From the August AD 2009
Our Lady of the Rosary
ON THIS PAGE:
Polygamy in the Old Testament
The Great Depression
[ Q&A ARCHIVES ]
Polygamy in the Old Testament
Question: Abraham fathered children by two women; first Ismael by his wife’s
maidservant, Agar; and then Isaac by his wife Sara (Genesis 16 & 21).
Wasn’t that adultery? Does the Bible condone adultery? (A.H. Atlanta)
Answer: Let us start by saying that not everything mentioned in the Bible is
intended to be emulated. Rape, war, murder, adultery, lying, and theft are
all to be found in its pages—but certainly not because the biblical writer
proposes them for approval.
Since the time of Christ we have an authoritative
pronouncement that from the very beginning, marriage was intended to be an
indissoluble union of just one man and one woman (Matthew 19:3-9). But in
the same passage we note that in the Law of Moses God tolerated the possibility
of divorce: “Moses, by reason of the hardness of your hearts, permitted
you to put away your wives, but it was not so from the beginning.”
In the Old Testament Law, adultery is the relationship of a
married woman with someone other than her husband. If the adultery is
voluntary, both are to be punished with death, but if the woman is not married
the act is not adultery (Leviticus 18:20, 29; 20:10).
In the Mosaic Law there are a few references to permissible
polygamy: Exodus 21:10 legislates for the man who has taken a slave as a
wife, and then wishes to marry another; Deuteronomy 21:15-17 speaks to how
a man with two wives is to divide his property among his heirs. In
practice we read that King David had six wives and a number of concubines (wives
of lesser rank), and his son King Solomon had hundreds of each. Again,
this mention does not mean that such behavior is encouraged—yet, it is not
disparaged except in the case of Solomon, whose many wives included foreign
women who led him to their false “gods.”
In the ancient world polygamy was often viewed as a
necessary expedient. It made provision for woman who lost her husband in
battle, enabling her to bear children throughout her fertile years, thus
maintaining a growing tribal population. It also provided for the
production of a male heir to a king or a wealthy man like Abraham; thus
preserving continuity in the kingdom and long term social order for those
associated with the wealthy man.
To be fair to Abraham, it must be recognized that he lived
long before the time of Christ, and even before the promulgation of the Law of
Moses. In his time, the Natural Moral Law was known only through human
reason, and had not yet been revealed by God. This meant that the Moral
Law was approximated by thoughtful men who determined right from wrong on the
basis of what worked and did not work in society.
It was obvious that society could not function if people
beat and killed and lied and stole from one another. But it was not
equally obvious that society was better off without polygamy, at least in the
circumstances mentioned above. It was at least possible for
polygamous families to function successfully. Children were produced and
nurtured in the sub-families that made up the larger whole.
Abraham was a man of his time—a time before the
revelation of God’s Moral Law. He was from Chaldea (modern day Iraq)
where some of the earliest attempts at codifying the Natural Moral Law, as
understood through human reason, took place. Perhaps
the most well thought out codification of the Natural Law in his time was the Code
of Hammurabi, which in fact did regulate marriages to second wives and to
Even Saint Thomas Aquinas suggests that the ancients might have been justified
in their polygamous unions:
Wherefore, since the good
of the offspring is the principal end of marriage, it behooved to disregard for
a time the impediment that might arise to the secondary ends [the community of
works that are a necessity of life], when it was necessary for the offspring to
Saint Thomas envisioned a sort of dispensation from the
Natural Law in this case:
Now the law prescribing the
one wife was framed not by man but by God, nor was it ever given by word or in
writing, but was imprinted on the heart, like other things belonging in any way
to the natural law. Consequently a dispensation in this matter could be granted
by God alone through an inward inspiration, vouchsafed originally to the holy
patriarchs, and by their example continued to others, at a time when it behooved
the aforesaid precept not to be observed, in order to ensure the multiplication
of the offspring to be brought up in the worship of God. For the principal end
is ever to be borne in mind before the secondary end.
In summary, Abraham’s taking of a wife and a concubine
would be seriously wrong for those of us who have received the Gospel of Jesus
Christ. Yet for those who had not received this disclosure of God’s
Natural Law; who had received only the Law of Moses, or had to work only with
what could be known through natural reason it might be justified by the urgent
necessity of bringing forth offspring—observing the primary end of marriage,
with the possible exclusion of the secondary ends.
