26. The life and work of Germán Bernácer

26.1. My inspiration

Germán Bernácer Guardiola is the son of Germán Bernácer Tormo. He had just arrived from Chile, where he works as a technician for UNESCO and is a trained physicist like his father. Germán Jr came over to me and introduced himself. A white bridge of letter writing had brought us together. It was a sunny morning. I immediately took him to meet Emilio Figueroa Martínez, a retired professor of Political Economy and Germán Bernácer’s former student at the Business Studies School, as well as a technician in Research Services at the Bank of Spain, where Bernácer had been assistant director. Figueroa, who was partly handicapped and felt tense due to his excitement, met us at the door to his home – me and the son of the man and economist that he most admired. Clouds of memories rushed in. Thirty years had gone by. Both of them, with different emotional bridges, brandished their passions and wove together a brief history. The man, the extraordinary scientist that he was, had close relationships with both of them, and it enhanced memories when trying to form a biographical portrait. I looked on silently from a corner. And suddenly the oblivion to which our economist was subjected and the conspiracy of silence, referred to by Figueroa, dissipated.

Another day, an even sunnier day in the city of Alicante, I met Mrs María Guardiola, the widow of Bernácer, at her home, at German’s home. The paintings, of course, by Varela; the objects and furniture spoke a language from the past with voices cracked by melancholy. Her children, Eda, Germán, Ramón and Ana María, and her grandchildren accompanied María. Afterwards, I visited the small house on the beach ravaged by wind and sea. Several pine trees withstood the onslaught. The little house in the mountains, its internal and external structure changed, surely made its original state unrecognisable. It was beautiful, but undoubtedly deprived of its natural and ancient poetry.

With all of this baggage of data and figures hanging in disorderly heaps in the asymmetrical hollows of my memory, I began to write Germán Bernácer’s biography. The help provided by Oliver Narbona’s book, skilfully written and quite precise, as well as by the systematic, comprehensive and geometric book by unflagging Henri Savall, helped me organise my natural chaos. I was further assisted by the fact that I lived in Madrid and had retraced Bernácer’s footsteps step by step and had gone through archives and unorganised libraries. But above all by dealing with an invisible Cyclops: that of the indifference, the methodical indifference of many, and the conspiracy –if there was one– of dense silence, if not hostility. I do not know why Germán Bernácer continues to cause problems!

Moreover, it was very helpful to know what no one else knew, not even his family or Figueroa or Prados Arrarte or Henri Savall, which is that Bernácer is more important than they think. This secret that I have tried to yell out in the desert is what, surprisingly enough, in my impossible loneliness, has urged me on. The secret is that modern macroeconomics classes can be found in Bernácer’s work, work that has yet to be written. This is the secret, the drama and the glory of Bernácer and perhaps my own.

26.2. The early years in Alicante

In the Mediterranean city of Alicante, in the restless year of 1883, Germán Bernácer Tormo came into the world on 29 June. For those that know the city, the exact place of his birth was number 10 of what is today Altamira Street, which used to be called Princesa Street. His father’s name was Antonio Bernácer Pérez and his mother’s Francisca Antonia Tormo Iborra. This was his father’s second wife, with whom he had two children, Germán and Julio ¹⁵⁸.

Due to varying circumstances, the year 1883 was abundant in sowing many interesting people and events. In economics, this was the year that brought death to the prophet of the death of capitalism, Karl Marx, and birth to who, according to some, would save it: Englishman John Maynard Keynes.

Neither geography, nor science, nor education nor the restless stars in the sky propelled destiny; nothing, I say, to make these two infants appear who were determined to be born in the same year and obligated to repeat one another as twins in economic theories. As an invisible mirror in a Platonic universe, like the images of words said by others, whispers of Alicante were repeated in the hard crystals of the Levantine sky to illuminate and repeat what had already been said in the English mist, where an ancient race of giants – classical and neoclassical Englishmen – rocked the cradle of the sleepless Keynes.

Another man, a scholar of dynamic economics and an economics scholar to the fullest extent, was born this same year: Austrian J.A. Schumpeter.

Germán Bernácer in his late teens.

Bernácer’s mother devoted all of her efforts to the education and upbringing of her two sons, Germán and Julio, and her daughter, Isidora. The common seed, in the form of efforts devoted to education, intellectual and artistic stimulation, resulted in the two brothers having an insatiable appetite for the two branches of knowledge. Julio and Germán were born on different planets under the auspices of muses that were not remotely similar. Julio was a lover of words; he was emotional and subjective in his assessments. Germán was precise and rigorous in his observations; he touched what he saw and only believed in what he touched. Germán Bernácer was before anything, before even an economist, a vocational physicist, and it is known that phantoms of subjectivity do not play a part in physics. And their character traits were also opposite. Julio was always likeable and extroverted up to his early death in the thirties. He was a brilliant conversationalist, timely and wise, a skilled writer, lively and descriptive. He was possibly a seductive companion and an attractive person. Germán, on the other hand, was an introvert, discreet in his relationships, quiet and prudent. Maybe his most important trait was his crippling shyness, which made him appear untalkative –which was true– and perhaps unfriendly. His writing and literary skills were subjected to the millimetric rigor of the watchmaker, to the steadfast patience of the accountant, and it was, nonetheless, his astoundingly simple and sometimes even funny style that frequently twisted rumours into a crystalline and non-aggressive irony. Many times his family and I have thought that the difference in character between Julio and Germán was similar to that between John Maynard and Germán. Keynes was the opposite of the man from Alicante. Keynes had it all, even luck. He was politically skilful in the internal politics of the astute British Treasury technocrats; seductive, ambivalent, cunning, clever, shrewd, snobby, elegant, a clever publicist of his own publicity, a great writer, and so on.

Julio wrote several literary works; ‘Infantilia’ was the most popular, precisely because it was the least objective of them all. They are memories painted with the watercolours of childhood fears in the setting of the family home, which is also described. ‘Infantilia’ was published in 1928, the year his father died, and dedicated to the person who may have known him best: his brother Germán. The book’s subtitle is ‘Emotions from Childhood’. You will understand why it seems important to me.

Julio Bernácer died in a foolish event during the Spanish Civil War. It was not an act of war that caused his death. Apparently the bus on which he was travelling was stopped by militia members and all occupants were shot.

Germán Bernácer, lecturer at
the School of Trade in Madrid.

Germán, as a scientist, was a stray sheep in the compact flock of scientific disciplines. First of all, he was an accountant who studied accounting mechanics and who slipped through the fields of Physics to escape through the window of the Food Industry. Without ceasing to be a physicist and professor of physics all his life, he was an economic scientist by vocation and this was how he was known. Fate or the inexplicable game of life wanted a Renaissance man to be born by chance in 1883.

However, furthermore, he was an untamed sheep that left the boundaries of classical and neoclassical economics. Of course, another sheep was doing the same in England. Keynes was a natural child of his time and of his profession. He was cradled by classical economists and hidden vice remained in his thoughts and doctrines. And they were awoken by the madness of stock market speculation and the roar of monetary inflationary and deflationary variations. Thus he ceased being classical. If some tried to let him sleep, others tried to awaken him. And thus Keynes created Keynes.

What I mean is that Keynes was a child of his time and his environment. But Bernácer was so unorthodox – although he didn’t know it– that he was nothing more than the biological child of his parents and nothing else. We do not know whose child he was in his economic scientific education. There were no resources for studying in the beautiful and provincial city of Alicante. There is no comparison with Cambridge. Spain was not home to the Smith’s or the Ricardo’s, Marshall did not walk its streets; his father was not John Neville, but rather a humble shopkeeper. His work was not in the activity of high finance or on the stock market or in the esoteric meetings of international economic organisations. He was also not a trader or an agitated speculator awoken from an impossible slumber by the death of the economic manuals that circulated during that period. Nor was Bernácer awoken from his slumber by the colossal uproar of the great crisis of 1929. Bernácer woke himself up with the marvellous stimulus of his own intelligence.

Man is the child of his environment, but he was not. However, this biography attempts to study Bernácer’s environment and the influence it had on him. Let’s continue with his childhood and adolescence. Alicante was not, like today, a city that lived from tourism; it lived from its commercial activity, maritime and fishing activities. Small, beautiful, it was surrounded by chunks of colourful landscapes: the blue blanket of the Mediterranean Sea, and a small mountain range surrounded by pine trees. Its climate was mild in winter and in summer and its streets were filled with an assortment of small family shops (one of which belonged to his father); a city of lively plazas with passing carts filled with goods, of wholesale fabric shops, of cafes where people talked about politics, bullfights or business, where they gossiped. They spoke of their simple lives and were pleased about everything from Alicante. The port received products from other parts of the world and Spain’s products were sent to other parts of the world. Everything travelled on uncharted routes, on the infinite destinations of the sea. The ships, untiring and slow, arrived and left bringing and taking things, ideas, and thoughts. Alicante by day was dazzled by a peaceful and powerful light with its blinding fires of creation that would be brazenly painted by Sorolla and, judiciously, by Varela. The light never rested, not even at night, a time when the giant oil lamp of the Levantine moon illuminated everything, as it always illuminated those that arrived there: Phoenicians, Greeks, Romans, Arabs, Moors and the last privateers related to the Tower of Babel of tourism.

In the surrounding area, Alicante was decorated with a beautiful landscape filled with vegetation and serene, harmonious and luminous mountains. The creator forgot to turn the light off in Alicante and, day and night, light soaked into the skin and bones of the city, unlike in England. This light has marked the soul of its inhabitants, of its writers like Miró, of its musicians like Oscar Esplá and of its physicists and economists like Bernácer.

As was said earlier, Bernácer was born on Princesa Street and from the time he was little he lived with his cousin Tormo Bernácer. The inverse relationship of the surname Bernácer Tormo and Tormo Bernácer is explained by a marriage that joined the two cousins. Among the cousins, Manuel Tormo was Julio’s and German’s best friend. The common language was Valencian and Spanish in a family surrounded by the ethnicity and culture of the city of Turia. Germán always kept his tendency to speak in the language of his parents (and I had the good fortune that one of my articles on Bernácer was fully translated into Valencian).

The two families shared a flat at number 6 San Bernando Street, which reached up to Princesa Street (Altamira nowadays). On Princesa Street there was a lane that connected the home to the family business. The family business was a grocer’s called ‘La Tienda del Gat’, which, like all grocers in the town, was a family business, a small bazaar where you could buy a little bit of everything on your way home. The business sold rice, nuts, spices, toys, needles, thread, starch, soap, candles, ribbons, groceries…; in short, it was a small piece, a microcosm of gross national product. This shop and his home must have been the macrocosm where Germán existed and Alicante must have been the rest, the microcosm, and his 20 odd years of existence in the capital, Madrid, a small and confused anecdote of his life.

There is a belief, said by I don’t know who, that geniuses are really not as intelligent as we think; they just ask different questions. Elementary questions about the most elementary things. One wonders about the shape of the thing that is being stepped on which, except for small reliefs, is normally flat. This was a question formulated by Aristarchus, of Thales of Miletus, until reaching another man that stubbornly tried to verify it, who was named Christopher Columbus. Another, more incredulous and more elementary, wondered why the moon doesn’t fall and why an apple does. Newton would take some time (1867) to build the foundations of universal gravitation. Galileo looked at –surely with his eyes facing upward and his mouth open– the oscillation of the lamp of Pisa. Young Bernácer speechlessly contemplated the oldest and most tenacious operation of humanity, looking amazedly at what did not astonish any man that we know of: what astounded Bernácer was the operation of buying and selling that happened on a daily basis at the small business. His gaze went from the hand of the buyer to the hand of the seller. Behind his father there was something desired by the buyer –goods, threads, food, soap, etc.– and in the hands of one and then the other, there was a fleeting moment, an eternal moment, because it lasted nearly throughout all of history; something was exchanged: money. Their hands didn’t touch –thought Bernácer– they were joined by money. In reality, what both of them really wanted was money. There was a difference between the goods sold and money. From time to time, the person buying wanted a portion of what he was buying, and his father, the seller, did not want what he was selling; to some extent it was excess. Why, then, was it excess? Well, as a pretext to buy money. His father bought money with goods, and whoever bought goods supplied money to acquire them. Subsequently, he would repeat this many times in his economic manuals, in his research. ‘Whoever demands goods is really supplying money and whoever demands money is really supplying goods’. As to the rest, what he would say about the Englishman and those of his cultural ethnicity, including Spaniards who followed English economic thought –this idea about the supply and demand of money is not nonsense, but rather a meaningless statement. To say that money is demanded without knowing what is offered in exchange and to say that money is offered (monetary supply) without knowing what is demanded is an assertion that totally defies logic. It is not for literary embellishment that this work insists upon the environment surrounding Bernácer; it shaped the first concern of his life. In reality, everyone demanded money, although everyone used different means to get it. His father accumulated goods. The husband of the women buying sold his labour. Young Germán probably asked himself why money was not dispensed with; and he himself replied that it was because of how uncomfortable an exchange would be without it. In the same way that the alphabet brought over thousands of years ago by the Phoenicians favoured the exchange of words and ideas as well as communication in general, money, also invented by them, favoured trade and with it, production, and with production, the division of labour, as Adam Smith would put it. And the Phoenicians, the Greeks, the Romans, the Arabs, the Moors, the pirates, the kings, and even domestic thieves all did the same: they supplied money in exchange for goods, and they supplied goods in exchange for money. Alicante and especially the Levantine coastline have forever witnessed the trade carried out continually in the grand wet marketplace of the Mediterranean.

But when Bernácer was young and went to the port, he already found himself, along with his brother, astonished at the fact that the currency of Spain was one, and there was another currency, foreign currency, which was different, and that this complication was connected to the ships that were lost on the horizon. In addition, all of this was joined with a serious problem in the young boy’s mind, which he endeavoured to resolve. A special coin or some coins were made up of gold or silver. This was correct and properly understood; if the currency represented a value, it was logical that the coin itself had a value, and nothing could be better than if the coin were made of a valuable metal. Julio wondered if life were not a ship that gets lost in the sea of life. The brothers were different.

