By Wayne Hage

Published by Stewards of the Range

October 1993

Formerly titled "Economics of the Anti-Livestock Movement"

It is a common axiom of history that the strength of a nation or society parallels the strength of its financial assets. Stated another way, the wealthier the nation the more it can afford a strong military, advanced educational system, technology, sophisticated health care, etc. This is the reason nations and their governments compete for wealth through trade and commerce. Some achieve it, others do not. Those who develop a strong financial asset base usually emerge as world powers. Those who do not generally decline to the status of third world nations.

 The financial structure of a nation can be measured in three broad, general categories. Liquid financial assets or in general terms, money, make up the first category. Long term financial assets such as long term loans or long term government bonds make the second category. The third category are short term financial assets. These include short term credits and government treasury bills of short maturity.

 I have addressed these categories in modern day terms, but a review of history shows that nations and societies from the beginning have measured their wealth and power by some variation of this same three-faceted standard. Man, from the outset of civilization, has depended upon some form of liquid assets, some form of long term credits or borrowing and some form of short term borrowing. This concept is so indigenous to the human experience that even primitive societies utilize some form of money, if it is nothing more than sea shells. Rules for the lending and borrowing of assets over short or long periods exist in the simplest of cultures. Severe penalties are often enforced for the violation of those rules.

 Upon what are these financial assets based? We know they are an expression of a nation’s wealth or lack of it. But what creates that wealth? Only when we understand these concepts can we take the necessary actions to insure continued prosperity and well being. By not understanding these concepts we as a society run the risk of leaving the foundations of our nation’s economy unguarded and subject to damage or destruction by those who have always envied and hated us for our prosperity.

 Money in the classic sense, must exhibit four main attributes. It must be readily acceptable by the members of society. It must have intrinsic value, must be durable and must be scarce. Gold and silver have traditionally been used as money because they fulfill these requirements. Gold and silver are readily acceptable by the members of society. They have intrinsic value, are durable and are scarce enough to make them difficult but not impossible to obtain.

 Gold and silver are considered hard money. A society which has an adequate supply of hard money in a free market usually has substantial control of its government. When the citizens of a nation control the wealth, government must depend on the same citizens for money to operate. A government which must ask its citizens for financing will be more likely to listen to its citizenry in conducting the affairs of state. A common attribute of strong free societies throughout history has been the availability of hard money to the broad majority of its citizenry.

 Another way to emphasize the importance of hard money is to view the pattern of subversion used so successfully throughout history by those who would destroy free societies. This scenario is not limited to modern times. The oft repeated subversion of governments practiced by communist movements over the past century and a half is a vivid case in point.

 The collapse of governments under socialist pressure from the period of socialist revolution in the German Palatinate through the collapse of Czarist Russia and Nationalist China, to the Sandinista revolution in Nicaragua all exhibit some variant of the attack on hard money.

 The object of these attacks is to take power from individuals and place power in the hands of centralized government. If a society can be convinced to exchange their hard money for currency which has no intrinsic value the process of control is well on its way.

 Currency which is not redeemable in gold and silver or something with intrinsic value is money only because the government says it is money. It is money because of government "fiat." Hence, the name for non redeemable paper money, "fiat money." If money has value only because the government says it has value, its purchasing power can also be reduced or eliminated by government fiat. The ability of government to completely control the money supply is an essential prelude to transfer of power from the citizens to a central authority. It is a major step toward the demise of a free people. Communist overthrow of elected governments have all utilized some variant of a fiat money standard to accomplish their objectives.

 The United States began a major departure from hard money with the gold exchange act of 1921. Some, but not all gold certificates were redeemable in gold under that act. A certain amount of fiat money had been created since there were more gold certificates than gold. In 1934 the United States totally departed from gold as hard money for the citizenry. The gold window remained open for foreigners until 1973 when it too was closed. Silver money and silver certificates were still common currency in the United States until 1965. In 1965, the federal reserve note completely replaced the last vestiges of hard money in the United States. Since then the United States has been on a "fiat" money standard. Our federal reserve notes have no intrinsic value. If the government were to declare them obsolete a one-hundred dollar federal reserve note would not purchase a scrap of bread.

