of all expenditure categories, those seemed the most transparently apt for producing tomorrow’s, and maintaining today’s, labor force. I don’t doubt that a more searching look at other government expenditures would add to our figure, so I think we can be confident that this $1403.7 billion figure is minimal.
The argument that these are investments is quite simple. You spend today to have a more productive, adaptable labor force tomorrow. To that very point, during the last part of the nineteenth and the early part of the twentieth centuries, the very largest private-sector firms extensively invested their own monies to produce a better labor force for themselves.
The business literature of that time evinced a considerable dissatisfaction with the qualities of the then US labor force. Aside from thinking that workers were too open to “un-American ideas” like trade unions and socialism, they also stressed that they were too lacking in knowledge and skills to work effectively with the rapidly developing and changing technologies then being introduced by the big firms. It was in that light that numerous schemes and proposals came forward from the private sector to invest in behalf of a more suitable labor force. Some, like Ford Motor’s Sociological Department, involved monthly visits to worker homes by company agents to make sure that the workers and their families were suitable Ford employees. If you, your spouse, and the kids passed the inspection, you got a special bonus. If not, you likely got the sack.3 Other schemes included Judge Gary’s “welfare capitalism” at US Steel and the Rockefeller’s Employee Representation, which fell apart during the famous Ludlow Massacre in Colorado.
Elsewhere, including the UK, France, and Germany, there were schemes to create company towns to rear company-certified workers, that is, whole towns in which everything from schools to libraries to churches to sewage works
2 Again, for all figures cited here, consult the tables at the end of the chapter.
3 That “special bonus” was the famous “$5-a-day” wage, received only by workers who subjected themselves to the Sociological Department and who met especially heavy output targets. See Lacey (1986: 125 ff).
and sanitation departments was planned, owned, and operated by the company. The most famous of these was Pullman, Illinois, now absorbed into the southern environs of the city of Chicago. There is a rich literature about the sort of private-sector social planning that was applied, as in Pullman,4 but the ultimate lesson was that it wasn’t feasible to create “islands” of extra-obedient, extra-industrious workers. A wider effort was needed, a mass effort which very heavily relied on government acting through the educational system.
Thus, private efforts were overtaken by what I have called “the Historic Advance”, spanning roughly 1870–1970. As described in my 2010 Restoring Democracy to America (Penn State University Press), this century-long, world-historic improvement in the life conditions of urban dwellers in the USA and Western Europe came of an overlap of purpose between, on the one hand, popular movements like the Social Democracy and a big industry in the throes of very rapid technological change. Better conditions = better workers! However bitter their day-to-day clashes, both wanted, needed, and together encouraged—if unequally—a vast social investment to create a modern labor force.
“To Create a Modern Labor Force!”
With that expression, we’ve jumped over to the most important point in this entire discussion. We mark the world-historical change from societies which produced a labor force spontaneously and without plan to those in which the size of the labor force, the identity of those who will be part of it, and, especially, the infinite diversity of its specialized productive abilities are the subject of social forethought abetted by overwhelming public investment. This, and not steam or steel or electronics, marks the break from a pre-modern to a modern economy.
Historians and economists frequently refer to two “industrial revolutions”. The first and best known, based on steam and iron (and cotton5), occurred in the very early part of the nineteenth century. Then, # 2 came about with the roughly simultaneous birth of the steel, chemical, and electrical industries in the last part of the same nineteenth century. Yet these are dwarfed by—and # 2 was made possible by—the most important industrial revolution of all, to wit when “we” ceased to be satisfied with whatever labor force the existing society just happened to offer “us” and instead set about to produce the needed workers, skills, aptitudes, and
4 See Buder (1967) and its bibliography.
5 See the groundbreaking Beckert (2015).
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attitudes as a matter of deliberate social investment and social engineering. This is the third and most important Industrial Revolution of all. It marks the very point at which “the private sector” ceased to represent a stand-alone phenomenon and instead became, so to speak, the ward, the creature of public-sector investment.
In this way of looking at things, a modern, ever-changing labor force is itself the key product produced by a modern economy. This is the goose that lays those golden eggs; to concentrate on the eggs, as we have traditionally so concentrated, is to get things backward.6
Analyzing the Investment Numbers
Education and Training: This first category is the most easily understood. There is a whole sub-field—Human Capital Theory—that relates investments in education and other training to their (greater) productive outcomes later. Gary Becker’s pioneering study of the question examined investments in schooling,7 and it has become a newspaper, TV, and magazine staple to run tables showing increased earning following upon a student’s more extensive investment in education.
Investments in an improved labor force are also at the very core of Economic Development Theory.
And they lie at the core of the rhetoric and impulse of today’s educational reform. This calls for greater investment in schooling and training, the “reformers” explaining that high, persistent unemployment and persisting low wages in the USA are the fault of the unemployed themselves. We should pause a moment on this point.
That may have been true before The Historic Advance—but no longer. We now have a modern, adaptable labor force—which is now being radically under-used. But instead of admitting that we keep so many unemployed to keep downward pressure on wages, we are told, “No, No, those workers are not really qualified enough to hold jobs in a modern economy!”
6 I should add here that I have not done the needed historical study, but a plausible hypothesis would be that government investment began to creep up on the private variety as elementary schooling became the universal norm in Europe, Japan, and North America, and began to exceed private with the expansion of secondary education into the norm, in the 1920s in the USA, and post-1945 in Europe and Japan.
7 Becker (1975) calculates in “years of schooling”, not “dollars advanced”, but the field has not stood still since then.
Ideology Trumps Facts: An Informative Detour
This is not the first time that Economics “Science” and Economics ideology have swapped places. This is not only erroneous Economics, it is spectacularly so, as the following historical account makes clear:
In 1940, the US Civilian Labor force was counted at 55.6 million persons. This was the official measure of all those persons who wanted work and who were deemed qualified for work. With the onset of war, the armed forces drew 10.9 million men and women out of that 55.6 million, almost one in five. But then some 9.1 million other workers showed up out of statistical nowhere8 who, “unqualified” as they were previously thought to be, helped to produce unheard-of numbers of state-of-the-art weapons and ships (and food) for the USA and its allies. And doubled the US GNP in the four years of the war!
On that experience, the bulk of today’s unemployed are not “unqualified” and don’t need to get “qualified” before they can get work. During those war years, patriotic reasons drove people to take what were called then “defense jobs”. But they were paid good, in fact high wages, from day one, often getting their training right on the production line or in the warehouse and dockside. In that way, former housewives, ex-sharecroppers, the prematurely retired, people who had been “unemployable” for the six to eight years of the Depression, and others were motivated to get “qualified”—and they did so in their 9.1 millions.
The truer truth about today’s massive un- and under-employment is that it is a policy outcome. Low wages and high unemployment are goals of our national economic policy and endorsed as such by virtually the whole of the mainstream profession over the past era9 but with roots going back well into the nineteenth century.
Basically, we are speaking here of that “money pasture”, the Federal Reserve system. The job of the Federal Reserve system is to make sure that there is neither too much nor too little credit available to the economy. Too little, of course, means bust, an economy that under-performs for investors—not everybody, emphasis investors! Too much credit tends to dry up unemployment, leads to price inflation, and threats to depress the values of the property—of those very same investors. This careful balancing
8 Historical Statistics of the USA. Series D, Nos. 1, 3, 4. I first heard this analysis many, many years ago in a private talk given by the New Deal economist Leon Keyserling.
9 Greider (1987), though dated, is still the best discussion of why and who “cooled” the US economy in the 1970s and of why this “cool war” against working people continues.
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act is simply part of that systematic deference, cited earlier, that we pay the private-sector investor for—it is theorized—“his” sacrifices.