What is “moral hazard”?
Moral hazard is more properly a term of the insurance industry than of religion,
but it certainly does have some moral overtones surrounding it. When
people are tempted to do something destructive because they know that they will
be compensated for any loss that they may incur, they are less likely to refrain
from the destructive behavior. Society in general, and insurance companies
in particular, have an interest in not compensating anyone for such immoral
behavior. Should they do so, they are said to be creating a “moral
hazard.” Your insurance company will insure your automobile because the
believe you will likely not to want it to crash, burn, or get stolen.
They may increase your interest in keeping the car safe by demanding that you
pay a “deductible” amount before they will pay the rest of a claim.
They will also refuse to insure something in which you have no interest, for
that would be a gamble on something you will not protect, and on the loss of
which you would stand to gain.
In the accompanying article we will see that deposit
insurance creates a moral hazard in that it may motivate banks to lend
recklessly, leaving the taxpayers to make good their losses. More recently
we saw a moral hazard at work when the federal government overrode the state
laws that would have prohibited “credit default swaps”—essentially
insurance on investments in which one has no interest.
The Great Depression
Were there moral aspects to the Great Depression? A lot of people suffered for well over a decade.
Shouldn’t someone be held responsible? Can we prevent such a thing from
& Monetary Causes of the Depression ●
2008-March 2009) we discussed the operation of the Federal Reserve System (the
Fed) and the mechanism of fractional banking.
The reader may wish to review this discussion before continuing.
World War I
was financed in large measure by government borrowing and inflation of the money
supply. When things returned to normal after the War (1920-1921) a mild
recession occurred as the economy re-arranged itself to meet demand for postwar
production and to value things in terms of the inflated money supply. The
recession was brief because the federal government took no steps to intervene in
the economy other than to cut taxation and spending, thereby making funds
available for productive efforts. Secretary of the Treasury Andrew Mellon
lowered the top income tax rate from 73% on incomes over a million dollars, to
25% in incomes over one-hundred-thousand dollars.
During the period
referred to as the “roaring twenties,” these tax cuts enabled production and
real income to grow steadily until 1929. Not only did the economy produce
more things, it produced them in much greater variety. Mass production of
automobiles and energy allowed common people to enjoy luxuries and labor saving
devices not even dreamed about by the rich a few decades before. People
were no longer limited to gas or kerosene lighting, nor constrained to travel
along the fixed paths of the railroads and the rivers. Electricity
provided not only lighting, but fans and refrigerators, radios and phonographs,
and a goodly number of small household appliances. Private trucks and cars
proliferated, changing both the patterns of commerce and recreation. Radio
stations multiplied, bringing about the nationwide dissemination of
entertainment, news, and opinion molding.
During the twenties
the Fed made credit easily available by mandating low interest rates, and
allowing banks to increase their reserves by freely discounting commercial
paper, and foreign and domestic acceptances (bank guarantees that a buyer will
make good on his purchase contracts) at low rates. The Fed allowed banks
to borrow inexpensively against such notes and promises to pay. Supporting
the return of the British pound to its pre-war exchange rate, the Fed agreed to
further inflation, engaging in large open market operations in 1922, 1924, and
In a free market,
money is a commodity like all others, subject to the forces of market supply and
demand. The interest rate is a function of how much money savers are
willing to lend to entrepreneurs, and how many entrepreneurs are bidding for
that money. The Fed tampered with this relationship, making money
artificially available, causing entrepreneurs to mistakenly believe that more
real wealth was available for investment and consumer purchases than there
actually was. With cheap credit businessmen borrowed money expecting to
make returns on investments that would be unprofitable when exposed to the
forces of the real market. With easy money, inefficient firms could
continue to operate for years. The Fed falsely signaled a boom extending
from the “roaring twenties” at least into the decade beyond. Money is
money, and, once loaned by the Fed and the banks, found its way into highly
speculative investments just as well into truly profitable investments.
The stock market crash of 1929 was simply the bursting of the monetary bubble
produced by nearly a decade of artificially created credit.
There is some
discussion about whether the Fed helped or hindered recovery after the crash.