But he was also interested in payments made with paper. And paper had practically no value, like the paper that his father used to wrap up goods. Where was the secret? Once again he asked himself about the most elementary matter. He soon knew that the paper represented a sort of promissory note or acknowledgement of debt that banks held against its owner for a quantity of metal that the latter had left at the bank. If it were a credit instrument or an acknowledgement of debt, it would have a value, and as a value it would be exchanged for another value, which was a good. And if the unstoppable machine of trade and technology, the work necessary to produce it, demanded more money, there would be no problem if paper was created freely. This would not only be an economic sin, but also heterodoxy. And so what if there were no gold to back the paper? International trade carried out by these ships that he saw required a prior trade. This was unheard of! In the same way that salt cod was bought and sold, pesetas were bought and sold against sterling pounds and sterling pounds were bought and sold against pesetas, all of which was done to then trade Spanish wine for English cloth. Behind the English pound and the peseta there needed to be gold that preserved the pound and the peseta. And why did this golden backing exist? For no reason at all, to make trade more difficult. The true backing of the currency, or currency equilibrium, is not gold or silver, but rather production or goods. There was something more; the currency itself activated the creation of wealth. On the other side of the sea, in England, in 1913, young Keynes published a discourse on the functioning of the gold standard (Indian Currency and Finance). Keynes was 30.

Julio, Germán and their cousin Manuel would go up to the roof of their house during the day where the clothes were hanging to dry and they could see the mountains in the distance faded by so much light: Cape Huertas and the Dome of the Collegiate Church and of Saint Mary. During the star-filled nights, Julio and Germán would name the different constellations. Perhaps in the same way as Phoenician sailors in times past looked at them to reach Spain. And adolescent Germán was probably inclined to think that the Phoenicians, the Canaanites, who brought so many things from so many places, did not also bring the demon of other Chaldean gods like the golden calf that perpetuated, through the gold standard, its malevolent influence.

He practically never changed tastes. What he liked as a child, he kept when he was old and loved even more. And what he loved was a quiet, family-oriented life frequently altered by the greater calm of nature, of the country, of the marvellous Aitana mountain range and of the sea in the company of his inseparable friends Oscar Esplá, Gabriel Miró and Varela. Germán penetrated deeply into nature, with the nature of his land, the nature of Alicante. At night he liked to examine the skies. During the day he liked to swim and he swam so deep into the sea that he was lost from sight and his family members worried about him.

His finances, which were not abundant, were stretched to make small, humble, country houses that allowed him to be closer to nature. He had a house built very close to Juan Vidal’s house in the land of Aitana, which is today naked and degraded by housing developments. According to family members, in that time, without a car and without current healthcare resources, the trip to Colot was an adventure. In San Juan, in front of the sea that was sometimes calmly and sometimes furiously whipped by the wind, he built a small home. The Germán from Alicante and the Germán that lived in Madrid can always be found alternating reading, meditation, a peaceful life with walks in the mountain and swimming. Miró, Esplá, Varela and Bernácer were what are now known as environmental enthusiasts. This piece of parochialism was always acclaimed by the three friends and was faithfully reflected in their works: Oscar Esplá in his music, Miró in his books, where he talked about customs and scenery, and Varela doing what was impossible – painting the eternal flash of the Alicante light that was never extinguished.

Childhood emotions, intuitions, fears and its endless curiosity gave way to adolescence, and along with it, the overwhelming reality that enters your home like a corpulent tenant. This neighbour was called economic reality. The shop went from bad to worse and I believe it had to shut down. Bernácer was forced to help his family out financially by giving classes in the morning, reserving nights to study by the light of an oil lamp. For many years, the oil lamp would be German’s silent companion in an Alicante that had no electric lights at the beginning of the century.

26.3. Professional life in Alicante

Germán began practical studies that allowed him to earn a living in a city of merchants. He studied to be a technical accountant, a branch of accounting that precisely tracks reality with as much monotony as accuracy. The mathematics involved in such accounting only amounted to adding and subtracting, but it would serve to keep him rooted in crude and frugal reality and not dreaming about things other than observable and observed reality. It would also help him to defend his own criteria with respect to general macroeconomic accounting. He began his studies when he was 14, the same year in which his Business Studies School was elevated to the rank of higher studies by Royal Decree. Although ‘higher’ may seem to allude to grandeur, it was not a university, but rather a simple trade school.

In the 18^th century, the city of Alicante began to dispute with Valencia for an autonomous consulate, which was obtained in 1875. Thus, the Council of Commerce, the Consulate and, obviously, the Business Studies School were formed.

The business studies there had two levels: elementary or expert (certified accountants) and higher or professorship (business professors).

The following disciplines were taught: Arithmetic and Business Calculus; Accounting and Bookkeeping; Commercial Law, Customs and Trade Practices; Political Economy and Modern Languages. Logically, since it was a school, it did not require a high level or much depth in studies. It was also normal that a school that was not the Faculty of Economic Sciences (created approximately 45 years later) in a small city did not have a well-stocked library. Two things, however, should be stressed. The first is that the elementary political economics studies rapidly attracted Bernácer attention. The other is that language studies also caught his eye, and the languages that drew his attention were French and English. As for the other disciplines, business calculus, arithmetic and, even less so, accounting should never be looked at with disdain; they are true gymnasiums where the ever-so-necessary musculature of logic is exercised.

The second group or level was comprised of the following classes: History of Commerce and Industry, Geography and History and Recognition of Commercial Products. Bernácer would later come to teach the latter subject and not the field about which he knew the most: Political Economics.

German’s superb ability of abstraction rose above the small jungle of homogenous disciplines, and it was this ability that resulted in his elemental and compact logic to understand what was happening in the uproar and clamour of street trading, fish auctions, banks, ships and agriculture. Thus, his impeccably solid scientific style was simple to the point that it irritated economic scientists that played and play with the mystery, the magic and the hypocrisy of useless technicalities. His childhood curiosities undoubtedly increased at the school and there, and in the street, especially in the street, and in the mysterious solitude of the oil lamp the answers became weaker. The Alicante Business Studies School seems to have had all of the resources necessary to develop his activity. The City Council and the Provincial Government and the support of other institutions helped the school to mature and develop. It is necessary to understand that in a small city, business professor studies, which were practical, were tightly intertwined and connected to the economic reality of the provincial city. Job offers were quickly filled by capable students. The Business Studies School was a natural part of the business life of the Levantine city. According to Oliver Narvona, who has meticulously studied the environment and the history of end-of-the-century Alicante, Gironés de Puerto, Professor of Economic Geography, directed the school. The Registrar was Campos Vasallo and the faculty was composed of: Campos Barrera, of the Development of Consumption and Industry and Complements of Geography; Soler López, of Natural History and Recognition of Industrial Products; Enrich, of Accounting and Bookkeeping and Business Operations Practice; Domínguez Navarro, of Comparative Merchant Law; Leveroni Morales, of Italian; Olivares Gil, of French; Fornier Padilla, of Arithmetic, Business Calculus and Calligraphy. The assistants were: Campos Vassallo, Santonja Gil and Sellés Gonzálvez.

Germán Bernácer, Oscar Esplà and
Agustín Irizar.

From these disciplines, it is necessary to take a closer look at ‘Recognition of Commercial Products’ and professor Soler López, because they would have special meaning in this future scientist’s mind. This subject, which would later be called ‘Industrial Technology’ and later, most likely, ‘Testing and Evaluation of Commercial Products’, clearly revolved around ‘Physics and Chemistry’. The accountant Bernácer, although as far as I know he was never an accountant, was in reality a professor of Physics and Chemistry, as subjects that shaped his shapeable and alert mind. As a researcher, he was an economist. Economic reality and economic theory are not physical facts and this, above all, was something that Germán knew. But there is an aseptic and pure rigour in physics that lifts it above other sciences. Observation, the incorporation of this observation in theory, the theory of observation and the mathematics linking logical events, all make physics and the physicist an almost perfect scientific fit. As for the rest, concepts like velocity, acceleration, elevations and flows, elasticity, etc. are similar to economic concepts: the speed of circulation of money, etc. Germán also knew that many things were different in economics than in physics. The most important thing is that wealth and money, unlike matter, are created and destroyed. And he also knew that alchemy was not such a mysterious matter, that it was a matter of chemistry and physics and that economics had something similar to alchemy. It was pure alchemy. And he wanted to one day understand this matter, this economic alchemy. What was the chemical process that Germán wanted to comprehend? What was the philosopher’s stone? It was simply how wealth was created. How wealth was created in factories, at workshops, in fisherman’s nets, in orchards. The issue was contemplated as follows: the alchemy to be explained was the transformation of money into real wealth, i.e. assets. Bernácer later found the answer.

Soler López, professor of ‘Recognition of Commercial Products’, greatly influenced Bernácer. Bernácer was the teacher’s aide in López’s official chair where he gave classes and conducted practices and experiments. Germán was appointed teacher’s aide according to his personal record dated 31 October 1901, which was the year he received his degree. According to a subsequent certificate ‘he was appointed by the Honourable Chancellor of the University of Valencia and at the proposal of the Faculty of Professors of the Business Studies School as a temporary free Auxiliary Professor’. The aforementioned certificate says that on 18 November 1902, by agreement of the faculty, he was appointed: ‘Personal assistant of the professor of Physics and Chemistry, Natural History, knowledge and application (illegible) of business and recognition of commercial products…’ ¹⁵⁹

Physics labs had to be conducted at the municipal laboratory located at number 3 Cádiz Street, which had been set up by chemist Soler Sánchez. Insistence and hard work made it possible to improve the school laboratory between 1905 and 1910. The chemistry laboratory was created at a slower pace until 1903, when splendid instruments arrived from France.

From the beginning of his time spent as an assistant professor, Bernácer carried out physics experiments, which fascinated him. He liked the seriousness of the science called physics, which never failed and could be represented mathematically on paper like a second lab. Strangely and inevitably, the two unrelated trainings would complement one another in Bernácer: accounting and physics. Accounting is a way or recording what exists and nothing but what exists, and physics experiments with facts that also exist. And these two sciences (physics overwhelmingly exceeds accounting as a science) shaped Bernácer’s scientific personality, where there was no room for useless metaphysics or fallacy or unnecessary learning.

But Germán was truly an economist, although his degree was not in economics, and as an economist he wanted to understand the economic events around him. He wanted to understand the explanation of misery; how misery was created, the same way that the gold block of wealth originated from the philosopher’s stone. Physicist-accountant Germán wanted to understand the other transmutation and how it went the other way: How could heavy shiny gold be turned into ash? Or laughter into tears? He wondered why physics and its new discoveries, minted in the engraved glory of technological innovations, told him that wealth was easy to create and that as humanity advanced, poverty would be banished. And since it wasn’t banished, there was an asynchrony between the capacity to generate wealth, the same wealth and poverty. The answer does not have to do with the unequal distribution of wealth, as the late Marx would explain it. There would be a much more profound internal explanation.

On 18 June 1901, he earned his degree to become a certified accountant with a grade of outstanding. This was the same year that he enrolled at the school. He was 18 at the time.

For nine years Bernácer had been trying to heal his spiritual scar created by the death of his only sister Isidorita (1897+), who had been loved by all. This was an event that wounded the entire family. His mother was deeply affected and never really recovered.

Since 1899, Spain had been living horrible years that affected its dignity, its politics and its economy. The empire was drawing to a close and the glories of the crown were crashing down. Cuba, Puerto Rico and the Philippines left to never come back. The Caroline and Mariana Islands were sold to the highest bidder. And all of this was combined with the new yet faltering reign of Alfonso XIII; the labour unrest of 1901 and the problems with Morocco the same year that were undermining an already-outdated economy. Like other ports, Alicante received the influx of the fall of the national economy; and like other families, the Bernácer family saw a decline in income, production and trade at their shop. They moved to Bazán Street. Bernácer’s mother, whose health had been poor since the death of her daughter, got worse. Bernácer, as the eldest brother, was called upon to assume responsibility, to rescue his family from the precarious situation they were in. Thus, he began giving private classes to students at the school. In the darkness of his personal and family situation, there was a glimmer of light via a call to take official exams to become a professor of Industrial Technology, which was also called Study of Principal National Industries. There was an opening in Alicante itself, and it would be given to the person that earned the highest mark.

The diminutive study of Germán Bernácer in the
seafront house of the San Juan Beach in Alicante.

The exams were held in April and May 1905. Bernácer, at 22, was named tenured professor of ‘Industrial Technology’ at the Business Studies School, per Royal Decree of 19 May, with a salary of 3000 pesetas, ordering the undersecretary of the Ministry of Public Education and Fine Arts, the Count of Albay, to give him possession of his post. His long-time friends Miró, Esplá, Castillo, Irles, etc. were ecstatic about the news and according to Oliver ‘they went in droves to the Encina Station to accompany him from there to Alicante, joyfully congratulating him for the victory’. A few days later, Bernácer officially took over his position as professor in the presence of School Director Manuel Gironés, with Hipólito Domínguez acting as registrar. He turned 22 the following month.

He was already a part of the faculty of professors, further developing, now as a professor, his relationship with his friend and teacher Soler López, who would later be the school director and to whom Germán owed so much. His salary allowed him to more easily attend to the needs of his family. The efforts put forth for the exam made it possible to see another of German’s character traits: his enormous sense of responsibility, which he showed first as an older brother and later as a father.