Reading the facts of the evidence is not a great merit in Economics. Thus, while some economists want to argue that the unemployed are too untrained and otherwise unqualified to find work, still others—even more orthodox—argue that the labor force isn’t produced; it just is! Economics and economists need to do or think nothing about it.
In the regnant contemporary theory, there are two basic kinds of players, Firms and Households. Firms possess productive assets; Households possess leisure, some only of which they give up for its disutility, labor. In this view of things, what creates an economy is not what people do but what they want—utility, satisfaction, ophelimity. Accordingly, labor, work, sweating, and so on, are only by-products of economic activity. Not the main show. Best properly relegated to special studies such as those above. Meanwhile, at the very, very highest, most prestigious levels of the Economics profession, the labor force and its menus of productive qualities are conceived like the fish in the sea before they are caught, the ore in the ground before it is discovered and mined, and the fertility of the soil before it is planted. Or, in the language of these theorists, labor and its productive qualities are a “non-produced input” into the productive economy. Hence the comparison to uncaught fish, unmined ore, and unplanted fields.10
These strained, deeply counter-factual explanations about the origins of the labor force and its menus of productive skills may be best explained by the very facts that we are exploring here, namely, that it is public investment that creates a modern labor force. It would be hard to maintain the idea of a self-contained, self-regulating private economy if its main productive agents come via the good graces of us and of government. Why not fur over this fact by means of theory and thus adopt the position that the labor force isn’t produced—it just is. As they do.
Let us move on.
10 In one of the most important theoretical works in contemporary Economics, Kenneth Arrow and Frank Hahn discuss some of the methodological difficulties in constructing a model of a productive economy. They go on to argue that there is “…at least one non-produced input that is needed directly or indirectly, for all production; labor provides an obvious example” (Arrow and Hahn 1971: 64). Curiously, the childhood of this now dominant view almost precisely overlaps the historic changeover from a spontaneously emerging to a socially fabricated labor force.
Health and Hospitals, Public welfare, Health and Hospitals, and Parks and Recreation: These categories of public expenditure come under the same compelling arguments as above. They are part of the cost of producing and maintaining a productive population.
Unemployment Compensation, Housing, and Food and Nutrition11: These categories of federal, state, and local expenditure have a different warrant. They are investments in that part of the labor force that earns less than a living wage, or is not now wanted by employers but that was once wanted or may be wanted again. The private sector wants workers, not a labor force. But the latter is needed if you are going to have the former. Why not pass that cost difference onto government, as it does? These are the categories which embody that process.
Whole industries depend on this subsidy = investment by government. Especially, all those industries which do not now pay a living wage.
There is no economic discussion more open to thoughtless, doctrinaire “analyses” than whether or not to raise the minimum wage. Economists truly wring their hands over the unfortunate prospect that raising it will cut down on the number of unfortunate jobs for these unfortunate workers.
Arrow and Hahn orthodoxy to one side, it costs money to produce workers. If one doesn’t pay a living wage, and doesn’t want those workers to die in the streets of starvation and disease, someone else has to make up the difference between what they are paid and what it costs them to grow up and to live—and thus to work.
At present, a living wage for a full-time worker in the USA should be about $15–20 per hour, depending on what part of the country we’re talking about. But it is everywhere closer to $10 plus or minus change. That implies that that fried chicken, or processed chicken, or hamburger, or sweat-shop garment is sold under its actual cost of production—with government making up the difference via Medicaid, food stamps, housing allowances, and the reverse income tax. In one calculation I’ve made, government pays more than half the real wages of fast-food (and many other low-wage retail) workers.12
11 I’ve included only federal assistance to states and localities under Unemployment Insurance expenditures: the rest of the unemployment benefit to individuals is paid for directly out of payroll taxes.
12 A recent academic study argues that government, through these programs, subsidizes the wage-bill of the low-wage industries by about $150 billion per year (Cohen 2015a).
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If those very same monies were invested in better jobs, we could eventually have enough of them to go around. This way, the present way, simply makes those bad, sub-living wage jobs a continuing scar on our society and an unnecessary burden on both those who have to work at them and those who have to pay the taxes for the subsidy. This is a perverse investment, a sterile “investment” that makes under-paid jobs economically viable. It is no tribute to the economics acumen of the Economics profession that it supports this sterile “investment”, and can thus be counted upon to rouse up in its righteous indignation when someone proposes to raise the minimum wage.
Looking back over the previous discussion, we, through government, in 2005, invested more in producing and maintaining the Labor Force than the private sector did in its whole investment program, $1403.7 to $1145 billion—roughly $1.22 to the dollar. If “the economy” is the sum of both activities, we—through government—are the majority investor.
But our public investment doesn’t end there.
Creating Infrastructure
Under this category, government, mostly state and local, invested a further $518 billion in 2005. These are monies that went to building and maintaining highways, to creating and maintaining sanitation and sewage systems, providing water, electric power13 and gas, and, of course, subway, local bus, trolley, and other transit systems, including airports.
And, lest we forget that we live in a society, not just an economy-in-thenarrowest-sense, this $518 billion also includes the annualized investment in police, fire protection, and the administration of justice. In short, under this category, we, through government, invested an additional 45 cents to every dollar of private investment ($518 billion/$1145 billion) to create the social and physical infrastructure the latter depends upon merely to function. Again, adding to our case that it is the society’s investments
13 In many parts of the USA, the electrical systems are owned and operated by local or state authorities. This is a legacy of the New Deal’s Rural Electrical Administration . Private industry wouldn’t take on the higher infrastructure costs for rural areas with, by definition, fewer paying customers. The rural cooperative movement, unsung as it is, also plays a part in many state and local economies.
which one-sidedly create the economy, not the smaller private-sector variety.
Public Co-investment
Under this category, government invested $169 billion in 2005, providing another 14 cents for every dollar of private investment. These are investments which the private sector would have/could have made for itself but which instead were provided by a kindly government.
Under Research and Development (R&D), I’ve listed only those monies spent by the military and space programs. Here it is useful to recall that virtually the entire science and technology that underlie today’s computer and electronic “miracle” was funded by, mostly, federal investments in behalf of the military and space programs. Bill Gates is probably the only “welfare queen” who actually does drive around in, not just one Cadillac but a whole fleet of them.
The earliest computers consumed immense quantities of electricity, filled whole buildings with their wiring, and their vacuum tubes blew out all the time. R&D which was directed at producing better batteries, at miniaturizing components, and at system reliability were critical issues for space rockets, rocket weapons, and military communications. It was this R&D that created the commercial opportunities for Microsoft, Apple, and the rest.
Looking across government R&D and Natural Resources expenditures, these replace the investments that private-sector firms would have had to have made to achieve what government now does for them. Some of these government investments are direct and immediate. For example, in order to access timber and to open up mineral sites, government will survey and construct access roads—the very same roads that will be later used—gratis—by the private-sector lessee to take the timber and the ore out.
But there are other indirect, delayed investments as well. Back in 1950, the US Office of Naval Research funded the translation of a classic Logic text, published originally in German by David Hilbert and Wilhelm Ackerman.14 The Navy was interested in artificial languages because of their significance for codes; Hilbert and Ackermann’s study was an early attempt to treat Logic as a very fundamental artificial language, thus the Navy’s interest. Here we witness one of the main and earliest sources of
14 Hilbert and Ackermann 1950 (1938, 1928).
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the development of the artificial languages that enable today’s elaborate computer programming.
The dollar costs of this indirect, delayed sort of co-investment by government may be relatively low, but they so often underwrite medical, pharmaceutical, or, as here, mathematical researches which are too long term or too “iffy” to win private investment.
