"And that was the start of the Forty Years War?"
"Approximately. Some of the States stayed out at first and various ones dropped out from time to time. But for all practical purposes Europe was at war for the next forty years."
"How did it end?"
"It didn't end, not formally. It burnt out like a fire that has consumed all of its fuel. In 1970 Europe contained over four hundred million people, exclusive of the Soviet Union, Sweden, and Norway, none of which were heavily involved in the war. The Soviet Union of course had not been a part of United Europe anyhow. In 2010 which marks the approximate end of the war Europe is believed to have had a population of less than twenty-five million."
Diana blanched. Perry spoke up. "Do you mean to say that over a third of a billion people were killed in thirty years?"
"Not all by shot or poison. More people starved than were killed in battle. It was the breakdown of the economic organization that killed the masses rather than deadly weapons. People hardly ever realize the completeness of our economic interdependence. Communications were destroyed by the fighting. Distribution was upset. The credit system expanded and then collapsed, leaving people to depend on barter. Barter was about as adequate to take care of the involved economic structure as oars would have been for one of their battleships. Governments resorted to the exercise of angary and expropriation to provide for troops, but it amounted to foraging and the people regarded it as such. This dog-eat-dog system ran its natural course. The farmers hoarded and the city dwellers starved. From time to time the city dweller killed the farmer and took what he had. When that was gone the city dweller died for he had never learned the arts of husbandry. And the armies ran over them all. Of course this breakdown didn't occur all at once. For the first few years the industrial civilization ran faster than ever, but in the high fever of war, living on its own substance. But when enough crops had been destroyed, or not planted, enough granaries emptied, enough water works bombed that the pangs of hunger became general, then dissolution set in. A modern city is an almost incredibly helpless and delicate organism. It has lost its power to produce the actual essentials of life. In spite of its transportation systems, it cannot move as they found out in the evacuation of London. It is like an overgrown idiot baby in an incubator. It is completely helpless without the aid of the many servants that succor it. It cannot even think except in a slow ponderous collective fashion and it cannot think at all in an emergency. Its individuals can think, but a city is an organism in itself and must have a directing brain and nervous system. Destroy its waterworks. It dies. Stop its food supply. It dies. Remove its directing intelligence, it commits suicide. The cities went to pieces first.
"And the birth rate fell to lowest ebb in history. Part of this was due to contagious abortion, one of the many epidemics that swept the continent. Some of the sociologists find evidence that a large number of women refused to bear children. And lots of the men were sterilized, even when they weren't killed, by exposure to the rays that a beneficent science had handed to the field marshals. And so Europe died."
"How in the world did we stay out of it?"
"Partly luck, but mostly the genius and strength of character of one man. Franklin Roosevelt had proposed and partially developed laws that were intended to keep the United States out of war. These were strengthened by LaGuardia until the President had the power to completely withdraw the United States from a danger zone. In 1970 the United States had enjoyed many years of useful economic relations with Europe. But at the time of the death of Edward, there was in the chair at Washington, President John Winthrop, elected by the Conservative Party and a man who might have been expected to repeat the mistakes of 1914. But at the first outbreak of trouble he suspended all shipping. When it became evident that a general war was likely he used the naval and air forces to evacuate our nationals and promulgated the Non-Intercourse Proclamation. Our diplomatic and fiscal agents were all withdrawn. Our commerce with Europe stopped in every respect. With minor exceptions, for twenty years no American citizen made a legal visit to Europe. Naturally it produced terrific economic dislocations in the United States. But he stood firm. At the time of the proclamation Congress was not in session and no regular was scheduled for five months. He refused to call Congress and his legal authority to do what he did was upheld by the Supreme Court. It seems likely that he would have defied the court if necessary. He was hanged in effigy, but by the time Congress met his action appeared justified to many. He was impeached but acquitted in his trial by a narrow vote, and the United States was saved in spite of itself. However before we talk too much about Winthrop we should go back a little in United States history."
"Just a second before we leave Europe entirely. What happened after the war?"
"We don't know, Perry. Not in any great detail. The Non-Intercourse rule has never been fully lifted and we have never resumed commercial or diplomatic relations. The population is increasing slowly. It is largely agrarian and the economy is mostly of the village and countryside character. Most of the population is illiterate and technical skill is almost lost. Our knowledge is incomplete although we maintain missions in several places for ethnological and sociological study. But now can you tell me what happened after the assassination of Malone?"
"Well, LaGuardia took office in 1951 and served two terms. The chap that directed the recording seemed to think that his biggest achievement was a change in the banking system. He called it the Battle of the Banks."
"Yes, and it is important for it was a change that made possible our present economic system."
"Wait a second, please. What is the present economic system? Diana says it isn't socialism. Is it capitalism?"
"You can call it that if you like. I would suggest that you think of it as privately owned industrialism for the time being. LaGuardia destroyed capitalism as you knew it. He started out to found a publicly owned bank, the Bank of the United States."
"Wasn't the Federal Reserve Bank still in existence?"
"Yes, but the Federal Reserve was not, despite its title, a publicly owned bank. Nor was it a bank in the common use of the term. A private citizen couldn't borrow money from it nor place money in it. Only bankers could use it and they owned it. LaGuardia wanted to set up a real bank that would be owned by and used by the people. But the bankers fought him in every way. They controlled most of the newspapers, owned a good piece of the wealth in the country, and held mortgages of one sort or another on the rest. Their position was very strong in machine politics, too. So they set out to defeat him. And that got him angry. It appears from what we can find out that it was never safe to get the 'Little Flower' angry. He jammed his banking bill through by a combination of personality and intimidation and announced to the whole country that he was ready to lend money to all and sundry who might be refused credit at the private banks. You see the banks had created a panic and a wave of fear by calling loans and refusing to loan more money. LaGuardia restored confidence even before he was able to set up the machinery for handling a banking business. And by now LaGuardia was not willing to let things drop just by setting up his new bank. He had intended it primarily as a fiscal agent of the government to aid in the manifold financial dealings of the government with the citizens, started by Franklin Roosevelt. LaGuardia became determined to break the private bankers. He called in several students of finance and studied the theory of credit himself. He became convinced that ordinary commercial financing could be done for a service charge plus an insurance fee amounting to much less than the current rates of interest charged by banks, whose rates were based on supply and demand, treating money as a commodity rather than as a sovereign state's means of exchange. He proceeded to lend money on this theory. His cost accountants figured pretty accurately the service charge necessary and estimates were made to cover insurance. As the system developed the insurance feature was simply the pro-rate of the losses of the preceding fiscal period. The types of loans the government would make and the quality of paper it would discount kept the losses low and within a year the federal government would loan money to its citizens at an average interest of three-quarters of one per cent per annum.