 The second broad category of financial assets we referenced were long term financial assets. We cited as examples long term loans and long term treasury bonds. There are a host of other instruments that also fall in the category of long term financial assets. In this discussion we are only trying to acquaint ourselves with where these financial assets derive their value so we will risk oversimplification of the issues in an effort to achieve a broad understanding of a very vital premise. If we are going to protect our strengths we must protect our financial assets. We need to know where these financial assets derive their value.

 All short and long term financial assets derive their value from private property. Before credit can be represented in the form of a bank loan there must exist, somewhere, something of real value to collateralize that asset. From the beginning of time, if one person extended credit to another he wanted to be assured of recapturing the value loaned in case the borrower could not repay him. Collateral, or in other words, private property, is demanded to support loans as a protection to the lender. The collateral base for virtually all long term financial assets is private real property.

 People often wonder at the "German miracle." Several times in the last century and a half, Germany has been involved in debilitating, if not disastrous military ventures. Yet Germany seems to quickly recover and in a very short time emerge again as a world economic and political power. The strong position private real property plays in German society is essential to understanding the "German miracle."

 Conversely, when we analyze the subversive attempts of socialist movements against free societies, along with their attacks on hard money, we see a parallel attack on private real property. If laws protecting private property can be weakened, the value of the property declines; so too does the value of the credit or bond which is collateralized by the private real property.

 As government regulations increase, the productive capacity of private property decreases and the value of the property itself, is reduced. If the value of the property is reduced, any financial assets collateralized by that property diminishes in value accordingly.

 Karl Marx considered the elimination of private property key to the establishment of a socialist government. There was good reason behind this premise. If people had no value left in their property that value must be in the hands of government. The terms property rights and property control are synonymous. Property rights are the ability of the individual to exercise control over his property. It is only through the right to control the use of property that the individual can make the property produce value or wealth. If control over one’s property is transferred by regulation or law to the government, then the ability of the property to produce wealth is also transferred to the government. Marx was right. The elimination of private property is essential if socialism is to supplant a free society.

 While long term financial assets are collateralized largely by permanent collateral assets such as real estate, short term financial assets are largely collateralized by non permanent assets. The land itself provides the primary collateral foundation for long term credits but the products of the land provide the primary collateral foundation for short term credits.

 This takes us to another basic concept of economics. "All wealth derives from agriculture or mining." Stated another way, all wealth derives from the development of renewable or non-renewable resources. Agriculture products are renewable. They continue to grow year after year. Minerals on the other hand, are non-renewable. Once they are taken from the land there is no way to replace them.

 Agriculture products are perishable. Mineral products for the most part, are non-perishable. Agriculture production on a constantly renewable basis gives value to agricultural land. Mineral production results in assets in the way of manufactured products. This gives value to the land producing the minerals and value to the land used to manufacture the products. Even energy products gain permanency as energy expended to produce tangible assets is in fact transferred to and becomes a part of the asset. Land, or real estate, which underpins long term financial assets has value because of what the land produces in the form of perishable renewable products, or non-perishable, non-renewable products and by the ability of land to enhance the utilization of products by mankind.

 Perishable agriculture products and more permanent manufactured products provide the collateral underpinning for a huge segment of the short term financial assets the typical business man and consumer depends on.

 For example, the largest business in California measured in terms of revenues produced is agriculture. It is bigger than the aerospace industry and the high tech computer industry of Silicon Valley. It is bigger than oil and gas production. It is bigger than mineral production, in wealth produced. The same is true of the United States as a whole. Agriculture is the biggest business in the United States.

 The largest segment of California and the United States agriculture is livestock production. Livestock production produces more wealth for our nation year after year than any other economic activity.

 We should not be surprised at this. The domestic ungulate animal such as the cow or sheep plays a very unique role in the human experience. The cow or sheep eats crude cellulose material in the form of forage. This forage is also renewable. If its annual production is not consumed by animals it goes unused. When unused it can become a very dangerous fire hazard. The domestic cow or sheep perform the almost miraculous function of converting a hazardous waste product to wealth with minimal input from mankind. If there is forage to consume, man only has to allow the animal to consume it and wealth is produced.