The private sector complaints about government spending aside, the private sector is hyper-alert to government investment in basic R&D, and in natural resources development. Forget, That government is best that spends least! Replace it with the wholly realistic, industry-approved, That government is best which co-invests best! Whole industries—we’ve cited only Electronics, Logging, and Mining—depend upon government to invest capital in their behalf when longer time lines or less certain outcomes are involved—and, often, just normally, as in…
Agriculture
In 2005, government, mostly the federal government, spent about $26 billion in behalf of US agriculture. I don’t have a figure for state and local expenditure although almost all states invest heavily in their agricultural sector: to improve crops and animals, in plant and animal medical research, in better methods of harvesting and storing crops, and in encouraging exports of rice or beef or soy beans, artichokes, or what have you. Under these categories, the federal government also adds funding for these purposes, especially for export supports of one kind or another. As such, that $26 billion almost surely under-represents government investment in Agriculture.
There has been considerable political pressure to end or at least to reduce crop supports, as well as to pull back programs which pay farmers for leaving un-needed land idle. These programs are still defended as helping the “family farmer” to survive.
Translating “family farmer” and “survive” into “agribusiness” and “prosper” gets closer to the truth. Ethanol, made from subsidized corn, costs more in energy, than the petroleum it replaces. US cotton growers receive 30% more in subsidies than their whole crop is worth (Beckert 2015 (2014): 438). And much of our rice is grown on desert land which, save for subsidized water, would revert back to cactus, scrub, and Gila Monsters.
In good part, because of the immense flow of federal money into agriculture, US farms have grown bigger and bigger, eventuating in the mega-
farms of today. For roughly the same reasons US agriculture has become a really big business dominated by a few huge, politically connected firms such as Cargill and Monsanto. Thus, the supports continue. Basically, the capital costs of US agriculture are heavily assumed by government.15
As we have been learning, albeit too slowly, agricultural subsidies have also had harmful social effects. For example, under the North American Free Trade Agreement, subsidized US corn, no longer blocked by protective tariffs, has flooded Mexico and Central America where it has wreaked havoc on local corn producers. In short, many of those desperate refugees, whom many blame for trying to enter the USA illegally, are fleeing dire economic conditions that have been generated by US export policy. Here again, we see the “Rule of Two Times”. Our subsidized corn exports produce the refugees that force us to spend extra money to keep from crossing our borders.
There IS more BeSIdeS
We’ve seen government investing $2091.6 billion in 2005 which the private sector relies upon for the purposes we’ve been discussing, but which the private sector’s $1145 billion didn’t cover—or about $1.82 of public investment for every dollar of the private variety. But even that understates the role of government in supporting private-sector investment. The details of this are too numerous even to list in the space available here.
We’ve barely touched the subsidized iceberg better known as the Defense Industry. For example, the Defense Department owns extensive manufacturing plant and equipment which are leased under-cost to defense contractors. The Federal Government offers under-cost insurance to US exporters lest they suffer a loss in their overseas dealings. And similar insurance to US firms carrying on manufacturing or other operations overseas.
US diplomatic personnel press the interests of US firms, and, like diligent salesmen everywhere, they try to cut out those of foreign firms. State and Commerce Department agents actively promote tourism, which is to say promote the interests of US hotels, restaurants, air carriers, creditoffering firms, and the rest. All of these entail some level of capital costs.
More dramatic, if one needs an unfriendly government overthrown, the US government has often been a willing partner, as for United Fruit in
15 See, for example, Kocieniewski (2013).
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Nicaragua, the oil firms in Iran, the old ITT in Chile, the telephone company in Cuba, and what appear to be continuing attempts in Venezuela. Break an overseas trade union? The CIA has some experience here too. It’s odd to think of it in these terms, but such strong-arm operations have very high initial and continuing capital costs. And as every new Senator and Representative soon learns, the Defense Budget supports many a laggard firm producing an over-priced, un-needed weapon system—but in his or her home state or district.
Basically, without government (and our) investments in Producing the Labor Force, Building Infrastructure, and Co-Investing, the so-called private sector—“Free-Enterprise”—would be a far smaller, struggling, paltry sort of thing, with lower productivity, technologically backward, even higher rates of business failure, and able to pay only the lowest of wages to a far smaller labor force.
“The money PaSTure”
I’ve called the Federal Reserve system “the money pasture” for that well describes what it is and what it tries to. In the jargon of the financial industry and the Economics profession, “the Fed” is responsible for management of the money supply, that is, to make sure that there is enough credit in the economy to keep everybody and everything going in a healthy fashion. But that’s not quite accurate, not really precise enough to qualify as true.
Although “The Fed” is supposed to serve everyone in the economy equally, favoring the interests of none, as we’ve already hinted, it treats businesses, consumers, and employees very, very differently, and that is the point.
The actual priority of the Federal Reserve system is to make sure that the average business firm can always find the credit it needs so as to be profitable and growing. That means there has to be enough borrow-able money available to that average business firm, and it has to be available at an attractive price. “The Fed” can’t and won’t guarantee profitability to each and every firm, but it does provide enough borrow-able money and at interest rates low enough that even run-of-the-mill, indifferently managed private-sector firms are likely to profit and grow. That’s what I mean by “the money pasture”. “The Fed” provides a “nutritious” money environment for the whole private sector. But not for everyone else.
Consumers have only limited access to its nutrition. It is of course standard policy for the Fed to provide enough available money that consumers
are able to borrow for homes, cars, TVs, and so forth, that is, borrowing that benefits key industries. But, unlike the capped and fixed interest rates “the Fed” makes available to business firms, many consumer interest rates are simply usurious, as for credit card balances, pay-day loans, and other high, high-cost borrowing.
Finally, “the Fed” sees it as its duty—in fact its most important duty— to make sure that the economy doesn’t become “over-heated”, which is the official synonym for “full-employment”.
In the very heady, prosperous years after World War II, there was some speculation among economists about what “full-employment” might consist of. One could imagine a situation in which every person who wanted a job had a satisfactory one or, not currently working, was in process of moving voluntarily to a preferred one. That was called “frictional unemployment”, and I recall that it was estimated to be about 2%.
Currently, the Fed aims at “full-employment”, but it conceives it to be somewhere around 5–6%. A rule of thumb used by those who are experienced in these matters multiplies that by 1.5 or 2, so that “fullemployment” actually means now a rate of 7.5–12% unemployed—at best. Probably the best known argument for this is “the Phillips Curve”. That expression argues that as unemployment goes down, the threat (and reality) of inflation increases. Another similar expression is “the natural rate of unemployment”, that is, a rate of unemployment high enough so that in the economic contest between labor and capital, capital is given the edge. Anything else would be “unnatural”.
For all that, “the Fed” does perform a core job for the economy that someone has to perform. Unfortunately, our “someone” is a self-interested someone of wealth and power. It needn’t be so, but it is so.
When all is said and done, the job of the Federal Reserve is to make sure that bankers and businesses, respectively, can lend and borrow enough money to keep the economy afloat. The variety of ways this is normally done, and when, and how, and so on, is the stuff of specialists.16 But not entirely. In one major program, called the Discount Window, the Federal Reserve loans money to bankers at lower rates so that they can loan it out to their customers at higher ones, a kind of money machine for those fortunate banks.
There are good—not the best, but good—reasons for this gifting. As we know, from their very origins capitalist economies have had a history of
16 Again I recommend Greider (1987).
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alternating bust and boom. The “busts” used to be called “Panics” because in bad times, commercial banks were panicked into not loaning even though these are the times when loan money is most needed. And in good times, the commercial banks wanted to loan more money than could be absorbed into productive activities which, of course, encouraged boomish speculation.
Jumping ahead, when purely private loan money is in short supply, the Fed should loan more; when there is too much, loan less. Government could do this stabilizing itself, but the bankers insist on doing it through one of their own, that is, with that free gift of government.
