Fake Quote Files: V.I. Lenin on Inflation and Taxation

Beware the well-armed Marxist.
Beware the well-armed Marxist.

It occurred to me, while researching alleged quotations from historical figures, that for every time someone cites a source for a quote, there are about 10,000 instances where people simply stick the purported author’s name under it with an emdash (—), as though it was a sufficient reference.

This is quite maddening, because even if a quote is accurate, you must wade through thousands of blogs, books, and pamphlets (all with slightly different versions) before you find someone who bothered to cite a source. When a source is given, it is usually a fairly simple matter to look up the referenced work and check if it is in there. When no source is forthcoming, the quote is probably fake, but it’s not possible to definitively prove that without a lot of research.

This leads to my contribution to the List of Things People on the Internet Need to Understand:

#6,879. Sticking someone’s name after a quotation is not a source. It’s an attribution. An attribution is the claim that needs verification. A source is a document written by the alleged author, or recorded by a credible contemporary witness, that contains the relevant passage.

For instance, this quote by V.I. Lenin is wildly popular and has been repeated countless times in blogs, newspaper articles, and books, going back to the pre-internet era.

“The way to crush the bourgeoisie is to grind them down between the millstones of taxation and inflation.”
— Vladimir Ilyich Lenin

(See? The longer dash makes it look much more credible.) This quote has a very long and fairly involved history, with ancestors as old as the 19th century. Thanks to the miracle of digital archives we can mark its entire evolution through transitional fossils, frozen in print:

  • 1997: The first instance of this version in print (that I can find) is in a paper on (of all things) taxes in Bangladesh. It cites no source.
  • 1988: A letter in The Bulletin (with Newsweek) had “middle class” instead of “bourgeoisie”: “Lenin stated that ‘the way to crush the middle-class is to grind them between the millstones of taxation and inflation‘, and that is exactly what is happening …”
  • 1986: An issue of Books and Bookmen makes reference to a different variation of it: “Lenin threatened to grind the middle-classes between the upper mill-stone of taxation and the nether mill-stone of inflation; but Lloyd George did so as well.”
  • 1984: A column in The Advocate attributed a version of it to Karl Marx: “One perhaps should remember that Carl [sic] Marx said ‘if you wish to destroy the middle class, then you grind it between the twin millstones of taxation and inflation.'”
  • 1974: In what probably marks the earliest embryo of the quote’s attribution to Lenin, Ronald Reagan remarked in a speech near the end of his term as governor of California: “Make no mistake about it: inflation is a tax and not by accident. Lenin once said, ‘Through inflation government can quietly and unobservedly confiscate the prosperity of its citizens.'”
  • 1961: Another probable ancestor of the quote comes from the November 1961 edition of The Freeman, which featured an essay by John Chamberlain containing this unattributed statement: “During the past generation the ‘middle condition of man’ has been ground between the upper and nether millstones of inflation and steeply rising progressive tax rates.”
  • 1956: An article about middle incomes in the Economist may have been the original source for the symbolism later used by others: “These incomes are truly caught between the upper millstone of steeply progressive taxation and the nether millstone of inflation.”

But where did this quote originate from? Did Lenin really say this? A search of Lenin’s Collected Works doesn’t reveal anything similar to it, and no version of it I’ve found has an original source.

Though it may come as a surprise to many libertarians, Keynes understood all too well the dangers of inflation.
Though it may come as a surprise to many libertarians, Keynes understood all too well the dangers of inflation.

If Lenin didn’t say this, how did it start? Was it misattribution, mistranslation, misunderstanding, bad paraphrasing, or deliberate forgery? Frequently, answers are lost to the mists of time, but fortunately in this case, we may be able to trace it all the way back to its probable origin: John Maynard Keynes.

Although it is now overshadowed by his later work, Keynes wrote a brilliant and enduring book in 1919, in the aftermath World War I, titled The Economic Consequences of the Peace. In it, he states:

Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens.

… Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.

Given the unambiguous parallels between this passage and Ronald Reagan’s quote, it seems Reagan read Lord Keynes (or at least, read someone who had read him), and somewhere between 1919 and 1974, what Keynes interprets Lenin as saying became a direct quote from Lenin, which was later embellished and merged with other powerful imagery about inflation and taxes circulating at the same time (grinding millstones crushing the middle class and the bourgeoisie).

But did the Soviet despot actually say what Keynes thought he did, regarding the “debauching of the currency”? Not exactly. In an article in the Journal of Economic Perspectives, Michael V. White and Kurt Schuler extensively researched the question, and discovered that Keynes had based his commentary in Economic Consequences on the report of an interview with Lenin published in the Daily Chronicle and the New York Times on April 23, 1919. From an unnamed source, the report quotes Lenin at length:

Hundreds of thousands of rouble notes are being issued daily by our treasury. This is done, not in order to fill the coffers of the State with practically worthless paper, but with the deliberate intention of destroying the value of money as a means of payment. …

Experience has taught us it is impossible to root out the evils of capitalism merely by confiscation and expropriation… The simplest way to exterminate the very spirit of capitalism is therefore to flood the country with notes of a high face-value without financial guarantees of any sort. …[T]he great illusion of the value and power of money, on which the capitalist state is based will have been definitely destroyed.

Russia suffered hyperinflation after World War I as a result of massive money printing by the Bolshevik regime. It reached 245% by 1924.

While there are grounds to doubt the veracity of this report, given its anonymous origin, historian E.H. Carr gives us some reason to think it could be plausible: “None of the Bolsheviks wanted, or planned, inflation. But, when that happened (since the printing press was their main source of revenue) they rationalized it ex post facto by describing it as (a) death to the capitalists and (b) a foretaste of the moneyless Communist Society. Talk of this kind was widely current in Moscow in 1919 and 1920.”

Lenin, in fact, read Economic Consequences, and in a July 1920 speech to the Comintern, approvingly cited Keynes’ criticism of European governments as evidence the capitalist states were on the verge of collapse. While he dismissed Keynes’ condemnation of him and the Communists as “the conclusions of a well-known bourgeois and and implacable enemy of Bolshevism,” Lenin never explicitly denies anything Keynes’ attributes to him in the book.

So Keynes’ commentary on Lenin was not made up, but based on a widely circulated interview in the mainstream press, which in retrospect seems of dubious origin, but is at least compatible with the statements coming out of Moscow around that time.  However, later paraphrases of Keynes given as direct quotes from Lenin, like Reagan’s and all of its descendants, are almost certainly false.

The found of Georgism.

A final note, regarding the origins of the “crushing/grinding millstones” metaphor (which seems to be a perpetual threat to reading audiences, as much as to the middle class): this phrasing appears to have originated in Henry George’s 1879 book Progress and Poverty. The namesake of Georgism wrote,

Private ownership of land is the nether mill-stone. Material progress is the upper mill-stone. Between them, with an increasing pressure, the working classes are being ground.

With its attack on private land ownership and material progress in the name of the working class, this certainly would sound very Marxist to a modern ear, but in fact, Marx and George were bitter enemies, and Marx probably would have been outraged to see his name attached to George’s words. Perhaps that irony makes it all worth it.

Thus, the phylogenetic family tree of a fake quotation is fully mapped. Keynes’ commentary on Lenin is hammered into a direct quote from Lenin, propagated by Ronald Reagan, which then merged (with all the promiscuity that unsourced quotes are infamous for) with a popular quote by free marketers about the millstones of inflation and taxation (itself a derivative of a quote from Henry George). Forgery makes strange bedfellows.

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Daniel Bier

Daniel Bier

Daniel Bier is the executive editor of The Skeptical Libertarian.

View all posts by Daniel Bier


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