He was from Alicante, in his character, his culture, his feelings and his passion. That explains why he stayed in Alicante, working as a professor, for 25 years, five months and 27 days, according to his personal record (and the biographical and precise accounting of Oliver). His primary co-worker was, inevitably and happily, Martínez Soler, with whom he worked on laboratory tasks as well as on the lab’s expansion. Another interesting figure was Vicente Martínez Pina, degree-holder in Political Economy and Comparative Commercial Law, because Martínez Pina’s education on economic theory made it possible for him to closely look at German’s work and evaluate it according to his knowledge of economic doctrines. The conversations the two held must have been interesting; it is a shame that they didn’t live in different cities, because the letters they would have written one another, if kept, would have given valuable information about Bernácer’s thoughts regarding this subject. Another faculty member was his restless and cheerful brother Julio, who was a Professor of Modern Languages from 1912 and was associated with the School’s Department of Sciences. His brother was fluent in English, French, Italian and German, as was Germán. Julio prepared to take official exams in Business Accounting and gave classes at the Iborra Academy and at the French School. Afterwards, he worked as an administrative assistant at Tabacalera S.A. in Alicante and later in Madrid, after 1932, just a few years before his absurd death.

Bernácer was fully dedicated to his work as a teacher and to preparing laboratory experiments. He even managed to prepare interesting textbooks for the Business Studies School between 1906 and 1936. There are references to a physical methodology book around the year 1932.

Such information may lead to the belief that Bernácer as the hidden researcher was always in the shadow, in total anonymity. This is not true. He held positions of a certain level of importance, but he never tried to arrogantly flaunt this fact. In 1906-1907, when he had been working as a professor for one year, the school registrar, Hipólito Domínguez Navarro, resigned and it was necessary to fill the position. A vote was held and Germán Bernácer was chosen. He began occupying the Registrar’s Office on 28 January 1907. He took over the position on 5 February and left it on 22 August 1909. He was once again appointed registrar per Royal Decree of 21 April, and he resigned on 31 December 1916.

His education at the school opened the windows of his understanding to discover the enigmas of his childhood and his adolescence: probably the enigma of buying and selling. Accounting and commercial law taught him what he already knew: businesses asked for loans to fund their activities. The economy was a marketplace in which voices wanting to buy were crossed with voices asking for loans. Business owners who contributed money from their pockets were also lenders of their own businesses. It was clear that companies, as legal entities, owed money to their shareholders, as individuals. In both situations, debt-based relationships were formed for those who owed and credit-based relationships were formed for those who lent, and all of this was formally and legally documented by means of beautiful papers decorated with the trumpery of strict protocol: they were shares, securities, bonds, certificates, vouchers, etc. Germán soon advanced as a silent sailor through the hidden monetary circulation of the economic system. It will be clear later that this is not just a blithe sentence. One loans what is not consumed; savings are lent. Thus, the savings of some –capitalists– fund investments of others, the producers, entrepreneurs and businesses. In theory, savings should be the same as investment. And what is investment? For Bernácer, it was the use of savings to fund the acquisition or formation of capital goods.

Germán Bernácer seated third from the right. It is very likely the group at Research Services of the Bank of Spain.

At a later time, in the physics lab, physicist-accountant Germán realised two things: that these papers called shares, securities, bonds, etc. that provide a record of a simultaneous credit-debit relationship are the ships that carry savings to investment, in the same way that when he was a child looking out from the balcony of his home he saw the ships carry goods abroad.

Nonetheless, he was astonished when he understood what the man of the street, the great business owner, the grand banker and the humble innkeeper had known for some time: there is a market in which these securities – these stocks called financial assets – were bought and sold. At the stock exchange, in a loud voice according to internal rules, securities were sold and bought; just as in his parents´ shop, where the fishermen, knife sharpeners, greengrocers, barbers, ice-cream vendors, etc. cried out, announcing their goods. The value of these securities was bought, or what may be better understood, buyers basically bought the capacity of these securities to generate (non-production) income. These types of assets were combined with real assets such as land, buildings, plots, the mere possession of which entailed the ability to obtain income. It was a lesson that came from the past and reached Bernácer’s eyes with uncommon energy. The lessons learnt from commercial law and accounting about matters such as liabilities, equity, non-depreciable fixed assets, stock portfolios and so on, were ideas seen differently by whoever was different. The shouting of street vendors and the scandal of white collar salesmen in the stock exchange and the continuous disorder of the souks of the ordinary and of the financial market were interpreted and translated like a magical order that was only understood by Bernácer.

This is the work and findings of scientists: to find a logical order, the law that governs movement in an entanglement of apparent disorder. He noticed that a common activity coordinated this ruckus: everyone demanded money and in the middle, some supplied it and others asked for it; it was supplied by those who bought goods and it was demanded by those supplying these goods, whether these goods were tomatoes or soaps or shares in tobacco companies or chemical industry bonds. But, there was something else. There were traders that didn’t shout, but with the most absolute discretion and outfitted in dark suits –scribes and distinguished gentlemen– carried out an ancient task in the world, especially in the Mediterranean. They were bankers. They remained silent because their goods, money, were in such high demand that they advertised themselves like an organic claim –hunger, thirst– in the minds of men. In addition, this money was not theirs, it was others´. Their business consisted of negotiating this third-party money with others, charging interest. And here is the word, interest, the concept, the poisonous reality that preoccupied him scientifically throughout his life and that as a secret curse spilled into earthly paradise, tormenting mankind… interest. The price of things being a quantity of money for a unit of goods also worked for money; money also had a price, and this price was interest. Without a doubt, a remarkable thing.

In the small city of Alicante, like in most Spanish cities, in the towns and large metropolises, a day-to-day reality full of bitterness, of terrible family tragedies, closed in upon men, and it was seen as the most natural thing in the world. Bernácer contemplated the existence of pawnbrokers, the evil aggression of usury that cleaned away wealth with a sharp scythe. The problem was not the usurer, but rather the interest of money. For this reason and for others, a moral concern hounded Bernácer in his scientific projection, as capital hounded Marx. The interest of capital, of money, had to have come from a perverse root and not from wealth. It did not come from production, as was believed by producers. Production, through the ordinary market (as it was usually called by Germán), created wealth and not misery. Moreover, interest was the door that closed the passing of the flow of money to the productive garden; then, interest is located outside production, out there, very far from earthly paradise. In the city of Alicante, when the empire fell with the tragedy of Cuba, the Philippines, etc., as in most of the emerging Spanish nation when it was created in the times of Philip II, the usury loan was an everyday reality, and it is not certain whether his family suffered this reality. In an economic collapse, when large and small businesses fall, like his parents´ business fell, the hyenas of the system leave their dens to satisfy others´ need for money and then, when the money is not returned, they keep everything. There was a psychological, personal and moral environment in Bernácer’s surroundings that made him look back to analyse this evil creature called interest. He couldn’t bear to contemplate how someone could accumulate wealth without working, i.e. with the monetarily (not socially) productive parasitism of interest. These issues were contemplated by the certified accountant with knowledge of political economics, accounting and commercial law fresh in his mind while he carried out physics experiments and while he strolled in the bustling city of Alicante. Around him he saw that there were people who lived to work and those who worked to live, and there were others who wanted to work but couldn’t find work in the market, and there was a parasitic cast that lived without working thanks to comfortable non-production income. Financiers (those that lived from investment income) were not workers. They lived from the work of others, because if they consumed goods that they had not produced, it meant that they had been appropriated from others. The mere possession of financial assets, of homes, of fertile lands, allowed them to obtain convenient, free and secure income, due to a peculiar confirmation of the economic system. And since these assets were acquired with savings and had a value, the percentage yield of the savings invested financially was the result of buying this value with the income that it provided. This meant that if an asset was acquired for 1000 pesetas and yielded 100, its percentage yield was 10%. This is where interest comes from, not from anywhere else! Outside of production!

It was necessary to show that these financial assets were not social and productive wealth, contrary to the teachings of economic textbooks and, later, Keynes, his followers and the entire legion of untiring macroeconomists. The issue was quite simple. After taking savings to investment, after forming equity, after financing the productive system, financial assets, securities, bonds, etc. do not die like bees after stinging. And it would be logical that these papers –simple acknowledgements of debt and a promised yield– remain recorded in a book and nothing else. But what happened is that these papers were bought and sold, and to do so, it was necessary to have much more savings than was needed in the beginning. The same thing happened to quiet and bored landowners that dozed in the colonial cafes of Alicante and to landowners who continually bought and sold. And, for such activities, society as a whole required huge quantities of savings, well above the savings needed for the original financing and service provided.

From the crazed chaos of blood, Servet knew how to notice order, and others were able to channel this order and discover not the flow of blood, but two flows: one in the veins and the other in the arteries. Other scientists discovered the mystery of air and blood: one flow gathers oxygen and carries it to the cells where it is burned, taking the carbon dioxide that is expelled by the lungs, resulting in another flow. Bernácer, in the tremendous chaos of the ordinary market, of the quiet and underground banking where there was a confusion of grocers, bazaars, vegetable sellers, fishmongers, gunsmiths, hairdressers, stockbrokers, speculators, financiers, functionaries… was able to understand the order that, although perverse, was indeed order. One market was the ordinary market, where true goods were produced, where production compensation known as production income (wages, salaries, etc.) was produced and sold. This is where wealth and income was generated and where the wonderful alchemy of the biblical and sacred transmutation of money into wealth occurred. The other market was where signs of wealth or artificial wealth were bought and sold, where financial assets were bought and sold. Both markets, the ordinary and the financial market, needed the common blood plasma of money. Yet, financial assets were not wealth, but rather an illusion of wealth, an illusion of the wealth that had been generated. It would be like if next to the shops, fruit shops, etc. there were mortuaries that did not shout to sell their goods, but sold them nonetheless.

The physicist realised the obvious, which is that the gift of being in two places at the same time cannot be found in the physical world of mortals; only in mystery novels; and in the economy, there were no possible secrets. If savings were in the ordinary market, they could not be in the financial market and vice versa; this meant that the financial market stole money from the ordinary market. Of course there are flows of spending and buying from the ordinary market to the financial market, which give rise to different yields of capital goods, and there are inverse flows, which make income go from the financial market to the ordinary market. This reshuffling of net flows is explained by the theory of economic cycles.

According to statements made by Bernácer, in December 1905 he had an idea made up of discovering monetary circulation in the mechanism of the circulation of money, more exactly through the organs of the economic system, specifically three main arteries: consumer spending, spending on capital (investment) and disposable funds; the latter would be spent in the financial market and would not stop being disposable funds. This idea was the secret code of German’s entire work. Maybe it was luck, or maybe not (luck is sought). The truth is, it was a colossal idea. Bernácer stated ‘…Regretting, not least on my part, that my work will not find in its day an environment better suited for its dissemination, because that would have given this orientation of monetary theory, which I think successful, the help of the best brains, which would impress it with quicker momentum. I think I can prove, even without the advantage that a competent critic would have provided me, which I have been lacking, that the poor seed that germinated one day in December 1905 has now reached momentum in its results, that it may go hand in hand with those obtained by other more or less academic economists, who have also stopped thinking in terms of perfect equilibrium…’ (concerning Robertson’s quote). These words were expressed verbatim in his book The Functional Doctrine of Money (1945) when Bernácer was 62 years old.

He looked back and found himself in the centre of an infinite market, astounded by the shouting and disorder, and suddenly, on his feet, he was astonished, since he had found the key that explained it all, the theory of money and of circulation. This young man in the infinite and eternal souk of the market immediately found a way out. He was 22 at the time!

It is common for good scientists to arrive at the city of the truth without following the arduous and prolific path of demonstration. This happened to Germán, who, aware of his achievement and of the need to pave the intermediary path, devoted the rest of his life to doing it. He would finish this feat 50 years later, with a vast amount of work along the way, in his book A Free Market Economy without Crisis or Unemployment. The young astonished man of 22 would agree with the wise man of 72. The obsessive observation of economic reality and the constant reading of related works, which in fact were scarce, and the repetitive and almost fanatical note taking, matured into a great book that would be handed over to the printing press in 1915 and would be published the following year. This book had sprouted in 1905 and it received moral strength in the wake of a trip around Europe.

He had the opportunity to take advantage of a scholarship in Belgium, Germany and Italy for eight months. There is no doubt that eight months is little time to study. If, in addition, it is coupled with the difficulties of the spoken language (not the written language, which Bernácer knew), moving from one county to another is difficult. His personal record states that ‘as per Decree dated 25 September 1911, he is granted a scholarship lasting eight months in order to study Technical Sciences in Belgium, Germany and Italy’. The scholarship lasted from 1 October 1911 to 31 May 1912. Certain experiences marked the will of the researcher, and this was one that stirred Bernácer. As stated before, this was little time to learn technical sciences, but a man whose mind was restless and fed by the rich minerals of economic theory knew how to draw conclusions from this interesting trip. The truth is, more than conclusions, he ended up with concerns and questions. He knew about the circulation of money and began to understand the origin of interest, and this origin was found in the perpetual income provided by land to its owner. The ordinary market of Europe, the production market, was lit by a number of flares coming from human minds. These flares were the technical advances that brought together the economic idea of classical economists and made the productive workshops of mankind much more productive. The emergence of synthetic rubber, the first submarine, colour photographs, the use of large machinery that intensively multiplied capital and, more slowly, the appearance of the theory of relativity, which, as a physicist, captured his attention, let him know that mankind had found the path that went from the valley of tears of misery to earthly paradise. The horn of plenty had been found, and he was worried that mankind was getting poorer without knowing why. The creation of greater wealth was starting to be distributed to the horde of workers, and jobs were wanted by those who didn’t have them. Great political and economic units suffered internal and external tensions during those times. Political agitators promised paradise on earth (where else?). Emerging wealth allowed everyone to dream about good things and not about the horrors that were soon to be, the horrors of the First World War. The conclusion drawn from this trip was the understanding of the asynchrony between the capacity to generate wealth and the misery on the other side. Production capacity is capital goods funded by savings, and these savings are captured. This is the cunning of interest and what leads to the decapitalisation of businesses.

He finished writing Society and Happiness in 1915 and it was published in 1916. The title, which was very misleading, diverted the attention of researchers of Bernacerian works, and they did not give it any importance. I have inventoried and closely examined Bernácer’s monetary construction beginning with ‘The Theory of Disposable Funds’ from 1922, and after that time I worked with subsequent publications. Nonetheless, the book from 1915-1916 was not forgotten, because I didn’t even bother to flip through it, due to a meaningless alleged common sense that believed that a book with this title would discuss utopianism, literary fantasies of a learning economist between 32 and 33 years old who must therefore not have a solid background. The title, I stress, Society and Happiness was followed by ‘A Test of Social Mechanics’, both of which I instinctively rejected for the same reasons. A lagging physicist from the past century, as so many other learning sociologists, utopian socialists, steeped in the modern dress of neopositivism, undoubtedly wanted to construct, as Comté, a sort of social engineering.