This sort of gifting has been quickening since the mortgage crisis of 2008. Beyond the Discount Window, there have been three main programs that try (1) to guarantee the stability of private property values (anti-inflation) and (2) to guarantee as well as it can be guaranteed that all but the most poorly run private firms will be able to make a profit. These are Open Market buying and selling of government bonds, the Troubled Asset Relief Program (TARP) in which government bought up bad mortgage, debts, and a new program called Quantitative Easing (QE).
The public is reasonably familiar with the Fed’s Open Market buying and selling of government bonds—usually under the rubrics “stimulus” and, earlier, “Keynesianism”. Private investors normally hold these government bonds—for steady incomes, as hedges against inflation and for other private reasons. When government sells the bonds, that removes liquidity—money—from the economy and in theory “cools” it down. Or, alternately when it buys them, it acts as “stimulus” by pumping money in. Familiar stuff, it is also a very lucrative business for the bigger banks and securities industry middlemen.
In TARP, government loaned $426.35 billion to the, mainly, big banks and was paid back $441.7 billion—a clear profit of $15.35 billion over which some government officials and some financial writers have enthused.17 That comes to a modest interest rate of 3.6%—but it was for five to six years, not one! On a five-year calculation, that comes to 0.72% per annum—an evidently modest return.
In the QE program, the Fed bought up not Treasury bonds but private corporate bonds in a kind of much, much bigger brother to its Open Market operations.
17 See Weisman (2014) from which I took the cited figures.
Altogether these programs pumped about $4.5 trillion into the private sector between 2008 and 2014.18 To give one a sense of the scale of this assistance, the annual value of all US domestic economic activity in that period—the Gross Domestic Product—was on the order of $12–13 trillion (SA 2014/698).
The point of this generosity was to encourage the private sector to invest in what was then and still is a too sluggish economy. That total sum of $4.5 trillion mentioned just above represents a huge sum—but it doesn’t seem to have been invested. As we’ve already seen, private US capital investment fell from its pre-TARP, pre-QE figure of $1161 billion in 2005 to only $1145 in 2010.
Much—possibly even most—of this largesse wasn’t invested and just found its way into private pockets. For example, when under QE, the Fed began buying up corporate bonds, that drove up their prices. Because corporate bonds are mostly held by the wealthiest individuals and institutions, it was these that got most of the benefit of the easing. When one reads now of more and more income going to the wealthiest, less and less to the rest of the country, think QE. The program, intended to irrigate the whole economy to everyone’s advantage, seems mainly to have pumped immense additional public wealth into private swimming pools and exclusive spas.
In the same period, Open Market purchases by the Fed of governmentissued bonds appear to have had much the same effect. Why? Why, contrary to orthodox opinion, did it not help to pump so much loan-able money into the economy?
One has to understand the contradiction built into the Open Market, TARP, and QE programs. The basic problem calls to mind the old adage about leading horses to water. The going theory about these programs is that if you provide a great deal of money to the private sector, and make sure that interest rates are low enough,19 then this “stimulus” will encourage private investors to invest more than they would otherwise—and the economy will grow and prosper. But as things are now, you—government—can’t force investors and firms to invest. All it can do is—frankly— bribe them to invest and hope they’ll take the bribe.
Working against this bribe theory is the view, dominant since the late 1970s among orthodox economists and, more important, the biggest
18 See the very brief but comprehensive Rogoff (2015).
19 As the Fed was simultaneously doing at the Discount Window.
J.F.M. MCDERMOTT
investors and the biggest businesses, that private-sector investors will do better with a slower growth, higher unemployment economy than with a higher growth, lower unemployment economy. That Phillips Curve again! Thus, wages and salaries offer an irresistible target for business leaders seeking to cut costs.
In general, a poorly performing economy favors property income over wage and salary income. If the economy is really bad, as in the recent era, employees have to accept cuts in their pay. Or bow to a change in their status from employers to “sub-contractors” (= no benefits). Or go on temporary employment or part-time. Or, accept “on call employment”, that is, where the worker has no regular schedule of work but is to come in only when called—often at short notice—for a few days or a weekend or, often now, just a few hours. Young job-seekers have to accept nonpaying internships for a summer (or a year) which may (or may not) turn into paying jobs. Or, things being bad enough, employers can even hold back some of the workers’ pay—this is called “wage theft” and is fairly common now.20
Meanwhile, there are other outlets for all that low-cost money being offered by the Fed and the Treasury Department. It can be invested in low-wage industries overseas. Or it can be squirreled away for some future rainy day.
One scheme currently in favor is for companies to use un-invested profits to buy back their own stock. High-level executive pay is closely tied to the rise in their firm’s stock prices. When un-invested profits are used to buy up company stock, that raises its price with the result that executive salaries jump and “performance” bonuses positively take off. In 2015, the Fortune 500 firms used 98% of their re-invest-able profits in this way (Kranish 2015).
Meanwhile, monies received from government through QE or the Discount Window can be loaned back to the government at a higher interest rate than the government is charging! Or one can speculate in the stock market, the money market, or in high-end real estate. Coming right to the point, when the government and/or the Fed pump money into the economy with no quid pro quo, there is no quid pro quo. Since 2008, the Open Market, TARP, and QE programs have added up to perhaps the biggest gift to private investors since what was called “The
20 See Senator Elizabeth Warren’ s op-ed in the February, 2016 Boston Globe (Warren 2016).
Big Barbecue” of the post-Civil War era. Then government gave—simply gave—the railroads virtually all of the best lands from the Mississippi to the Pacific and then paid them—often twice or three times—to actually build the roads.21 But at least those old railroad barons did build railroads. Open Market, TARP, and QE seem to have built nothing comparable.
But again, the essence of this whole discussion: we through government invest more in the economy than does the private sector in itself. And then we additionally underwrite private investment to make sure it will yield its owners a decent profit. We wrongly think of government as only the auxiliary power in our economy, the private sector as the principal one, but the reverse is true. The simple truth is that government is and has long been the principal and indispensable engine and underwriter of our modern economy.
Or, to put it technically, there is no integral domain of institutions, data, and economic experience whose study will give economic legitimacy to the concept of a stand-alone, purely “private sector”. The latter turns out upon analysis to be ideology, pure and simple.
TaxeS: Who PayS?
One could of course counter that business pays so much in taxes that it deserves—and largely pays for—public-sector investment in the economy. Could! But the argument doesn’t hold water. The evident truth is that “we” invest in the economy way more than the private sector and at the same time “we” pay way more than it does in taxes.
Even the briefest analysis of the tax history of the period we have been examining, 1970–2010, evidences three distinct trends.22
First, the share of federal tax receipts provided by the Corporate Income Tax has been declining, from 18.9% in 1970 to 8.8% in 2010, more than half. The figures show an uptilt for 2000 and 2005, but then the decline, which actually dates back earlier, appears to resume.23
The share of receipts borne by the Individual Income Tax has also declined, although more slightly. It was 43.9% in 1970, down to 41.5% in 2010. These figures, however, don’t tell the whole story. As we know from the current public discussion of economic inequality, the progressivity of the
21 See the very interesting analysis of this in White (2011).
22 See the data tables at the end of the chapter.
23 Earlier, in 1950, the Corporate Income Tax provided 25.4% of federal receipts.
J.F.M. MCDERMOTT
federal tax code has declined over time. In 1970, there were higher rates on the wealthier; they’re now lower. Accordingly, those at the top of the income pyramid paid a larger share of that 43.9% in 1970 than they paid in 2010 on that 41.5%. The best current estimate is that all taxpayers pay more or less the same rate so that the trend has been to lighten the income tax burden away on the better-off, that is, the leaders and owners of that “private sector”.