 Domestic livestock production has been a measure of national wealth since ancient times. It was not by accident that ancient Israel - a major livestock producing nation of the ancient world - chose to worship a golden calf. Domestic livestock production and the nation’s wealth and status in the world community have always been closely entwined. Livestock as a producer of wealth is important even in primitive African tribes. It is important in the major industrialized nations of the modern world.

 Domestic livestock provide the collateral for a major portion of the short term financial assets the nation relies on for its day to day business. These mortgages on perishable agricultural commodities of which livestock are the most dominant are termed chattel mortgages. They provide a very vital underpinning of the financial stability and economic health of our nation. It should come as no surprise that the third primary target of those who would destroy free market societies is domestic livestock.

 Recently, I gave a speech to a mining association reviewing some of the precepts presented here. After the talk, a geologist related to me an observation he had made in Nicaragua immediately before the Sandinista revolution turned violent. Prior to the actual attack on the non-communist citizens the Sandinistas fanned throughout the countryside and destroyed all the domestic livestock they could find. The revolutionaries were following up their successful efforts in devaluing private real estate and debasing the money supply. A review of socialist revolutions since the time of the French Revolution shows a similar pattern. An essential element in bringing a people or a nation down is to destroy the wealth generating capability of its domestic livestock base.

 If we take the environmental community at its word, its goal is to destroy industrialized society. We can then understand their incessant demand to increase the regulatory burden on private property. We can understand their unrelenting efforts to convey private land to the central government under the guise of preservation. Current figures show the conversion of private land to government ownership is at 6,210 acres a day. Current lobbying efforts are working to add a billion dollars a year to transfer more private lands to the governments already enormous holdings. Today over one-third of the land area in the United States is in claimed government ownership. Private property owners of the other two-thirds are seeing their lands devalued at an ever increasing rate under the endless deluge of environmental regulation. Increasingly the only option available to many land owners is to sell to an environmental organization which then conveys the land to the government, or they can abandon their property for the government to acquire by default.

 Domestic livestock are under endless assault by environmentalists. "Red meat causes heart attacks." "Red meat is responsible for cholesterol problems." "Cattle are responsible for global warming." "Livestock damage wildlife and fish habitat." "Livestock destroy archaeological sites." "Livestock diseases threaten wildlife population." All of these accusations are untrue. The truth is often the exact opposite of what the environmentalist say. For example, studies have shown that heavy grazing increases the productivity and bio-diversity of rangelands.

 They have been effective though. Domestic livestock numbers in the United States have diminished drastically. The wealth of the nation measured in short term financial assets has declined as the collateral base for those assets has withered under the attack of those who despise the free market society and the free people who have enjoyed it.

This is the very reason actions such as Hage v. United States are before the courts today. Cases such as this provide the rallying point for those who want to fight these problems, but do not have the ability to file a separate action on their own. Much more is at stake than the survival of a remote Nevada ranch. At stake is whether or not the conspiracy to destroy the economic underpinning of the United States will be exposed before it is too late.

 This also explains the reason for the government attempt to stop discovery against the Forest Service and the National Wildlife Federation. Discovery in Hage has already revealed evidence of a clear co-operative effort involving members of Congress, the Forest Service, and the National Wildlife Federation to economically destroy every range operation in the eastern United States. This is an attack based on idealogy, not on science. It is an attack made not for the environment but in the name of the environment.

 The question is clear. People are rapidly being forced to decide whether to oppose the efforts of those who would destroy the last vestiges of constitutional government in the United States and the principles upon which it stands, or to submit to the totalitarian rule of those who seek to destroy our heritage. Those of you who have rallied to the cause through Stewards of the Range may well make the difference.

 Wayne Hage is author of Storm Over Rangelands and the plaintiff in the landmark takings case, Hage v. United States. He can be reached at Stewards of the Range, 208-336-5922.