Common sense and instinct failed. The subsequent reading –pure effort of scientific decency of having to read it out of obligation– let me be doubly astonished by this work, Society and Happiness. It was an abstract and profound work that sowed the harvest that would be collected years later. An interpretation of David Ricardo’s income appears in the first pages, the origin of interest, the circuit and monetary equilibrium and, also, the balance between real return on capital and money, matters that are subsequently discovered. It is a book on macroeconomics when well read, a book on morality when properly understood. It is, moreover, a work that, being the first, is abstract, complete, comprehensive, unlike the rest of his books, which were more enjoyable and more specialised. The creative strength of the young man of 33, a physicist and certified accountant, annihilates those scientific concerns that had bothered him for years. It is a robust tree that grew from his happy intuition in December 1905, watered by immutable springs of hours of reflection and by his brief but fruitful trip around Europe.

The book was published in Madrid at the Modern Library of Philosophy and Social Sciences by Francisco Beltrán. According to the book, a previous work had already been written by the untiring physicist that was entitled Food Industries, which was published in Alicante 10 years earlier, in 1906, when Germán was only 23 years old and was just beginning work as a professor.

His mother, who he respected and worshipped, died in 1917. It was the second blow after the premature death of his only sister. Two years later, in 1919, and as a result of much thinking, that great tree of Society and Happiness began to bear fruit. He published his first economic article in the journal Revista Nacional de Economía. The article was entitled ‘Currency and Social Issues’, and in 1921 it was followed by ‘Two Current Issues: Banking Law and Tariffs’ and ‘The Monetary Problem’. The plan was designed in his mind, but he lacked something that allowed him to connect economic operations and their impact on income: consumption, savings, capitalisation, decapitalisation, the genesis of disposable funds, all of which are made with money and, given that they are made with money right there, they should comprise the monetary market: the supply and demand of money. The plan was designed and published. It was the theory of disposable funds, the master key to the work of Bernácer. It was published in Revista de Economía and sent (most likely in French) to many economists around the world, including Robertson. It is not certain what happened to this work in the hands and understanding of Robertson, if Keynes read it or not; what is certain is that its echo took 16 or 17 years to be answered. Robertson brought attention to Bernácer and to his article in the journal Económica in the year 1940.

Germán began to enter cultural circles in Alicante. He joined the editorial committee of the magazine Literaria Local. He was later appointed secretary and subsequently vice-president of the Alicante Literary, Scientific and Artistic Cultural Centre. Alicante and its weather formed a peaceful space where he felt comfortable. He had time to work and to think. His life was calm and tranquil while taking care of his mother, elderly and ill, resentful since the death of her daughter Isidora until she died, and taking on the financial responsibilities of the family. Teaching and research used up his free time. He was a man of few friends; he only spent time with Miró, Esplá, Varela and a few others who, unlike other Spaniards whose national pastime was to spend time at cafes, preferred the solitude of the beaches and the secret noise of nature. He was 34 when his mother died. Bernácer was still single. For a shy and quiet man like him, it must have been a considerable problem to perform the ritual ceremony of the wedding party.

They were prolific and tragic years for Europe. Englishman Robertson was pondering his Money”, and the other Englishman, Keynes, published his Treatise on Monetary Reform in 1923, a work in which, like an angry Moses, he knocked down the gold standard, the guilty cause of the sin of unemployment, something that Bernácer already knew. Keynes was an advocate of paper money (that is, without metal backing) to finance economic activity, since equilibrium was required, not between currency and gold, which was absurd, but between currency and the wealth created, which was logical. This is what Germán Bernácer had clearly said in 1917 and throughout his life: that new currency should be created to finance working capital and that savings should finance fixed capital, since working capital, when clearly understood, is nothing other than the wealth created or national product. As Lucas Beltrán Flores ¹⁶⁰ said (not the editor of Society…), the years from 1870 to 1930 were bountiful ones for economic science. After the contribution made by Wicksell, there was Hawtrey, Shumpeter, Hobson, Clark and a long and fruitful so on. Doctor Schacht in Germany managed to defeat the thousand-head serpent of frightening German inflation, creating the Reichsmark. This important economist and well-known German banker had read Bernácer’s works in Germany and when he was invited to Spain, he asked to meet him in person, at the surprise of his trip organisers, who didn’t know who Bernácer was.

26.4. His marriage and children

The circumstances of scientists’ personal lives surely condition their science. An unfortunate event –and a bad marriage is one– can destroy scientists much more effectively than someone finding an error in one of their math proofs. Bernácer was still single at that time, with marriage in the future. This marriage, which was a lucky and good decision, would chart a sunny and warm path through his scientific research. María Guardiola would not only be his lifelong companion and the mother of his children, she would be the glass house where Germán could hide away, unaffected by the perpetual drizzle of domestic problems.

The period of dating, of courtship, of asking for her hand, the complex and ceremonious ritual in those times is something that I will never know about, because I cannot imagine introverted Germán going through this emotional and social relationship without a great blush on his face. Nonetheless, I will hazard some assumptions.

José Guardiola Ortiz, Maria’s father, was a renowned and prestigious criminal lawyer and an indomitable Republican. He was a councillor as an independent radical-socialist in April 1931. He became Civil Governor of Valladolid and was appointed ambassador in Portugal. He had a strong character and always had a strong curiosity about intellectual matters. This is seen by his conferences and his broad education, which not only included intellectual subjects, but also encompassed the sensual culture of cuisine, which is one of the undeniable manifestations of a people’s civilisation. He was a great connoisseur of Alicante cuisine and also a good cook. His love of food can be appreciated in his book The Cuisine of Alicante and Wartime Dishes.

He was friends with a mutual friend of German’s, writer Gabriel Miró, who he admired and whose writing he loved. A second book was evidence of this esteem. In fact, Intimate Biography of Gabriel Miró, published in 1936, was kept by his daughter María and by Germán as a precious relic. This book, filled with rich and colourful fabrics, also had beautiful illustrations, some of which were done by the hand of another friend, Varela. One of Maria’s uncles, her father’s brother-in-law, was journalist Emilio Costa, who died after the Spanish Civil War in a concentration camp (Orleansville) near Orán. A group of friends, including Germán, collaborated with this director of Diario de Alicante newspaper.

Young Bernácer was at the home of his older, talkative and well-spoken friend José Guardiola. It is likely that through José’s brother-in-law and mutual friend Gabriel Miró, Bernácer got to know the Guardiola family and was introduced into the family environment of this cultured dynasty. Another site of intellectual debate was the Huerto de los Leones in San Vicente, which was a meeting place of the friends of José Guardiola, then President of the Cultural Centre, called by G. Miró: ‘La casa Hidalga y amiga’. According to Oliver, in addition to a fondness for conversation and reading, they were joined by a penchant for sunbathing and swimming (Germán even sunbathed in Madrid, when this trend had not yet caught on in society). They held long conversations at the ‘Belvedere’ chalet in Muchavista, which was in front of the sea.

The truth is that wherever Don José was, his daughter was generally there as well. And thus, the love and affection that would later unite the two in matrimony was born. I believe that the secret romance, so secret that the couple didn’t even know it, evolved through a loving and silent plan coordinated by Miró, his future father-in-law José Guardiola and other friends who, knowing Bernácer’s reserved and shy nature, wanted to complete the impossible mission of finding him a girlfriend. The plot, which was secret, since it was surely never spoken about but was understood in the invisible and spiritual language of friendship, did not lack difficulties, given that María was 20 and Germán was 42. A 22-year age difference! At a time when masculine sieges, calculated and managed by the bride in the outlines of baroque formalism, were titanic feats, I do not know how Bernácer managed to end up at the altar on 17 February 1926. I refuse to explain what I don’t know, which are the details of the courtship. It is enough to say that German’s shyness prevented him from following the insurmountable protocol of asking for her hand.

Germán not only married late, but he also arrived late for the wedding, as a result of his incurable shyness. On his wedding day, Germán was fulfilling his promise to listen to ‘La Pastora’ by Ernesto Halffter at Oscar Esplá’s home. The music was good, as well as very long. Time went by and as the wedding hour drew near, causing shy Bernácer impatience and nerves, he remained in his chair due to a combination of politeness, shyness and embarrassment. It was surely his friends who finally realised it was Germán’s wedding day and turned the music off, accompanying him to the church. At the church, an uneasy and happy José Guardiola waited nervously for his scatterbrained son-in-law, whose defects he already knew well. Who know how many times José looked at his watch.

There was a way of doing things among the young intellectuals of Alicante, who, to some extent, wanted to do things and ceremonies, but in a different way, without the baroque oppression of customs and manner. One of these things was the wedding, which was celebrated at the Collegiate Church in the small communion chapel, where María Guardiola Costa and Germán Bernácer Tormo got married in an intimate and informal wedding surrounded by close friends.

Four children were born from the marriage: Eda, Germán, Ramón and Ana María. One of the boys, Germán, inherited his father’s fondness for physics, and he earned his degree in this discipline. Ramón, or Rom as he was called by his father, earned his university degree in Economics and Exact Sciences and studied to be a Business Professor.

He was a responsible and selfless father who always knew how to provide his family with the financial security that makes a home peaceful. He was his children’s father and teacher. As a capable man or, better said, as an economic man, he never stopped being a government worker, whether as a professor or as a technician at the Bank of Spain. His psychology was somewhat that of a government worker who knows that his limited salary is as sure as it is unsubstantial. It was this security that gave him a certain peace-of-mind, and it was this limitation that always caused some anxiety, although not much, in caring for his family. It appears as though this was true when he retired late in life. The great economist did not know how to hold on to earnings; he lacked entrepreneurial spirit and the adventurous impetus natural in a businessman; he didn’t know how to deal with unexpected situations. He only knew how to bring his wages home and give them to his wife. He didn’t earn money with economics, nor did economics give him a special status. His wife María, or Maruja as he called her, handled the family finances and, to make matters work, she constantly struggled to make sure that Germán, the everyday Germán, carried money for his expenses. When she was careless, it was possible to find a lost Bernácer on the street or on the subway, frenetically looking in the depths of his pockets for a single coin. Not carrying money on him was one of his character traits, a revealing one at that. How different from John Maynard, for whom money was a part of his life and his entertainment! He handled cheques and foreign currencies with the skill of a swordsman. I can imagine him, happy and content, going to the bank to ask for loans in order to go to the stock exchange and buy and sell shares, surrounded by the excited shouts of brokers, winning, losing, returning loans, riding his toboggan up and down the peaks and valleys of the preferences of public liquidity in the City of London.

When Bernácer got married in 1926, he had just published the memorable article ‘The Economic Cycle’, which was the prolific child of the third part of Society and Happiness, a book that gave him his nickname (created by Gabriel Miró) Germanazo (or Big Germán). Afterwards, the book The Theory of Interest… and the article ‘The Theory of Disposable Funds’ were also spawned by Society… He understood the hidden route where monetary rivers flowed and the steel floodgates that held them in and the silver keys that, as capricious as they were, opened and closed income, and the desert of salt and saltpetre where savings disappeared and where humanity, the unemployed, income and wealth died of thirst, far from earthly paradise. He understood economic cycles in an idea that was born in 1905 and published in 1926, just after he got married, an idea that prophetically foresaw the cataclysm that would come three years later, in 1929. He found another epicentre of human misfortune, just like killing machines, in a human activity, stock market speculation. And he also found the path of this moral criticism

His wedding did not affect his relationships with his long-time friends, which included a circle wider than Miró and Esplá. He was also friends with Rafael Altamira, José Martínez Ruiz, Arniches, Chapí, Emilio Varela, Figueras Pacheco, Vicente Bañuls and Adelardo Parrilla, although he was not as close to them as with Miró and Esplá. Other people sporadically joined this circle of friends. His father-in-law José Guardiola Ortiz, Eduardo Irles, José Chapulí, José and Juan Vidal, Manuel Tormo Bernácer, his cousin Julio Bernácer, his brother Emilio Costa, Rodolfo Salazar, Eufrasio Ruiz, Heliodoro Carpintero, Rafael Bas, Esteban del Castillo, Agustín de Irízar y Góngora, Edmundo Ramos, Salvador Sallés, Luis Cánovas, whome were also joined by his friends born and raised in Madrid. During this stage of his life, the time when he was married and living in Alicante, he found peace of mind, just another child of the landscape, of the yellow and warm sun of friendship and of the astral king of his land. He saw happiness as a haven of peace and reflection, far from the frenetic pace of hasty pleasures and of the blinding lights of quick success. He liked nature and especially sunlight, the diffused and golden light that illuminates things, not directly looking at the blinding sun that damages one’s eyes. A natural product of this peace and this light are the works written with amazing simplicity and with transparent syntax, fleeing from the unbearable litter of useless scholarly syntax and blinding empiricism. He moved his home from Joaquin Costa Street (Reyes Católicos) to Alfonso El Sabio Street in front of the market and then to Plaza de los Luceros. Newlywed, among his varied economic readings, he found time to enjoy the work by Ibsen ‘Edda Glober’, which touched him. Meanwhile, Maruja became pregnant with their first child, who, when born, received the inevitable name of the protagonist of the novel: Heda, only with the Spanish spelling, without the invisible and soundless H: Eda.

Oscar Esplá, to whom he dedicated Society…, was Edita’s godfather, demonstrating his intimate friendship with Esplá and Miro. Eda would be the depository and guardian of these wells of family memories and would always accompany her parents during their lifetime. The second of the children, the first male, was Germán, who was named after his father in the customary way. This child was cheerful, open, outgoing, much like his father’s brother and diametrically opposed to his father. He remembers the people his father knew personally and through letters. Jokingly, he used to reread the letters from Robertson to his father, giving them a haughty English tone that caused spasms of laughter. He has worked for UNESCO in Chile for many years.