This trend is even plainer when we look at Social Insurance (payroll) taxes. Thus, while the share of federal receipts from the Corporate Income Tax was roughly halved from 1970 to 2010, the share of payroll taxes doubled, from 18.6% to 37.7%, in the same period. These of course are the most regressive of all; low-wage workers and millionaires each pay the same rate on the first segment of their income, nothing thereafter.24
That’s all Federal taxes. The pattern of state and local taxes is that the less well-off pay at higher rates than the better-off.25
Given these figures, what are we to make of those frequent laments from business spokespeople about the ruinous burden of taxes that business and the wealthy have to pay? Such tear-shedding is a disguised plea to continue the historic trend toward lower taxes on business and, by extension, on the incomes of those who most profit from business. The deeper truth is that these laments are grossly deceitful and profoundly anti-civic.
And an even deeper truth about public investment generosity and private tax avoidance is that the fiction of a self-sufficient free-enterprise blinds business leaders and economists to the real source of a healthy, growing—forget fair—modern economy, including, ironically enough, its private sector. We, the public, are by far the chief investor in the US economy and have been so for many years. A business leader or an economist with any common sense should be urging government to tax and invest more and not, as now, less. “You can lead a horse to water….”
PIPerS and TuneS
In spite of this very considerable public/governmental investment in aid of the private economy, the latter has performed poorly for both the country and the society. We should qualify that statement. From the war years, 1940–1945, and then continuing for perhaps another quarter of a century, the private US economy performed reasonably well both for itself
24 In 1950, payroll taxes bore only 4.3% of the burden.
25 Cohen (2015b).
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arrested him for car-stealing, but he hadn’t. Why, he even paid Mrs. Davis’s bill!”
“Do you mean to say he asked for his bill yesterday afternoon, and we never heard of it?”
“No, he calculated it out exactly, left a tip of two shillings for the barmaid, and went off leaving the money on his chest of drawers.”
“What about his suitcase?”
“It wasn’t his, it was Mottram’s. He carried off all his own things in the despatch-box. Apart from the fact that he gave a false name to the garage people, his exit was quite en règle And it’s dangerous to stop a train and arrest a man like that. Added to which, it was perfectly possible that he was lying doggo at Lowgill.”
It was at this point that Mr. Pulteney sailed into the room. The old gentleman was rubbing his hands briskly in the enjoyment of retrospect; he had scarce any need of breakfast, you would have said, so richly was he chewing the cud of his experiences overnight. “What a day I have spent!” he exclaimed. “I have examined a motorcar, and even opened part of its mechanism, without asking the owner’s leave. I have been suspected of murder. I have set up in an extremely draughty garage, waiting to pounce upon a criminal. And, to crown it all, I have approached a total stranger with the words ‘Here we are again.’ Really life has nothing more to offer me. But where is Mr. Eames?”
“We took him to Lowgill with us,” explained Angela, “and when he got there he insisted on taking the late train back to Pullford. He said he had something to talk over with the Bishop. He has left some pyjamas and a toothbrush here as hostages, and says he will look in on us in the course of the day to reclaim them. So you’ll see him again.”
“A remarkable man. A shrewd judge of character. He recognized me at once as a man of reflection. God bless my soul! Do I understand that Mrs. Davis has provided us with sausages?”
“It’s wonderful, isn’t it?” said Angela. “She must have felt that the occasion had to be marked out somehow. And she was so pleased at having her bill paid. I don’t think Brinky can have been such an unpleasant man, after all.”
“Believe me,” said Leyland earnestly, “there is no greater mistake than to suppose your criminal is a man lost to all human feelings. It is perfectly possible for Brinkman to have murdered his master, and have been prepared to run off with a car and a thousand pounds which didn’t belong to him, and yet to have shrunk from the prospect of leaving an honest woman like Mrs. Davis the poorer for his visit. We are men, you see, and we are not made all in one piece.”
“But how odd of him to pop off into the gorge like that! I mean, it’s a very jolly place, they tell me; and we know Brinky admired the scenery of it, because he told my husband so. But isn’t it rather odd of him to have wanted to take a long, last lingering look at it before he bolted for South America?”
“It is perfectly possible that it may have had a fascination for him,” assented Leyland. “But I think his conduct was more reasonable than you suppose. After all, by coming up at the farther end of the gorge he managed to make it look quite natural when the motor found him walking in the direction of Chilthorpe. And, more than that, I have little doubt that he knew he was followed. Eames is a most capable fellow, but he must, I think, have followed his man a little carelessly, and so given himself away. Brinkman probably thought that it was Bredon who was following him.”
“Because he did it so badly, you mean?” suggested Angela. “Miles, you shouldn’t throw bread at breakfast, it’s rude.”
“I didn’t mean that. I meant that he had reason to believe Mr. Eames was at the cinema, whereas he knew Bredon was in the house, and saw him sitting in a window that looks down over the street. Almost inevitably he must have supposed that it was the watcher in the front of the house who had followed in his tracks.”
“It’s worse than that,” said Bredon. “I’m afraid, you see, when my wife went out of the room, she opened the door in that careless way she has, and three of my cards fell into the street below. Well, I thought Brinkman had disappeared; there was no sign of him. So I went downstairs and retrieved the cards, thinking it couldn’t do any harm. But I’ve been wondering since whether Brinkman wasn’t still watching, and whether my disappearance from the window didn’t give him the first hint that he was being followed. I’m awfully sorry.”
“Well, I don’t expect it made any difference. He was a cool hand, you see. I suppose he thought your sitting in the window must be a trap, and that the house was really watched at the back. He wasn’t far wrong there, of course.”
“Indeed he was not,” assented Mr. Pulteney. “You seem to me to have posted a singularly lynx-eyed gentleman in the stables.”
“And so, you see, he thought he’d brazen it out. He reckoned on being followed, but that didn’t matter to him as long as the man behind was a good distance off, and as long as he himself made sure of picking up his car at the right moment. The whole thing was monstrously mismanaged on my part. But, you see, I made absolutely certain that he was going for Mottram’s car, in which he’d obviously made all the necessary preparations. Even now I can’t understand how he consented so calmly to leave the car behind him. Unless, of course, he spotted that we were watching the garage, and knew that it would be unsafe. But he must be crippled for money without his thousand.”
“My husband,” said Angela mischievously, “seemed to know beforehand that he wouldn’t go off in Mottram’s car.”
“Yes, by the way,” asked Leyland, “how was that?”
“I’m sorry, it ought to have occurred to me earlier. It never dawned on me till the moment when I mentioned it, and of course then it was too late. But it was merely the result of a reasoning process which had been going on in my own mind. I had been trying to work things out, and it seemed to me that I had arrived at an explanation which would cover all the facts. And that explanation, though it didn’t exclude the possibility that Brinkman intended to skip with the thousand and the car, didn’t make it absolutely necessary that he should mean to.”
“I suppose you’re still hankering after suicide?”
“I didn’t say so.”
“But, hang it all, though there’s little enough that’s clear, it’s surely clear by now that Brinkman was a wrong ’un. And if he was a wrong ’un, what can his motive have been throughout unless he was Mottram’s murderer? I don’t associate innocence with a sudden flitting at nightfall, and a bogus name given in when you order the car to take you to the station.”
“Still, it’s not enough to have a general impression that a man is a wrong ’un, and hang him on the strength of it. You must discover a motive for which he would have done the murder, and a method by which he could have done it. Are you prepared to produce those?”
“Why, yes,” said Leyland. “I don’t profess to have all the details of the case at my fingers’ ends; but I’m prepared to give what seems to me a rational explanation of all the circumstances. And it’s an explanation which contends that Mottram met his death by murder.”