One school of thought (espoused by the current Fed Chairman, Ben Bernanke, and
others that believe the economy can be revived by printing money) is that the
Fed should have made interest rates low and credit very lose in order for
failing businesses to get back on their feet.. This opinion ignores the
fact that businesses fail when they make inefficient use of resources—failure
is the mechanism by which those resources are re-directed to more productive
use. Had the Fed been tighter with interest rates and credit, the process
of re-direction of manpower, materials, and entrepreneurial ability would have
taken place much more quickly, ending the depression in a year or two (as it
ended in 1921), and allowing people to get on with their lives.
In theory, checking
depositors can expect to remove their deposits from a bank “on demand”
(savings accounts may be subject to a specified waiting period). But
fractional reserve banking makes this impossible if more than a small percentage
of customers decide to withdraw their deposits at the same time. Most of
the depositors’ money (perhaps ninety or ninety-five percent) has been loaned
to bank customers, and even the shortest term loans cannot be called in
immediately. Only a few depositors are enough to “make a run on the
bank,” after which it must close its doors to seek bankruptcy protection,
quite possibly never to open again.
twenties, many states embracing the “big-is-bad” mentality of the
“progressive” “trust-busters” adopted unit banking laws,
prohibiting banks with more than one branch. The McFadden Act of 1927
brought federal law to restrict the operation of national banks to the state in
which they were located and required them to observe the branch or unit banking
law of that state.
Unit banking proved
disastrous for rural banks, particularly for banks in agricultural economies,
and especially so in single crop economies. Imagine, for example, a bank
in a community where virtually everyone depends on the cotton crop. If the
crop is poor, some of the cotton farmers will default on loans taken out for
their farms. The same cotton farmers are also the bank’s depositors.
When the depositors remove money to buy necessities and to pay for the next
planting they may quickly deplete the bank’s reserves—reserves that will
never be replenished because the cotton farmers have defaulted on their loans.
Under such a situation not only does the fractionally created money disappear,
but is likely that the physical assets of the farmers and the banks will decline
in value as they are put up for desperate sale. There are no branches in
other economies that can provide funds to keep the bank solvent until the bank
run can be resolved.
In the cities the
unit banks fare a little better because their depositors and borrowers are more
likely to be in a variety of industries. A cotton crop failure will have
some effect, but the vast majority of their clients will be in a number of other
industries. Of the roughly six thousand bank failures in the decade up to
the crash, about eighty percent of them occurred in the rural unit banks.
Where they were allowed, the branched banks were the most secure of all, except
for the branched banks that also provided investment services for stock and bond
buyers and sellers.
As might be
expected, more banks began to fold after the market crash, including some
significant big city banks. For example, The Bank of United States [sic]
was the third largest in New York City and twenty-eighth in the nation, until it
failed in December of 1930.
The panic caused by the bank failures led several state governors—Nevada,
Michigan, Indiana, Ohio, Illinois, and Pennsylvania—to declare “bank
holidays”—periods of closure intended to let the banks arrange to meet
expected withdrawals when they opened again. Of course, the “bank
holidays” caused even greater panic as depositors were unable to withdraw even
from sound banks. No one knew whether the holidays might be repeated in
those states or spread to other states. The bank closures (as well as a
record increase in taxes in 1932) caused people to keep their money “under the
mattress,” making it difficult for even the most efficient businesses in the
private sector to obtain funding—once again postponing recovery.
On the day after he
took office as president Franklin D. Roosevelt invoked the World War I
Trading With the Enemy Act to declare a nation-wide “bank holiday.”
This was clearly illegal, but Congress passed The Emergency Banking Act, ex
post facto (also illegal) giving Roosevelt the authority to close the banks
in peacetime. The banks closed on March 6th, and only those declared
“sound” by the government were to open on March 13th. The law also
provided for loaning up to a billion dollars to banks with cash flow problems.
The Emergency Banking Act also empowered the Fed to issue Federal Reserve Notes
not backed by gold, but only by government bonds!
The Glass Steagall
Act of June 1933 provided for federal deposit insurance—good for the
depositors, but giving the banks less incentive to operate
conservatively. The cost of bank failure was now passed from the
depositors to the taxpayers. Once again, the “big is bad” mentality
prevailed—with no evidence that facilitating stock and bond trading had caused
any bank failures, the Act also forbade commercial banks from handling such
investments—precisely what was needed to further weaken the banks.
[To be continued
“The Great Gold Robbery of 1933”]