The third of his children was Ramón, the last to be born in Alicante. He was shy and physically resembled his father, especially his personality. He has brought together his father’s works and he prudentially centralised relationships with the researchers who have worked on his father’s scientific doctrines. If Society… was dedicated to Oscar Esplá, Gabriel Miró would have a place of honour in the enduring affection of Germán, proven by the fact as that Gabriel Miró’s real self, Ramonet, which German and Maruja knew, was bequeathed to their third son: Ramón. This child has retained an endearing affection for the now devastated and bald Sierra Aitana, spending time in Clot del Pi.

His youngest daughter, Ana María, was the only one born in Madrid, the second to last stage of German’s life. She studied to be a pharmacist, although she left her studies when she married Raimond Baineé. She lives in France, where she has started to translate the great book by Henri Savall Germán Bernácer: L’heterodoxy en Science Economique, since her siblings lovingly look over their father’s work.

Let’s go back to Alicante, where the married couple still lived. His father lived with them, but died two years after the wedding. The year was 1928 and two years later, another painful death occurred, the death of a close friend, Gabriel Miró. The year was 1930.

In 1923 he was appointed Secretary of the Alicante Chamber of Commerce, Industry and Navigation, a post held along with being a professor at the Business Studies School. In Alicante he was a prestigious man whose science was admired and recognised by educated people in society. His research work was reaching beyond the small borders of his province as he began publishing in economic science journals. In 1929, after publishing The Economic Cycle, he published Technique to Return to the Gold Standard: the Problem of the Price of Money. Both he and Keynes were obsessed with this matter. It was necessary to get rid of it. That same year, England had its issues with the gold standard, which, according to what was said, was one of the reasons behind the unforgettable fall of the stock exchange on Wall Street. The year his fraternal friend Gabriel Miró died (1930), he published an article in his friend’s honour in the magazine Sigüenza. The same year, he participated in the course organised by the Section of Economic, Financial and Monetary Issues of the Spanish Association of International Law. His specific contribution consisted of the conference ‘The Physiology of Money’.

Emilio Varela artist, and Gabriel Miró and Julio Bernácer, writers,member of the Alicante Circle.

26.5. The move to madrid

The second stage of Germán Bernácer’s life began in Madrid. His hiring at the newly-created Research Services of the Bank of Spain was irresistibly appealing for the economic scientist. The position was so attractive that even though he loved his land, the place where he had lived his entire 48 years, and had three children, and cherished his talks with old friends and was committed to his lab and his university chair, he nonetheless went. It was a painful move that he never got over. Any opportunity was a good one to go back to Alicante, and when he retired early, he went back to Levante.

The Bank of Spain was increasingly aware of the enormous importance of monetary issues. Regardless of the progress of economic theory, authorities were aware that assessing the economic situation, changes in magnitudes, calculations and so on were important insofar as they related to the skilful handling of domestic and international monetary issues. This work, entailing research, statistical and legal infrastructure support, was carried out by research services in other countries. The Banking Law of 1921 entailed greater complexity in the Bank of Spain’s task to handle economic issues and international relations. Thus, the creation of Research Services was imposed.

Research Services at the Bank of Spain was established in December 1930, at the initiative of Governor Federico Bas, and operations began the following year in January 1931. Approximately 12 months later, Bernácer was appointed head of Research Services. His appointment is on record on 7 December 1931 as per a resolution of the General Council. Julio Carabias was governor of the Bank at the time ¹⁶¹. It is clear that it would be an interesting experience for any scientist to practically inaugurate Research Services, thus creating the model for this new administrative and technical unit according to his image and likeness. However, this assertion will be discussed later on.

Research Services began to operate in quite an interesting way. There were two shifts, one in the morning and one in the afternoon. The first shift was led by José Larraz and was in charge of translating and classifying laws and bank statutes. The afternoon shift was led by a future great friend of Bernácer’s, Olegario Fernández Baños, and was in charge of creating index numbers and technical financial studies. Before the year ended, Larraz gave up his position, which was quickly requested by Germán Bernácer. Thus, in a strict sense, I can’t say that he was the first Head of Research Services at the Bank of Spain. At the time (1930), Bernácer was working as a professor of ‘Industrial Technology’ and in the position of Secretary General of the Alicante Chamber of Commerce, as mentioned above. When hearing that Larraz had left a vacancy, Bernácer quickly wrote a letter to the first Deputy Governor of the Bank, Mr Pedro Pan Soraluce, on 30 November 1931. The letter read: ‘Economically speaking, the position I would like is not any sort of improvement for me. My request is only a response to my interest in better satisfying my penchants and in finding an environment suitable to my favourite studies…’ The request was well-received by the Bank. On 7 December 1931, the Bank General Council agreed to his appointment. The agreement stated: ‘The management of Research Services is the responsibility of two heads…, one of them is Olegario Fernández Baños, who is currently deputy director, and the other is Mr Germán Bernácer Tormo, who is appointed to occupy the vacancy due to the resignation of Mr Larraz, agreeing that his duties will correspond to his degree of seniority at this bank…’. Bernácer, with much regret and much excitement, packed his bags and said farewell to his land and his friends; leaving his childhood, adolescence and maturity behind. He had a difficult time coping with the problem of his professorship, which he couldn’t attend to and which created a professional, emotional and economic void. However, he soon filled this teaching and professional space.

Meanwhile, many things happened in the world. The most important was the bonfire that quickly consumed the Pagan temple of Wall Street, the flames devouring other adjacent buildings. The market in general was destroyed by depression, which decreased production and consumption. Upon the still hot embers of the fire, it was possible to hear the voices of lost economists like Fisher, an economic genius, trying to find north with his stone compass. They were years of tragedy, offspring of tragedy, like the Second World War was the offspring of the first, which ended with the madness of Versailles. Meanwhile, the lone sailor Keynes unravelled his work in 1923 and published another Treatise on Monetary Reform in 1930, which discussed a theory of cycles and gave a clear description of the role of money in the economy of his time. The reflection and the precipitation that emanated from the anguish and terror of the depression encouraged him to write. This was still six years prior to important events like the Spanish Civil War and the emergence of The General Theory of Employment, Interest and Money. They were years of ignorance for Bernácer, who did not know what Keynes and Robertson were doing or the whereabouts of the article he had sent to Robertson in 1922-3. He neither knew nor cared at the time. The thirties was a triumphant decade for this theory and for Keynes’ theory and it was chaotic for the world and fraught with impatience for a world that sensed tragedy looming. And it was a decade in which the evil disease of doubt was born in the mind of Bernácer caused by a virus that came from England.

Calle Princesa de Alicante
between 1890-1900.

Thus, he became Head of Research Services at the Bank by appointment dated 7 December 1931 and he had resigned from his post as professor of Industrial Technology in Alicante. Germán quickly found the solution by taking official exams in Physics and Chemistry at the Business Studies School in Madrid. His mind, which had been devoted to pondering economic issues, now had time for research into food industries, physics and chemistry. These circumstances, the long years of teaching (some 27) and the status he obtained when he was young, all influenced his obtaining the chair in Madrid. He was appointed by Royal Decree of 12 November 1932, his post as lecturer in Commodities in that of Alicante being annulled. Despite the different names of Physics and Chemistry at times, ‘Industry and Food’, ‘Industrial Technology’ and ‘Testing and Evaluation of Commercial Products’ at other times, this professorship can be summed up in teaching Physics and Chemistry and laboratory work, activities that Germán carried out until he retired in 1953. He taught for a total of 48 years, since he passed his first official exams in 1905 in Alicante. He was not happy at this school; there was not much space and very few instruments to work with. There was a noticeable difference with Soler Sánchez’ laboratory in Alicante. I found a letter in which he emphatically requested a laboratory for the school in Madrid, a request that seems to have been fulfilled. At this school, which was located on Rey Francisco Street and then very close to Plaza de España, he would receive students who would later become university figures, professors, experts, etc. He worked with young Emilio Figueroa, who would later be his colleague at the Bank of Spain and his successor. Fernández Pirla and Marcial Jesús López Moreno were also there. They would later be professors at the future University of Economics in Madrid. He spent many years, 21 in all, devoted to the school, years he always remembered fondly. They were years of simple work and full devotion. Despite his full devotion to Research Services at the Bank of Spain, he found time to write two volumes about ‘Testing and Evaluation of Commercial Products’, which were published in 1935-36, as well as two treatises on physics and chemistry methodology, which were never published. Upon entering the school, he gave a lecture in Saragossa at the Business Studies School. It was 1932 and I believe this was a significant event, as it was the first time (the first of only two times) a business studies school gave a lecture on economy, since classes in this discipline were never taught there. Indeed, very few students were aware of his economic wisdom, although his colleagues and friends at the school were aware of his huge contribution to economic science and they always remembered this reputation. Alicante was not a big city and Bernácer wanted Madrid to be like it, small and peaceful… and he succeeded. He settled down on Ferraz Street, surrounded by the Parque del Oeste Lake, by Princesa Street a few streets up and by the Plaza de España. His school was in the area and only a few subway stops away was his work at the Bank of Spain. His life, which was always peaceful, was still peaceful. His movements, sheerly motivated by work, took him to the bank in the morning on foot and, in the afternoon, just around the corner from his home, to the school. He later moved to another house that was even closer to school and the bank. The building was located on a triangular block delimited by Seminario de Nobles Street, Mártires de Alcalá Street and Princesa Street. Germán lived on the fourth floor in a flat with windows looking onto the Palacio de Liria. He kept up his habit of sunbathing on the terrace of his home.

Germán and his family arrived in Madrid and were received by the professional and urban environment. He was still a man of few, but true, friends. He didn’t often go to cafes or public places. He met his friends at home. Edmundo Ramos and José Fuentes Ruiz became frequent visitors; the latter a co-worker at the bank who worked as head of translations. At his home he welcomed more than one important personality from abroad who wanted to talk to Germán.

At the Bank of Spain, from the time he occupied the post left vacant by José Larraz, Research Services was managed by Germán Bernácer and Olegario Fernández Baños. This long period, not only in his life but in his profession, was not only important for his personal and professional life, but also for his life as a researcher, seeking to untangle the skein of human relationships and policies on the one hand and on the other, withdraw from subjectivism and passion.

Research Services was a fruitful seed that had grown to become technical support for the bank and a strategic enclave to learn about the national economy. In the beginning, however, it was small and its work, although extensive, was somewhat disperse and encompassed the different, but not opposing, territories of bank needs and its clients’ concerns. Statistical material began to be gathered in order to produce monetary series; reports were written about the Spanish economy; and annual reports were drawn up at year end. There was also administrative and bureaucratic work to be handled, inevitable in all research services, which became tightly linked with the Administration. It is not hard to imagine that he felt comfortable at the institution, because, on the one hand, he could empirically analyse changes in the economy and empiricism was a subject that was absent in his publications, which were theoretical. On the other hand, he was allowed some downtime within an institution that, with its translation service, libraries and publications from abroad, made it possible for him to do research. Neither do I think that he was bothered in his research work nor that the political struggles and the desire, not shared by him, to broaden administrative functions, would have prevented him from developing his studies.

When he arrived at the bank, he was already pondering the fundamental patterns of the movement of income, his theory about the creation of money and the money market, his dichotomy about the ordinary and financial markets and, above all, his idea about interest. These theories were not born in the comfortable refuge of the Bank of Spain, but arrived with him from Alicante along with his suitcases. And it was at the bank where he was able to analyse the monetary flows that emanated from it like a torrent of gold that comes from the throat of a mysterious God beyond the Bank that is located in the Plaza de Cibeles. It was the other market, the child of another God, that ate the monetary food of the ordinary market. This other market was the Stock Exchange located in the Plaza de Neptuno, just a few metres from Plaza de Cibeles, and within it, the cries that he had heard as a child at his parents´ shop and in the auctions and street markets of Alicante were repeated.

I think it is necessary to repeat the date that he began working at the Bank of Spain: 1931. Why? Because the 1929 crash had generated, not in the ordinary market, (at factories and shops), but in the financial market, in the stock exchange that infected the real and productive economy of North America like a plague and from there, the rest of the world. This didn’t happen immediately but over time and when he began working at the bank (1931), the alarming reports and news could probably be heard in its vaults and corridors. It must have been an unforgettable experience, given that his suitcases contained various works regarding the crisis that was beginning in the financial market.

Bernácer undoubtedly found a vantage point for analysing the economic world and studying theoretical economics. It is highly likely that he was not part of all the administrative activities that would have hindered his research. In any event, Bernácer did not have the ambitious and deft character of a politician who aspires to move up the administrative ladder. He was not made for that. He was a profoundly scatterbrained man. He was well-placed in the complicated maze of economic theory and knowledgeable about the guidance of the stars, about the keys of the economy, and he was usually lost in the real world, in his own economy, on the streets that he walked, among his co-workers. There are endless stories about his absentmindedness.

For his part, the restless John Maynard in England had attended the Paris Peace Conference (1918-1919) in his capacity as Technical Advisor to Lloyd George, who was the Prime Minister of England. A brilliant record as a technician at the Ministry of Finance (1914-1918) preceded him, making him recommendable for a position as important as advisor. After the conference and upset about how it went, since it required Germany to incur impossible and ruinous burdens as war reparations, he wrote a premonitory political and economic book: The Economic Consequences of the Peace. It was published in the year 1919, and because of its quality, it was a book that was read by a large, not necessarily economic, public. It was the anticipation of a funeral for a death that started to occur 20 years later in World War II. Keynes, once again, showed an added facet of his brilliant personality and extreme intelligence.