Chapter XXIII. Leyland’s Account of It All
“Of course, as to the motive,” went on Leyland, “I am not absolutely sure that I can point to a single one. But a combination of motives is sufficient, if the motives are comparatively strong ones. On the whole, I am inclined to put the thousand pounds first. For a rich man, Mottram did not pay his secretary very well; and at times, I understand, he talked of parting with him. Brinkman knew that the sum was in Mottram’s possession, for it was he himself who cashed the cheque at the bank. It was only a day or two before they came down here. On the other hand, I doubt if Brinkman knew where the money was; plainly Mottram didn’t trust him very much, or he wouldn’t have taken the trouble to sew the money in the cushions of the car. When I first found the cache, I assumed that Brinkman knew of its existence, and that was one of the reasons why I felt so certain that he would make straight for the garage. Now, I’m more inclined to think he fancied he would find the money among Mottram’s effects, which he must have hoped to examine in the interval before the arrival of the police.”
“Then you don’t think the Euthanasia had anything to do with it after all?” asked Bredon.
“I wouldn’t say that. There’s no doubt that Brinkman was a rabid anti-clerical—Eames was talking to me about that—and I think it’s quite likely he would have welcomed, in any case, an opportunity of getting Mottram out of the way provided that the death looked like suicide. The appearance of suicide would have the advantage, as we have all seen, that the Indescribable wouldn’t pay up. But he wanted, in any case, to give the murder the appearance of suicide, in order to save his own skin.”
“Then you think both motives were present to his mind?”
“Probably I suppose there is little doubt that he knew of the danger to Mottram’s health, and the consequent danger, from his point of view, that the money would go to the Pullford Diocese. But I don’t think that motive would have been sufficient, if he hadn’t reckoned on getting away with a thousand pounds which didn’t belong to him.”
“Well, let’s pass the motive,” said Bredon. “I’m interested to hear your account of the method.”
“Our mistake from the first has been that of not accepting the facts. We have tried to fit the facts into our scheme, instead of letting the facts themselves guide us. From the first we were faced with what seemed to be a hopeless contradiction. The locked door seemed to make it certain that Mottram was alone when he died. The fact that the gas was turned off seemed to make it clear that Mottram was not alone when he died. There was ground for suspecting either suicide or murder; the difficulty was to make the whole complex of facts fit into either view. We had made a mistake, I repeat, in not taking the facts for our guide. The door was locked; that is a fact. Therefore Mottram was alone from the time he went to bed until the time when the door was broken in. And at the time when the door was broken in the gas was found turned off. Somebody must have turned it off, and in order to do so he must have been in the room. There was only one person in the room— Mottram. Therefore it was Mottram who turned the gas off.”
“You mean in his last dying moments?”
“No, such a theory would be fantastic. Mottram clearly turned the gas off in the ordinary way. Therefore, now, mark this, it was not the gas in Mottram’s room which poisoned Mottram.”
“But hang it all, if it wasn’t in his room”——
“When I say that, I mean it was not the gas which turned on and off in Mottram’s room. For that gas was turned off. Therefore it must have been some independent supply of gas which poisoned him.”
“Such as?”
“Doesn’t the solution occur to you yet? The room, remember, is very low, and the window rather high up in the wall. What is to prevent a supply of gas being introduced from outside and from above?”
“Good Lord! You don’t mean you think that Brinkman”——
“Brinkman had the room immediately above. Since his hurried departure, I have had opportunities of taking a better look round it. I was making some experiments there early this morning. In the first place, I find that it is possible for a man leaning out of the window in Brinkman’s room to control with a stick the position of the window in Mottram’s room—provided always that the window is swinging loose. He can ensure at will that Mottram’s window stands almost shut, or almost fully open.”
“Yes, I think that’s true.”
“I find, further, that Brinkman’s room, like Mottram’s, was supplied with a double apparatus, with a bracket on the wall and with a movable standard lamp. But whereas the main tap in Mottram’s room was near the door, and the tube which connected the gas with the standard lamp was meant to allow the lamp to be put on the writing-table, in Brinkman’s room it was the other way. The main tap was near the window, and the tube which connected it with the standard lamp was meant to allow the lamp to be placed at the bedside. The main tap in Brinkman’s room is barely a yard from the window. And the tube of the standard lamp is some four yards long.
“When Mottram went to bed, Brinkman went up to his room. He knew that Mottram had taken a sleeping draught; that in half an hour or so he would be asleep, and unconscious of all that went on. So, leaving a prudent interval of time, Brinkman proceeded as follows. He took the tube off from the foot of the standard lamp; that is quite an easy matter. Then he took the tube to the window. With a walkingstick he slightly opened Mottram’s window down below—it had been left ajar. And through the opening thus made he let down the tube till the end of it was in Mottram’s room. Then, with the walking-stick, he shut the window again, except for a mere crack which was needed to let the tube through. Then he turned on the guide-tap which fed his standard lamp, and the gas began to flow through into Mottram’s room. That coil of tube was a venomous serpent, which could poison Mottram in his sleep, behind locked doors, and be removed again without leaving any trace when its deadly work was done.
“Whether it was through carelessness on Brinkman’s part, or whether it was owing to the wind, that the window swung right open
and became fixed there, I don’t know In any case, it did not make much difference to his plans. He had now succeeded in bringing off the murder, and in a way which it would have been hard for anybody to suspect. But there was one more difficulty to be got over: In order to remove the suspicion of murder, and to make the suspicion of suicide inevitable, it was necessary to turn on the gas in Mottram’s room. Now, there was no implement Brinkman could employ which would enable him to reach Mottram’s gas-tap. He depended, therefore, on bluff. He made sure that he would be summoned by the Boots when the locked door forbade entrance. He would force his way in with the Boots; he would make straight for the tap, and pretend to turn it off. Would anybody doubt that it was he who had turned it off? The room was full of gas fumes, and even a man of more intelligence than the Boots would naturally leap to the conclusion that the gas must have been on, in order to account for the fumes.
“His plan, you see, was perfect in its preparations. It was an unexpected interference that prevented its coming off. When Brinkman was telling you the story, he pretended that it was he who saw Dr. Ferrers outside, and suggested calling him in. Actually it was the Boots, according to the story he himself tells, who drew attention to the presence of Dr. Ferrers and suggested his being called in. This point, which was of capital importance, was slurred over at the inquest because nobody saw the bearing of it. Brinkman did not want Dr. Ferrers to be there; yet the suggestion was too reasonable to be turned down. Brinkman stationed himself with his shoulder close to the lock, while Ferrers leant his weight against the door at the other end, nearest the hinges. Assuming that the lock would give, Brinkman could rush into the room first and go through the motions of turning off the gas without attracting suspicion.
“Actually, it was the hinges which gave. Dr. Ferrers, realizing that the gas must be turned off in order to clear the air, ran straight to the tap over the débris of the broken door before Brinkman could get at it. And Ferrers naturally exclaimed in surprise when he found the tap already turned off. The Boots heard his exclamation; Brinkman’s plan had fallen through. There was nothing for it but to pretend that the tap was a loose one, and that Dr. Ferrers had himself turned it off
without noticing it. That was the story, Bredon, which he put up to you. We know that it was a lie.”
“I don’t quite see,” said Bredon, “how all this works in with the sandwiches and whisky. In the motor, I mean. What was the idea of them?”
“Well, Brinkman’s original idea must clearly have been flight. That was, I take it, when he realized the difficulty which had been created for him by his failure to reach the gas first. It must have been before I arrived that he made these preparations—stored the motor with food and painted out the number-plate at the back. I’ve had him under pretty careful observation ever since I came here. But that was Tuesday afternoon, and I have no doubt that his preparations had been made by then.”
“And why didn’t he skip?”
“I think he was worried by my arrival. You see, he tried to palm off the suicide story on me, and I didn’t fall to it. If he skipped, he would confirm me in my conviction that there had been a murder, and, although he himself might get off scotfree, it would mean that your Indescribable people would have to pay up to the Bishop of Pullford. He couldn’t stand the idea of that. He preferred to hang about here, trying to convince you, because you were already half-convinced, that the case was one of suicide and that the company was not liable.”
“In fact, he just waited for the funeral, and then made off?”
“No, he waited until he thought he wasn’t watched. It’s a rum business, shadowing a man; you don’t want him to see exactly who is shadowing him, or where the man is who is shadowing him; but you do, very often, want him to know that he is shadowed, because that makes him lose his head and give himself away. Now, Brinkman didn’t know what I suspected and didn’t, I think, know about my two men at the Swan. But I contrived to let him see that he was under observation, and that it wasn’t safe for him to go far out of my sight. It’s an old game: you give a man that impression, and then you suddenly let on that he is free—for the moment at any rate. He seizes his chance, and, with luck, you catch him. He really thought yesterday evening that you were the only person watching the front of the house. But he was clever enough, confound him, to see that
there might be danger for him in the garage. So he rang up, ordering a car to meet the 8.40 at Chilthorpe Station, and then made his arrangements—uncommonly good ones—for boarding the car en route. And nobody’s to blame, exactly, but I gravely fear that the murderer has got off scotfree.”
As if in confirmation of his words, the maid came in with a telegram. He opened it and crushed it in his hand. “As I thought,” he said; “they searched the train at the terminus and didn’t find their man. They may watch the ports, but I doubt if they’ll get him now. It’s a rotten business.”
“I don’t think you’ve explained everything,” said Bredon, “I mean, about Brinkman’s movements after the murder. Indeed, I know for a fact that you haven’t explained everything; partly because you don’t know everything. But I think your account of Brinkman’s movements that night is extraordinarily ingenious, and I only wish it were true. I wish it were true, I mean, because it would have brought us up, for once in our lives, against a really clever criminal. But, you see, there’s one thing which is fatal to all your theory. You haven’t explained why the gas-tap showed the mark where Mottram turned it on and didn’t show the mark where Mottram turned it off.”
“Oh, yes, I admit that’s puzzling. Still, one can imagine circumstances”——
“One can imagine circumstances, but one can’t fit them onto the facts. If the gas had been quite close to Mottram’s bed, and he had had a stick by his side, he might have turned off the tap with the stick; I’ve known slack men do that. But the gas wasn’t near enough for that. Or, again, if Mottram had gone to bed in gloves, he might have turned off the tap with gloves on; but he didn’t. The tap was stiff; it was stiff both when you turned it on and when you turned it off; and there must, in reason, have been some slight trace left if that gas was turned off by a man’s naked fingers. Therefore it wasn’t turned off by a man’s naked fingers. Therefore it wasn’t turned off by Mottram, or by anybody who had any business to turn it off. It was turned off by somebody who had a secret end to serve in doing so.”
“You mean a criminal end?”
“I didn’t say that. I said a secret end. Your view doesn’t explain that; and because it doesn’t explain that, although I think you’ve told
us an extraordinarily ingenious story, I don’t think it’s worth forty pounds. . . . Hullo! What’s this arriving?”
The taxi from the garage had drawn up outside the inn’s door, and was depositing some passengers who had obviously come by the early morning train from Pullford. They were not left in doubt for long; the coffee-room door was opened, and, with “Don’t get up, please” written all over his apologetic features, the Bishop of Pullford walked in. Eames followed behind him.
“Good-morning, Mr. Bredon. I’m so sorry to disturb you and your friends at breakfast like this. But Mr Eames here has been telling me about your alarums and excursions last night, and I thought probably there would be some tired brains this morning. Also, I felt it was important to tell you all I know, because of Mr. Brinkman’s hurried departure.”
Bredon hastily effected the necessary introductions. “You know something, then, after all?”
“Oh, you mustn’t think I’ve been playing you false, Mr. Bredon. The evidence I’m referring to only came to hand last night. But such as it is, it’s decisive; it proves that poor Mottram met his death by suicide.”
Chapter XXIV. Mottram’s
Account of It All
“Rapid adjustment of the mental perspective,” said Mr Pulteney, “is an invaluable exercise, especially at my age. But I confess there is a point at which the process becomes confusing. Are we now to understand that Mr. Brinkman, so far from being a murderer, is simply an innocent man with a taste for motoring late at night? I have no doubt there is a satisfactory explanation of it all, but it looks to me as if there had been an absence of straightforwardness on somebody’s part.”
“Possibly on that of Mr. Eames,” said the Bishop. “I have to confess, on his behalf, that he has been concealing something, and to take the blame for his conduct—if blame attaches to it— unreservedly upon myself. However, I do not think that any earlier disclosure could have helped forward the cause of justice; and I have lost no time in putting it all before you.”
“You mean that letter which was left about in the gorge,” suggested Bredon, “addressed to the Bishop of Pullford? With a confession of suicide in it?”
“Goodness, Mr. Bredon, you seem to know as much about it as I do myself! Well, that is the long and short of it. When Mr Eames was with you last night, Mr. Leyland, he told you that he had followed Brinkman along the gorge, and that Brinkman had disappeared in a motor. He did not tell you that, half way through the gorge, he saw Brinkman leaping up under a ledge in the rock, as if to put something on it or take something down from it. The something which he was putting up or taking down was, I make no doubt, the document which I now hold in my hand. Mr. Eames found it after Brinkman had left, and, seeing that it was addressed to me with an intimation that it was private and confidential, thought it best to carry it straight to me
without informing you of its existence. I understood him to say that he did not mention its existence to you, Mr. Bredon, either.”
“Nor did I,” put in Eames.
“How jolly of you, Mr. Eames,” said Angela. “You can’t think what a lot of trouble we’ve been having with my husband; he thinks he knows all about the mystery, and he won’t tell us; isn’t it odious of him? And I’m so glad to think that you managed to keep him in the dark about something.”
“Not entirely,” protested Bredon. “Cast your eye over that, Mr. Eames.” And a document was handed, first to Eames, then to the rest of the company, which certainly seemed to make Eames’s caution unnecessary. It was a plain scrap of paper, scrawled over in pencil with the handwriting of a man who is travelling at thirty-five miles an hour over bumpy roads in a badly sprung car. All it said was, “Make Eames shew you what he found in the gorge. I thought it was you. F. Brinkman.”
“Ah!” said the Bishop. “Brinkman, it seemed, had some doubt as to the fate of a document which got into the hands of the Catholic authorities. Poor fellow, he was always rather bitter about it. However, here we are, Mr. Bredon, owning up like good boys. It was to put that very document into your hands that I came down this morning. But I think Mr. Eames was quite right in holding that the document, with such a superscription, ought to be handed over to me direct, without any mention even of its existence to a third party.”
“I for one,” put in Leyland, “applaud his action. I do not believe in all these posthumous revelations; I prefer to respect the confidence of the dead. But I understand that Your Lordship is prepared to let us see the contents of the letter after all?”
“Certainly. I think poor Mottram’s last directions were influenced simply by consideration for my own feelings in the matter. I have no hesitation myself in making it public. Shall I read it here and now?”
In deference to a chorus of assent, the Bishop took out the enclosure of the envelope and prepared to read. “I ought to say by way of preface,” he explained, “that I knew poor Mottram’s handwriting well enough, and I feel fully convinced that this is a genuine autograph of his, not a forgery. You will see why I mention that later on. This is how the letter runs:
“ ‘M L B :
“ ‘Pursuant to our conversation of Thursday evening last, it will be within your Lordship’s memory that upon that occasion I asserted the right of a man, in given circumstances, to take his own life, particularly when same was threatened by an incurable and painful disease. This I only mentioned casually, when illustrating the argument I was then trying to put forward, namely that the end justifies the means, even in a case where said means are bad, provided said ends are good. I note that your Lordship is of the contrary opinion, namely that said end does not justify said means. I am, however, confident that in a concrete case like the present your Lordship will be more open to conviction re this matter, as it is a case where I am acting to the best of my lights, which, your Lordship has often told me, is all that a man can do when in doubtful circumstances.