26.6. The civil war years

Spain moved forward in the world conflict and got locked in a fratricidal war. There were two governments and two leaders, but while the war continued, the Bank of Spain logically followed the Government of the Republic. It set up provisionally first in Valencia and then in Barcelona along with its precarious administrative organisation. The Bank of Spain followed the government and Germán Bernácer went with it. He initially was in Valencia, due to its proximity to Alicante, where he still had some family. He chose nearby accommodation, visiting once a week. The separation was final when the national troops severed the Mediterranean coast by cutting off communications between Valencia and Barcelona.

I have several questions about this period and the subsequent period. They are not always in order. The first is that usual currencies of payment had to have been a serious problem for the national economy (on both sides), since bread was bought by both the Nationals and by the Republicans. And if the Bank followed the Republic and its Government, the factory for printing bills didn’t do the same. Jesús Prados Arrarte, who knew Bernácer and who in his youth became a colonel in the army ¹⁶², explained about the variety of currencies that existed. He meant that the war that had split the national geography into mosaics of occupation, which resulted in towns on one side (normally Republican) being occupied by anarchists, by socialists, by communists, etc., each imposing their own currency. These experiments were dead from the beginning; they acted as irrational criticism against the capitalist system, which some fought against and saw as a child of money, albeit a monstrous child. Then something occurred and I’m not sure whether it was ridiculous or entertaining: money vouchers were created that were worth something like a day’s work or an hour’s work. There is no doubt that Bernácer would have criticised this meta-economy or economic irrationality.

Member of the Alicante Circle in the Aitana hills outside Alicante. Kneeling is the artist Emilio Varela. The man wearing the crown is Óscar Esplá, with member of his family.

The other questions are in line with the vicissitudes of Bernácer at the Bank of Spain before and after the war. In El Banco de España 1931-62: Una Historia Económica (Madrid 1970) ¹⁶³, Juan Sardá said that the administration at the Bank of Spain followed the division of the administration in the war. In the area of Madrid, the position held by Pedro Pan, who was deputy governor, was handed over to Julio Carabias and the position of second deputy governor was taken over by Suárez Figueroa. That was in the government in Madrid. In Burgos, the national government appointed Pedro Pan as the principal figure of the Bank of Spain Foundation. At the same time, Antonio Goicoche was appointed Governor (March 1938) and Ramón Artigas was appointed deputy governor. This clear and emphatic decision at the two banks that affected bank administration did not leave room for those who were neutral or non-belligerent, which is important to remember, since it marked the composition of bank staff after the war.

Juan Vidal, engineers and member
of the Alicante circle.

Said transfer of the Government of the Republic to Valencia occurred in November 1936. The Bank of Spain and its Research Service followed the Government, and Germán Bernácer moved with it in accordance with the Government Decree of 7 December 1936. The year 1937 had yet to begin and he was already in Valencia. Almost a year later, in September 1937, the Central Administration of the Bank moved to Barcelona and Bernácer preferred ¹⁶⁴ to stay in Valencia, close to his family in Alicante, working for the Delegate Board of Administration and for the General Council of the Bank in Valencia.

It was not a split administration, but two parallel administrations. The end of the war entailed the provisional validity of this single administration, which logically encompassed the administration of the Bank of Spain. The victory of the National government over the Republican government led to the purging of the defeated and/or nonsympathisers. Henri Savall said that ‘the end of the Spanish Civil War almost meant the end of his career at the Bank of Spain. Indeed, the victory of the Movimiento ¹⁶⁵ of General Franco was followed by a period of purging that, in varying degrees, reached those in charge at all levels that did not align spontaneously with the Movimiento’. This assertion by Savall explains why Bernácer was liable for political purging.

This is a very delicate matter, since to a large extent this book aims to clear up false information that exists about darkness enshrouding Bernácer as a scientist in Spain and abroad (if the Englishman copied or plagiarised his ideas) and as an official at the Bank of Spain.

All civil wars tend to have two phases. One is the fight, where two blood-related sides face one another. The other is an execution, which means that one assaults the defeated, with no possibility of defending themselves. This second event shows the desire to find an ideological purity of blood, the aim of which is to assert power, and those that are not in the seats applauding (or at least this is what the winners think) are in the group of enemies. Since Bernácer did not openly show affection to the winning regime or for its ideology, he was immediately subject to purging. On the other hand, there is no evidence to indicate that he applauded either regime or any political ideology that wore a specific colour. He was always a free thinker who tried to find a regime of freedom for himself and everyone. As an official, he did nothing other than fulfil his duties, which consisted of loyally following the administrative unit he was in and obeying orders he was given. This is the only plausible explanation to indicate why he followed the Republican government in Valencia.

What is known about the purging? Very little. It was just a gust of wind following the hurricane of the second act of the contest: the political purging. He was saved as a result of the friendship and honour of two of his good friends: Olegario Fernández Baños and Ramón Artigas, who occupied management posts at the Bank of Spain. In addition, if he had been openly Republican or anti-Movimiento, it is unlikely that he would have been able to continue with his duties at the bank. I don’t know, but don’t think that a supporting argument is that Bernácer always believed that a regime that permitted private freedom would ensure freedom in the market and in the economy and political freedom in general. This was an argument that was diametrically opposed to the socialising endeavours of the opposite side.

Another explanation will help to understand the freezing of his administrative career: the appointment after the reorganisation of the Bank of Spain in 1946 of the new director of Research Services, Mariano Sebastián Herrador, who was more committed to the regime. According to Savall, Mariano Sebastián, professor of Public Finance, intervened between the board of directors and Bernácer. Until the war broke out, the duties of Bernácer were active and involved full influence in the governing bodies. After the war, this influence diminished like a drop of water in the ocean. This statement is not only difficult to sustain but also difficult to verify. One thing is certain; Bernácer at the Bank of Spain after the war was a shadow of an official, roaming around unappreciated by anyone except his acquaintances. In 1948, two years after the bank was reorganised, he was appointed deputy director of Research Services, a position that he held until he retired in 1955. I don’t know if it was Bernácer, with his reserved and introverted character, or it was the position without dynamic functions that turned the man or the administrative position into a spectral figure without defined activities. To stage the romantic scene of a heroic scientist, it is sometimes necessary to magnify the figure of the persecutor or castrator, in this case Mariano Sebastián, to wound more people than the hero. Let’s do the opposite. We’ll take apart the apparent floorboards that seem to have been built upon this stage of Bernácer’s life.

John Maynard Keynes.

While it is true that bank reorganisation eliminated the grand official (that he never was), it is also true that the scientist that could do what he wanted to do with regard to research was gained. At the Bank of Spain, despite the marginalisation to which he was subjected, including losing his physical office space, Bernácer was never sidetracked from what he needed to do, and what he had in his hands was neither more nor less than the development of the great assembling of macroeconomics, of his macroeconomics, not the nonsensical scaffolding of Keynes’ General Theory. Facing a continent to be discovered and colonised, he did not have time or interest for anything except the overall assembling of the theory of disposable funds, tied in the middle with the theory of interest rates, linked to the theory of income and crowned by the theory of cycles. If the assembly of the theory of Keynes occupied hundreds of careful economists in England and the United States who used the best years of their lives and their untiring efforts to understand what was difficult to understand, imagine the huge work of this humble man who constructed his own theory. He didn’t have time for anything else. It was impossible. And to think that he resented their systematic alienation is incomprehensible.

Mariano Sebastián, who took over Bernácer’s position (those who want to believe he stole it can understand it this way), let Bernácer freely do what he wanted to do. Bernácer did not meander lost at the bank; he walked directly on the wide and clear path of research. It is important to remember that between 1940 and 1955, a time period that encompasses the end of World War II and his retirement, he wrote nothing less than 33 articles and the book The Functional Doctrine of Money (1945), finishing with A Free Market Economy without Crisis or Unemployment (1955). Whether meditated or not, Mariano Sebastián´s indifference is not very important. This administrative and bureaucratic freedom did not significantly hamper him and it was not based on aggression. However, it was the key to understanding the development of Bernácer’s enormous body of work.

Martín Aceña provided a valuable explanation to understand the twilight of Bernácer’s activity, an explanation that was simple. After 1940, Research Services not only decreased its activity, but also reduced its staff. In 1935, it had 22 officials, and after the reorganisation that took place in 1940, it had only 11. While perhaps not proving its loss of recognition by the authorities, it did display its reduced capacity for action. It was after the year 1950 (Bernácer was 67 years old) when the service began to regain its influence and activity.

26.7. His works

History is not necessarily lineal, but rather oblique and horizontal. From 1936 until, for example, 1950, a waterfall of events occurred that were interlocked in the same time, many of which were simultaneous. Some were worldwide, belligerent and scientific, others were institutional and others, small ones, involved Bernácer’s life. Some occurred on the same date.

Human burden, which is broad, complex, intellectual and emotional and defines the vessel of life, was poorly stowed in Bernácer. Faced with a silent storm, adrift from the early death of his sister and the later death of his mother, he ran from his burden and let the vessel list. Bernácer was a good man, an exemplary father, a dear friend to many and, above all, focused on and fully devoted to research. Another event demanded his urgent attention: the publication in 1936 of The General Theory of Employment, Interest and Money by John Maynard Keynes. It was then that the suspicion about the British plagiarism spilled the contamination of bitterness upon the beach of his soul. Since this work aims to be objective, with such intensity that perhaps reality is distorted, this point, if possible, should be clarified. This book was not a continuation of his 1930 book, A Treatise on Money, but a change of direction. This was a beacon of suspicion that led Bernácer to write many articles on the subject, but he didn’t talk about his analogy and much less about the plagiarism, an issue that is hugely delicate, but about the labyrinth of mirrors between his and Keynes’ works. The general outline dealing with the determination of income in its broad and complex design, in each of its small details, is the same in both works. It is not a single concept, which could be explained by simple coincidence, but each one of the pieces and the work in general. Income, he said, comes from production; and potentially and fatally, income and production are equal (Say’s Law). But there is interest that comes from speculative activity and limits the flow of the potential investor river and, therefore, conditions future production. There are, furthermore, various types of potential disequilibrium, one of which is unemployment and another full employment, etc. Too many to be coincidental. It was then that he realised that all parts of the maze of income in his and Keynes’ theories mirrored each other. But it is a deformed mirror, since Keynes did not understand a lot of details and he escaped his ignorance with premeditated cunning. It’s as if a secret plan that he didn’t understand very well had fallen into his hands, and the Englishman, who had extensive knowledge about economics, reinvented it to patent as his own. It resembles Bernácer’s famous key article about disposable funds that was sent to Robertson at the beginning of the twenties, and although we know of the ongoing correspondence between Robertson and Bernácer, we do not know for certain what they wrote to each other during the approximately 17 or 18 years that went by between 1922, when the theory of disposable funds was published, and the year 1940, with The General Theory… in the middle. Nonetheless, something happened between 1936 and 1940, the period in which Keynes’ book became popular and was read and understood. It is necessary to stress that in the circumstances of the year 1936, it was not easy to understand this book with the knowledge held at the time. And something happened when Robertson’s agile and precise pen published an article about Bernácer’s work in the twenties in the prestigious magazine Económica. The article was called ‘A Spanish Contribution to the Theory of Fluctuations’ and it made Bernácer known to Spaniards and to the international scientific community. It is a seemingly honest and noble work. It was an acute Robertson who, in those years, dissected Keynes’ ideas and criticised them, as he also criticised Bernácer. In the end, in Part III of the article, he acknowledged the analogy between Keynes’ and Bernácer’s work with regard to interest.

What happened before 1940, the year in which the article was published? What made Robertson hastily explain Bernácer’s theory when the ink of The General Theory was still fresh? I don’t know, although it is easy to imagine. I think that Bernácer became irritated and rebuked Robertson about Keynes copying his theory. It is also possible to imagine that when critically reading The General Theory, Robertson suddenly remembered Bernácer’s work. Maybe out of solidarity between Englishmen, between Cambridge graduates, Robertson reviewed Bernácer’s work and made it known to the world by discreetly talking about it in passing and in a clever way left it aside and consolidated The General Theory of his countryman. Or maybe absolutely nothing happened. Reading Bernácer’s entire work is a long and difficult task, despite the fact that the ease of his simple prose makes it entertaining to read, and furthermore, it is written in Spanish. Had Robertson only read the article about disposable funds, or did he know the entirety (up to 1936) of Bernácer’s thinking? I am inclined to think that the first hypothesis is the most probable, and if it was indeed this way, then the theory of disposable funds, although key, was not enough to understand Bernácer’s conceptual framework. The hypothesis of Keynes copying Bernácer is thus destroyed (assuming the existence of the hypothesis given).

Theories often occur in the disorganised order of scientists’ subconscious, where reports on scientific theories and observed realities arrive in a haphazard manner. And the works of classical economists and the fine work of a modern Alfred Marshall bounced around in the mind of John Maynard Keynes. In addition, ringing in his ears was the bustle of the stock exchange, the scandal of speculative activities and the dead silence of banks, and this silence was wrapped up in the noise of the requests made by the public at teller windows. They ask for what others have (monetary supply), and what they are asking for are three types of money: income deposits, business deposits and saving deposits. The first two are similar to demand accounts and the third is similar to fixed term accounts. His mind was also filled with the words of Pigou, and the rush of blood of what should be done in practice also arrived from the depths of his speculator instinct: save money to speculate at the best time. This was how his mind came up with a theory that broke away from Fisher’s quantitative theory, and he developed another theory that related money to the desire to maintain a certain purchasing power. This linked the book from 1922, not with the book from 1930, but with a subsequent book published in 1936. His mind and his subconscious were reached by the multiplier work of Kahn and the deceased voice of the vigorous Malthus and Swedish Wicksell.

All of these ideas intersected, jumped in the mind of Keynes and demanded the sacred order of a logical theory, and who knows if in the middle of this happy and distressing situation, he heard the secret whisper of his friend and colleague Robertson on the bucolic lawn of Cambridge, speaking to him about a secret plan found or that had arrived by sea from Spain, from Alicante, a plan that was the theory of disposable funds. That would be when he found the order in his disorder, aided by a foreigner, and when he proceeded to write The General Theory. And, understanding this suggestion helps to explain The General Theory as an idol admired and revered by many economists that was sculpted with the melting of the metal from other gods, some British, others foreign, such as, without a doubt, Wicksell and possibly Bernácer.