“ ‘I regret to have to inform your Lordship that, interviewing recently a specialist in London re my health, said specialist informed me that I was suffering from an incurable disease. I have not the skill to write the name of it; and as it is of an unusual nature, maybe it would not interest your Lordship to know it. The specialist was, however, of the decided opinion that I could not survive more than two years or thereabouts; and that in the interim the disease would give rise to considerable pain. It is therefore my intention, in pursuance of the line of argument which I have already done my best to explain to your Lordship, to take my own life, in circumstances which will be sufficiently public by the time this reaches you.
“ ‘I have not, as your Lordship knows, any firm religious convictions. I believe that there is a future life of some kind, and that we shall all be judged according to our opportunities and the use we made of same. I believe that God is merciful, and will make allowances for the difficulties we had in knowing what was the right thing to do and in doing it. But I have been through some hard times, and maybe not always acted for the best. Being desirous, therefore, of making my peace with God, I have taken the liberty of devising some of the property of which I die possessed to your Lordship personally, to be used for the
benefit of the diocese of Pullford. Said property consisting of the benefits accruing from the Euthanasia policy taken out by me with the Indescribable Insurance Company. And so have directed my lawyers in a will made by me recently.
“ ‘I believe that your Lordship is a man of God, and anxious to do his best for his fellow-citizens in the town of Pullford. I believe that the money will serve a good end, although I do not agree with what your Lordship teaches. I feel sure that your Lordship will realize the desirability of keeping this letter private, and not letting it be known that I took my own life. The insurance company would probably refuse to pay the claim if I was supposed to have died by my own hand, that being their rule in such cases, except where the deceased was of unsound mind, which is not the case, me being in full possession of all my faculties. If, however, the preparations which I have made should eventuate successfully, it will not be supposed by the coroner’s jury that I took my own life, and the claim will be paid accordingly. Your Lordship will realize that this is only fair, since (1) in taking my own life I am only anticipating the decree of nature by a few months, and (2) the object to which I have devised the money is not the selfish enjoyment of a few persons, but the spiritual benefit of a large number, mostly poor. I am writing this, therefore, for your Lordship’s own eyes, and it has no need to be made public. I am quite sure that God will forgive me what I am doing if it is at all wrong, for I am afraid to suffer pain and am doing my best to bequeath my money in such a way that same will be used for good purposes. With every gratitude for the kindness I have always received at the Cathedral House, though not of the same religion, I remain, “ ‘Your Lordship’s obedient servant, “ ‘J. M .’ ”
The Bishop’s voice quavered a little at certain points in this recital; it was difficult not to be affected by the laborious efforts of a pen untrained in language to do justice to the writer’s friendly intentions. “I’m very sorry indeed for the poor fellow,” the Bishop said. “The older we grow, the more tender we must become toward
the strange vagaries of the human conscience. That’s not the letter of a man, whose mind is unhinged. And yet, what is one to make of a conscience so strangely misformed? However, I didn’t come here to talk about all that. You’ll see for yourselves that, although the writer recommends my keeping it dark, he places me under no obligation to do so—he would have put me in an uncommonly awkward position if he had. As it is, I’ve had no hesitation in reading it to you, and shall have no hesitation in producing it, if necessary, before a court of law. It seems that our legacy, after all, was only a castle in Spain.”
“The poor dear!” said Angela. “And it’s bad luck on you, Mr. Leyland. Did you realize, My Lord, that Mr. Leyland had just succeeded in persuading us all that Mr. Brinkman had murdered Mr. Mottram by letting in gas from the room above?”
“Well, thank God it was nothing as bad as that!” said the Bishop. “At least this letter will help us to take a kindlier view of him.”
“It would be a very singular and, I had almost said, a diverting circumstance, if both things could have happened at once,” said Mr. Pulteney, “if, while Mottram was busy poisoning himself with his own gas down below, Brinkman was at the same moment, in complete ignorance, feeding him with an extra supply of gas from above. It would be a somewhat knotty problem, in that case, to decide whether we were to call it suicide or murder. However,” he added with a little bow to the Bishop, “we have a competent authority with us.”
“Oh, don’t ask me, sir,” protested the Bishop, “I should have to consult my Canon Penitentiary. He would tell me, I fancy, that the act of murder in this case inflowed into the act of suicide, but I am not sure that would help us much.”
“Perhaps,” suggested Eames, “Mr. Bredon could tell us what view the Indescribable would take of such a case.”
“They would be hard put to it,” said Bredon. “Fortunately, there is no question of any such doubt here. For Leyland’s suggestion of murder was only based on the impossibility of suicide, in view of the gas being turned off. Whereas Mr. Pulteney’s ingenious suggestion has all the difficulties in it which Leyland was trying to avoid.”
“I’m hanged if I can make head or tail of it,” said Leyland. “It’s like a nightmare, this case; every time you think you’ve found some solid ground to rest on, it sinks under your feet. I shall begin to believe in ghosts soon. And what are we to make of the message itself? Might I see the envelope, My Lord? . . . Thank you. Well, it’s clear that Brinkman wasn’t putting the letter up on the ledge; he was taking it down. It’s so weather-stained that it must clearly have been there the best part of a week. Now, why on earth was Brinkman so anxious to take the letter away with him? For the letter proved it was suicide, and that’s precisely what he wanted to have proved.”
“Brinkman may not have known what was in the letter,” suggested Eames.
“He may have thought the thousand pounds were in it,” suggested Pulteney, “waiting there as a surprise present for the Bishop. I am no acrobat myself, but I believe I could jump pretty high if you gave me that sum to aspire to.”
“I wonder if Brinkman did know?” said Leyland. “Of course if he did he was an accessory before the fact to Mottram’s suicide. And that might make him anxious for his own position—but it doesn’t ring true, that idea.”
“Might I see the letter itself?” asked Bredon. “It sounds impolite, I know; but I only want to look at the way in which it’s written. . . . Thank you, My Lord. . . . It’s rather a suggestive fact, isn’t it, that this letter was copied?”
“Copied?” asked the Bishop. “How on earth can you tell that?”
“I am comparing it in my mind’s eye with the letter we found lying about in Mottram’s bedroom, half-finished. Mottram wrote with difficulty; his thoughts didn’t flow to his pen. Consequently, in that letter to the Pullford Examiner you will find that only the last sentence at the bottom of the page has been blotted when the ink was wet. The rest of the page had had time to dry naturally, while Mottram was thinking of what to say next. But this letter of yours, My Lord, has been written straight off, and the blotting process becomes more and more marked the further you get down the page. I say, therefore, that Mottram had already composed the letter in rough, and when he set down to this sheet of paper he was copying it straight down.”
“You’re not suggesting that Brinkman dictated the letter?” asked Leyland. “Of course that would open up some interesting possibilities.”
“No, I wasn’t thinking of that. I was only thinking it was rather a cold-blooded way for a suicide to write his last letter. But it’s a small point.”
“And meanwhile,” said Leyland, “I suppose you’re waiting for me to fork out those forty pounds?”
“What!” said the Bishop, “you have a personal interest in this, Mr. Bredon? Well, in any case you have saved your company a larger sum than that. I’m afraid you will have to write and tell them that it was suicide, and the claim does not urge.”
“On the contrary, My Lord,” said Bredon, knocking out his pipe thoughtfully into the fireplace, “I’m going to write to the company and tell them that the claim has got to be paid, because Mottram met his death by accident.”