Before, it was stated that time and history, besides being complex, are not necessarily linear. This statement acts as an excuse to once again go back to the years before 1936. In Alicante, just like in the rest of Spain, the voices of political instability and economic crisis echoed as a result of the unequal distribution of wealth. Everyone was a Democrat and everyone was a Republican, even those who rose up against the Republic did it with the Republican flag in front of them. In Alicante, there was a Republican tradition in which Maisonnave, Rico and Altamira stood out. They were Reformists, Federalists and Radicals. The others, those on the other side, were Centrists and Nationals. The Reformists expressed themselves in the newspaper Heraldo de Alicante and the Centrists in the newspaper Diario de Alicante. Germán Bernácer’s father-in-law was among the Radicals, as was his uncle, Costa. The rest, who were close to the Radicals, such as Azorín and Figueras Pacheco, showed inclinations that, more than political or ideological, were a progressive, democratic, regenerationist philosophy; they were lovers of political and, especially, social reform. Germán likely thought in this way, a way of thinking that saw inequality in income distribution as a source of economic instability. The group of Republicans followed another moderate and cultured political group of Madrid that promoted intellectuals like Ortega, Pérez de Ayala and Marañón, among others. This political group, which served the Republic, disseminated a manifesto in 1931 that was signed by various people from Alicante, including Bernácer’s brother Julio.

His close friend and companion Oscar Esplá, acting in the Círculo de Empresarios (Circle of Entrepreneurs) and encouraged by a reformist political desire, played one of his creations called Canto Rural a la República Española (Rural Song to the Spanish Republic) with text by Manuel Machado.

According to Martínez Mena ¹⁶⁶, in light of news from the Alicante weekly La Raza Ibera for the constituents of the year 1931, a candidature was formed that was assimilated to the Republican left-wing made up of independents like Azorín, Germán Bernácer, Figueras Pacheco, Oscar Esplá, R. Altamira and J. Guardiola, among others. A political evening was held at the Teatro de Verano on 26 June 1931. They did not seem to obtain popular support.

Bernácer, like many intellectuals, was not a disciplined and fanatic follower of specific political factions, but instead formed part of a group of people who, out of their anguish over a critical political situation, demanded reforms of all kinds. And it is not certain whether this sort of activism, more intellectual than political, acted later, after the war, to fuel the purging actions that followed him. I believe it was due to his following the government and the bank administration during the war. As mentioned earlier, he followed the legitimate power and the administrative apparatus that he was part of.

Now I will jump to the beginning of the forties when the first faculty of economic sciences was starting to be managed. It was a sign of the times. Most European countries had created faculties of economics and research services at their central banks some time ago. On 29 May 1931, in the dawn of the Second Republic, the lucid mind of philosopher Ortega y Gasset wrote: ‘I have always believed that one of the greatest crimes of the defunct regime was not creating a school of economics’. Savall said that the Faculty of Economic Sciences was developed by friends of his (for the most part) that were friends of the new regime.

I once again am tempted to create the legend of the persecuted hero and the scientist that was not given access to universities. Indeed, what person would have been more suitable to become a university professor in those days, when there was a lack of devoted or at least trained candidates, than Bernácer? In those years, he had already written two books and a countless number of articles. In addition, Robertson, in 1940, had already made Bernácer known to the international scientific community. In 1942, Haberler’s book entitled Prosperity and Depression appeared and in the prologue he mentioned Bernácer’s contribution. The fact of the matter is that he did not become a professor at the university and he stayed at the younger sister institution, the Business Studies School. There is true and accurate information about what happened. Bernácer, like many other professors at the school, was asked to teach at the university. Bernácer didn’t accept the offer. It seems as though there were two groups at the school: one group wanted to teach at the university and the other didn’t think it was appropriate. Bernácer was part of the latter group. According to what is known, in principle he believed, to begin with, that the level of such faculty must not be very high and, furthermore, that the job possibilities of economists educated there would not be very promising. Eighteen years later, in 1959, he was offered a professor position at the University of Buenos Aires, a position that he also declined. He was 76 at the time. I believe that this was a dark point in Bernácer’s academic life and the Faculty of Economic Sciences against which many prejudices were held for a long time. Many times reality is much simpler than it seems.

As an aside, I will recount a story here. The Faculty of Economic Sciences was located in the old Caserón de San Bernardo building. One of its rooms was used to hold official exams in which París Eguilaz concurred with his former student and companion at the Business Studies School and at the Bank of Spain, Emilio Figueroa Martínez. It is possible that the latter asked his friend and teacher to attend the exams, which Bernácer did happily. According to his son, who accompanied his father to the university, he was invited by the court to sit in the first row, which Bernácer refused. In the end, the chair was for Emilio Figueroa Martínez.

The beginning of the forties, when remnants of our national war had not yet run their course, was when the destruction of the Second World War began. His book Society and Happiness from 1916 talks about the origin and causes of World War I; they were years in which the first velvet wrapping around Keynes’ General Theory appeared, and according to many authors, they were years in which politicians and the rapacity of businessmen understood that effective fiscal policy would be a second war. In a serious conflict in which national honour is compromised, there is no time to look for lengthy excuses to finance spending. Savings, or rather savings that fund the deficit that war causes, are taken from wherever and spent urgently, and if that is not enough (or is not sufficient), money is created. Thus, the economy, which was at a standstill, since it had been covered in mud during the sad swamps of the thirties, stopped producing consumer goods and began producing capital goods and goods of war. It was a war in which there were few swords and little metal from bayonets but much density of fire and capital. Behind, there was nothing more than the secret and titanic struggle of industrial systems, which resolved wartime conflict in the end. More than anything, it was a struggle between machines that in turn created killing machines. The war, even within the apocalypse that it entailed, contributed to the economy’s ability to overcome, as a result of construction, what was to be destroyed and the re-building of that which was already destroyed. It was the tragedy and the mortal anecdote of the system that Bernácer knew when he travelled throughout Europe in 1911 amazed by so many technological advances.

Say’s Law, as fragile and beautiful as glass, was destroyed in three episodes: the first was the work of many economists before the crisis of the year 1929. The second was breaking this law, which defends supply generating its own demand and states the impossibility of economic crises. This assertion was trampled by the soles of thousands of businessmen that desperately galloped when the stock exchange fell in the last quarter of the fateful year of 1929. The third revolved around a hammer that gave two blows: one, The General Theory, and the other, fiscal policy in action (which was furiously active) that facilitated the way to the Second World War.

Once Say’s Law was destroyed and another was created on paper –which would in time be modern macroeconomics– the intermediate solution to solve the problem of unemployment was fiscal policy, a policy that was comprised of the technique for handling taxes and public spending, sometimes to revitalise the economy, sometimes to reduce its force when there was inflation. The Keynesian message was understood according to the point of view of increased public spending, a public spending that was strong, purposeful and bold and that would compensate weakness in private demand. It is clear that increased spending using a small amount of taxes resulting from small incomes makes system loans necessary. That is precisely what was needed: unlock savings lost who knows where, perhaps in the drains of the Great Depression.

Bernácer had understood it very well. He stated the following in an article entitled ‘The Financial System and Crisis’: ‘…the only effective thing is to spend generously; what is least important is whether people spend usefully or uselessly; what is important is that this spending cannot be governed by profitability; for example, in war and in armaments, on which spending is carried out without thinking too much because it is a matter of national honour. Public works also fulfil the condition of distributing new income and their products are not sold on the market although, unfortunately, the securities used to finance them are…’ This article is reminiscent of Keynesian fiscal policy and, despite being published in 1956 (20 years after the appearance of The General Theory), it is the result of other articles of his that appeared in the twenties. It was a dramatic solution made for a dramatic situation, but in order not to permanently stay –become institutionalised– in the economic system; it violated market freedom and all advantages such freedom entails.

He prophetically said on the last page of his last book (A Free Market Economy…): ‘The policy advocated by Keynesians leads to monetary disorder and to the replacement of private capitalisation for public capitalisation, which marks a strong inclination towards state capitalism, i.e. a regime similar to Russian communism.’

In the mid-forties, mankind, Keynes and Bernácer had all learned many things. The Great Depression, the Second World War and the atomic bomb (tested on human beings for the first time) had taught humanity a great deal.

Bernácer consolidated his fundamental equation in the face of the macroeconomic equation that said that savings is equal to investment. He passionately defended that savings should finance fixed capital and new money should finance working capital. Fixed capital is working capital when in the hands of entrepreneurs, becoming fixed assets –an accounting term– when demanded by entrepreneurs. Then, it is not only a matter of its nature why it is called fixed capital, but rather the financial function of buying that the demanding entrepreneur has carried out. In this way, he asserted that, on the one hand, fiscal policy hinders the market and, on the other hand, new money must always be created to fund this working capital. Since the market shouldn’t go mad about the arrhythmic and capricious creation of money, this growth must be orderly. This is the same assertion that was made later by a critic of Keynesian theory, the apostle of monetarism, Milton Friedman, who he never quoted, since he didn’t know him, and whose theory paradoxically censures Bernácer. Friedman said that fiscal policy should be outlawed and that only a monetary supply that continuously grows at a constant rate should be used.

Bernácer was one of the critics of quantitative theory and of any kind of radical empiricism. As a good Alicante man, he did not look directly at the light, since this light blinds just like ineffable and unstoppable data on the empirical relationships of quantitative theory, which axiomatically relate the amount of money to prices. It is better to look to the side in order to be able to channel statistical and empirical information wisely. Light as food and medicine should be taken in doses. He criticised radical liberalism, though he supported economic freedom.

In the mid-forties and until the end of his days, Bernácer was famous, and he wrote and related to the great economists of the time. He maintained correspondence with Hayek. In Madrid he spoke to Dr Shaach, the Minister of Finance of the Third Reich, to Jacques Rueff and to Swede Johan Akerman. In 1952, he was invited by an admirer, Professor Francoise Perraux, to give a lecture in Paris at the IESA on 1 April, a lecture that was published the same year in the journal Economie apliquée. Professor André Piatier wrote to him and said ‘I would like to congratulate you again on your brilliant lecture and tell you how much it impressed us economists who heard it’.

In the forties (1945-7), he had a strong but civilised dispute with Professor Josué Sáenz from Mexico in the journal El Trimestre Económico, which served to clarify the thinking of Bernácer and Keynes. Professor Sáenz was Keynesian, which at the time did not strictly mean being excessively rigid or not; it meant knowing economic anatomy and monetary physiology. It simply meant understanding economics, given that it comprised matters like the savings-investment identity. Bernácer said that consumption is not the same as consumer spending and Sáenz responded that it is impossible to consume without having spent. It seemed to be a ridiculous issue, a problem merely of terms, when a fundamental issue was cleared up after reading the appendix of his last book A Free Market Economy… This issue was that a person can spend more on consumption in one period than in another and, nonetheless, acquire and consume less. Bernácer was not thinking about the destruction of consumption, but the quantity of goods that were taken away from the market. In any case, for a reader who did not know Bernácer’s work, the dispute that tilted in favour of Bernácer would tilt in favour of Sáenz, who was Keynesian like everyone else. Sáenz was the person who translated Bernácer’s work on the theory of disposable funds for Robertson; however, although key, this was not enough to understand his work. If more is spent on consumer goods in a period or the same as in another and due to prices one acquires less, unsold products will be left, and if the part of income that is not spent or saved does not demand or fund all capital goods, then this savings does not have a place to go and, therefore, savings can be equal to investment, unless we cheat and say that the unsold production is what it is not, capital goods, the misnamed inventory investment. It was necessary to explain where non-capitalised savings were and Bernácer knew it, but Sáenz, Robertson, etc. needed to know his work on the theory of interest rates in the financial market. That was the big problem for Bernácer and for economics: nobody read all of his work while almost everyone read all of Keynes´ work.

Bernácer’s name was known in the international economic community, but it was never valued at its true worth. He exchanged letters and commented on and received suggestions from important figures in the economy. These included Jacques Rueff from Paris, Aldo Scoto from Genoa, Stuken from Erlangen; Emil Küung from Zurich; Vito and de María from Milan; Professor Montgomery D. Anderson from the University of Florida; Eirch Schneider from Aarhues; Andrés Pedrhol and Walter Hoffman from Kiel; Piatier from Strasbourg; Diehl from Fribourg; Howard S. Ellis from Berkeley; Jassen from Berlin; Carlos Souza from Lisbon, etc. and, of course, honourable economists Robertson and Haberler. He was a figure who shone with his own light in a constellation that was beginning life like a galaxy just starting to explode. It was the galaxy of macroeconomics. John Maynard Keynes was not needed. In the forties, he was extremely busy with the replies to his insistently famous book The General Theory of Employment, Interest and Money from 1936. Hicks, the developer of the IS-LM curves, the bars where macroeconomic students would work out, was already fluttering on one of his sides with the article ‘Mr. Keynes and the Classicists: a Suggested Interpretation’. And on his other side, there were the academics, the scholars. They were Robinson J., A. Hansen, Kaldor, Beveridge, etc. And just by reading those who read him, the untiring Keynes was overwhelmed with work; nonetheless, in addition to his work in the private economy, in 1940 he had time to publish the book How to Pay for the War. He still had to publish ideas about the future international monetary order and about the past experience of the prejudices of the gold standard.

The World Conference was held at this time at the Bretton Woods Spa, a conference that gave rise to the International Monetary Fund and another conservative American plan, which soon became obsolete. Keynes worked tirelessly like a comet in the middle of the modern world that had just appeared, which was the economy. He illuminated the economy and was illuminated by the economy and he became, I believe for the first time in history, a famous and popular scientist on the subject of economics. Amid the maelstrom, Keynes didn’t listen to his already sick heart that seriously warned him about his health. And why should one think that this famous, skilful, intelligent, multifaceted and seductive man, besieged by fame in the capital of the British Empire that was collapsing, would agree to meet a man he had heard of in passing, superficially perhaps, almost whispered by Robertson? Could it be that perhaps the theory of disposable funds subconsciously influenced the minds of Robertson and Keynes? If Keynes simply didn’t remember him, and since he didn’t remember him in the Tower of Babel of economists from different places, logically he didn’t quote him. But, in light of this fact, there was a Robertson who, in 1940, actually said that Bernácer’s theory of resembled Keynes’, implying that he knew about the theory years before the forties and that, obviously, he must have explained it to his friend and colleague Keynes, who already knew that in Spain, the underdeveloped and exotic Spain of that time, there was a man who was ahead of him: Germán Bernácer ¹⁶⁷. John Maynard drank up the knowledge of Swedish Wicksell and he quoted him with his mouth somewhat closed. It was necessary to remain respectful. Then, what happened to Keynes when Robertson explained the theory of disposable funds to him? And if he barely explained it, mustn’t he have at least mentioned that his theory had a predecessor in Spain? And if he had to act properly, even if it was only a matter of scientific policy, of diplomacy or of grace, why didn’t he do it? Why didn’t he quote Bernácer, not even in passing? Is it possible that he didn’t read the article in the journal Económica in 1940 written by Robertson in which Robertson spoke about a thesis that was similar to his?

Many facts, events and developments that are true or easily learned by knowledge are difficult to prove to others. This is what lawyers call evidence in trial proceedings. Bernácer could not show plagiarism between Keynes and himself, and neither can I. There is no proof, but there are solid indications. They explain the low probability that two puzzles scattered in pieces, each one with exact and well-defined conceptual pieces, put together according to an elaborate economic plan coincide. It is frequent in science that a discovery is found by two or more people, but not a set of pieces and much less the plan that combines and organises them. Apart from the content rich in monetary issues, The Functional Doctrine of Money, when it speaks about similar doctrines, yells with its mouth closed and with contained anger about the suspicious change of course of Keynes, who in 1936 turned around completely and changed the direction of his theory. The suspicion was always hidden in Bernácer’s soul.

After the Spanish Civil War, Bernácer was recognised in Spain by a handful of friends. Around him there was a cold silence that froze the field of economic culture that acted as a bridge to Spanish scientists. The indifference with which they looked at his work was similar to the silence on the moon. To the contrary, abroad they repeated his name. Perraux and Henri Wallich from the Board of Governors of the Federal Reserve acknowledged him as a great economist. The financial genius from Hitler’s Germany, Dr. Schaachft, wanted to meet Bernácer when he was invited to Spain. Bernácer’s direct friends at this time, or rather his friends from Madrid, were those at the Bank of Spain. They knew about his merits and about his serious and introverted personality. They were Olegario Fernández Baños, Ramón Artigas, José Fuentes Ruiz, etc., the same friends that helped him during the time of political purging.

It is not possible to understand such a great intellectual effort if it is not accompanied by a series of parallel deformations of intellect. Germán Bernácer lived solely for research, with the invisible but energetic help of his wife María or Maruja, who isolated him from the buzz of immediate domestic work, and with the relative comfort of his work at the Bank of Spain and, before going to Madrid, with the bucolic peace of the joy of Alicante. Isolated in his research, he became nearsighted with regard to the reality around him. His absentmindedness became popular among his friends. Thus, one time at the Bank of Spain, a friend came up to him and, confused, asked him: Hey Germán, what is that shoe doing on your desk? What shoe? Bernácer replied. Well, this one that is on top of your desk… It’s true. Well, I don’t know who could have left it there, Bernácer responded while he looked around for someone to give the shoe to, when he himself was barefoot.

Other times, feeling nervous while standing before the ticket office of the subway, he would search frantically for money to pay, as a result of the fondness of this specialist in monetary matters to not carry money on him. Sometimes he would travel forever on the subway, skipping stations without arriving anywhere. And it was not strange for one of his children to run after him to bring him a tie that he hadn’t put on or for someone in the street to let him know that he was wearing his slippers. It is the price of abstraction, of the loss of vision for everyday life, like what happened to Adam Smith, Albert Einstein and so many others. This same thing didn’t happen to the clever David Ricardo or to the intelligent and practical businessman John Maynard Keynes, who was a brilliant scientist and an effective ‘trader’ who always carried money on him and was always impeccably dressed in accordance with the strict label of the English gentleman. Bernácer’s intimate and good friend, the deputy governor of the Bank of Spain, Ramón Artigas, took him to his properties in Saragossa for several days to talk to him about monetary matters. Taking advantage of the occasion, they visited the Church of Pilar, and once they were inside, they realised that Germán was wearing slippers. He didn’t react at all. This is a detail that shows Bernácer’s personality and truly exemplifies that he was careless about anything that wasn’t scientific truth. Perhaps this clarifies so many things without much mystery. He wanted an economic livelihood to care for his family and to research freely, and as for the rest, he was truly indifferent about his position and promotion at the Bank of Spain and his entry into the recently-created university.

There is no record of scientific controversy in Spain with his colleagues. There couldn’t have been one, because nobody could compete with him. That’s the way it was. What was most aspired to in Spain was to boast about knowing works by different scientists, and Bernácer was a scientist competing in the same category as renowned scientists. Especially in the forties, when Keynesian belief was lodged in economic science, people boasted about having read Keynes and about having studied with one of his followers, while Bernácer knew that he was far above the Briton.

I believe that this book throws the salt of scepticism onto the thicket adorning the scientific hero who stealthily researched in the face of the conspiracy of silence that imprisoned him in his surroundings. However, there is still more. Savall spoke of the wall of silence that was built around him and his friend, disciple and colleague, Figueroa. He wrote about the conspiracy of silence that was carefully woven around Bernácer. These assertions aside, what is true and what is not explained is how Bernácer’s work, which at the time was anticipative of modern macroeconomics, was so forgotten.

I don’t know of books, of articles, of anything in his day that talked about Germán Bernácer’s monetary theory. It is inexplicable. It is traditional for the Spanish to disdain what’s theirs, and in the economic sciences of the time, when economic studies were just beginning in Spain, there wasn’t even anyone to disdain, since there were few who were educated in economics. Admiration for anything English or German was instinctive. But what is surprising is that there were already macroeconomic books written by a Spaniard, articles, etc. And it was work, especially that from the forties, which destroyed an idol that was not yet created and that was a harsh criticism of Keynes. The community of Spanish economists knew it and was amazed when it saw how a provincial man, without a university degree, dared to shake the new genius of economics. And these economists (some at the bank, some at the faculty and the rest embedded in national scientific economy) read letters, articles, etc. that, like international couriers, brought them news about the Spanish economist. Robertson’s article from the forties (from 1940 to be exact) and the visits from Schaachft are also from that time. Haberler’s prologue from 1942, where he talked about how the Spanish public was more interested in foreign literature than in its own; Bernácer’s work showed it, not to mention many other economists. And it is impossible to explain that the light and the reflection of the light, the work and the recognition from abroad, not from within, was unknown in Spain… and for such a long time. It is a difficult task for midday light to illuminate a room that is closed, and Bernácer had to cast a perpetual, not instantaneous, magnesium flash into the Spanish scientific solar system. And if no one remembers this light, it is because it was hidden. There is no other explanation. There are two ways to hide this light. One is by casting another, stronger light. That explains why the flame of a candle is not seen in the middle of the day. That’s not what happened, because there was no other economic genius in Spain. The other way consists of hiding this light inside the earth or throwing water on it. This is what Savall quite rightly called the wall of silence. His distance from Spain, given that he lived in France, allowed him to have a certain necessary perspective. It is what Emilio Figueroa, Bernácer’s contemporary, affirmed: the conspiracy of silence. His physical proximity to Bernácer, his direct knowledge of the institutional world that Bernácer lived in at the Bank of Spain and his life at the Spanish economics university, which he saw open, gives his words a certain degree of authority. And my modest efforts and common sense do not admit any other explanation than to believe in the coldly meditated indifference around a man, who also didn’t worry about whether or not the world was indifferent to him, given that he was indifferent to the world. There is one other explanation in Spain: the vinegar fountain of envy. And out of caution and since it is not a scientific matter, this will not be discussed here.

After the Keynesian rage of the forties, as works by other great economists gave profiles to macroeconomics that was consolidating into a science, the name of Keynes grew until it became popular to the extent that his theory was becoming blurred like a drawing in the sand being blown by the wind. And that was how students and scientists understood the theory of Keynes, like stories in the villages with oral traditions where, when the story is told for the umpteenth time, it has little to do with the original story. Keynes died on 21 April 1946 and his name lives on in the same way that his work was transformed. With Bernácer’s work, neither occurred. The conspiracy of silence was at fault, but contrary to what Emilio Figueroa and Henri Savall think, this culpability is not very important. Almost in its entirety, the cause of the oblivion of Bernácer’s work was nothing more than Germán Bernácer himself, who was never interested in teaching economics classes or forming a group of disciples or anything else along these lines. He went through the academic and scientific world like he was, like a silent breeze. What aids the transition to a school of thought are its disciples, the author’s ability to influence policy and the tenacious effort to form an academic realm. The brilliance that Bernácer had in his day was extinguished over time until resulting in the fact that he is not known by prestigious contemporary economists, if we don’t include Françoise Perraux, Henri Wallich and some others who quoted him in their works, such as Olarra Giménez R., who included Bernácer in his book about money published in Buenos Aires. The conspiracy of silence was largely built by Bernácer himself. It is also true that if he had worked at Harvard, Oxford, etc., he would have been a famous economist. But he must have known that at the Spanish university, with little capacity for cultural projection onto international university settings, his theory was going to die just after it was born. These words carry even greater impact when repeating the argument that he never gave economics classes to anybody, as far as known ¹⁶⁸.

However, there is also the following argument. It appears as though Bernácer asked for help so that all or most of his work was translated to other languages. He knew that this translation was necessary for two reasons: on the one hand, his work has many roots and the explanation cannot be understood with just one or a few articles. I view his articles as extremely valuable, but that is because I’ve read all of his prior work. On the other hand, this translation, if there had been one, required a lot of work from a large group of people that, after having understood his work, had to organise and synthesise it. Without a doubt, this would have saved him from his subsequent anonymity. He asked for help and, the truth is, he was denied it, and Spanish science and world economic science lost a wonderful opportunity provided by an economist that rivalled and, to a certain extent, exceeded Keynes. Nonetheless, a piece of glass that still shone and was recognised by the light of admiration persisted in the dream of oblivion. There was the incredible meeting between Bernácer and Robertson in the city of Granada and his entry in the Academy of Economics and Finances of Barcelona.

26.8. The meeting

The city of Granada hosted an International Banking Conference that was attended by bankers and economic scientists. It was 1954. These conferences, as well as talks over coffee, presentations, etc. were opportunities to get to know each other and exchange opinions. Economist Jesús Prados Arrarte, who was later a Scholar of Language and Professor of Political Economy, was at the Conference as was, of course, Emilio Figueroa Martínez, who attended as an official from the Bank of Spain. The story below was told to me by Jesús Prados in approximately 1978 or 79 and it was the spark that lit our inexhaustible research on this unknown person named Germán Bernácer.

Emilio Figueroa was staying with his teacher at the Washington Irving Hotel. None other than D.H. Robertson was staying at another hotel. They had to meet at the building where the conference was held. And, I must remind you that they didn’t know each other personally. Jesús Prados was talking to Robertson when he said to him: by the way, Germán Bernácer is here. Robertson’s response was not long in coming; he wanted to meet Bernácer quickly, a request that Prados fulfilled with pleasure. Bernácer was at the cafeteria, so they went downstairs and went inside. It was summertime and hot and all the windows in the cafeteria were open. Invisibly, imperceptibly, they had been meeting each other since the manuscript on the theory of disposable funds reached the hands of Robertson in 1923 and since Robertson’s articles appeared in Económica in 1940. A brilliant path of letters that flew like white doves had built a bridge of communication between the two men, both between their minds and, like at that moment, closer, physically.

There they were, suddenly, in 1954, face to face, Germán Bernácer and Robertson, and the encounter was witnessed by Jesús Prados. Emilio Figueroa was with the Spanish economist at the time. And the unexpected happened. The Englishman overflowed with Latin passion and hugged Bernácer enthusiastically. The situation called for nothing less. This time he knew who he held in his arms. He knew it very well. The Spaniard showed a sign of greeting well below the usual phlegmatic nature of the English. Figueroa explained that Germán was practically frozen, and not just due to his lack of mobility because the Englishman held him in a tight grasp. Some years later, Prados said rather sarcastically: ‘the expression on Bernácer’s face was like he was ill, not letting him gesticulate’. It is difficult to understand this attitude in an individual who was always courteous and polite. His children said that the cold response with which he received Robertson, which was in great contrast to the warm hug given by the Englishman, was due to their father’s insurmountable shyness. It is necessary to imagine that a spontaneous introduction is occurring and the person being introduced suddenly hugs the other without giving any time to react. The occurrence happened in just a few seconds and it was not enough time to digest the figure of a man to whom he had written so many letters, to whom he owed so much and about whom he held so much doubt. Perhaps this unequal hug can be explained by the shyness and the speed of the introduction, or perhaps it is due to many other things stored in the labyrinths of Bernácer’s mind. He hugged Robertson and also Keynes. Or rather, he was hugged by them. There was gratitude, perhaps, in them. And in Bernácer’s fallen arms and in the rigidness of his face, perhaps there was the suspicion that followed around him his whole life and that, at that moment, gripped all of the muscles in his body. It is most likely that a bit of everything occurred. Surprise, shyness and doubt joined together and twisted around the body of Bernácer. Or simply nothing happened. But the truth is that Prados and Figueroa were somewhat stunned at the beginning, if not uncomfortable, with Bernácer’s cold greeting.

26.8. The twilight years

In 1954, Bernácer had already withdrawn from his professional activity. One year before he had retired from the Business Studies School as a professor and one year later he retired from the Bank of Spain. He was 72 when he retired from the Bank, and the same year, his last book, A Free Market Economy without Crisis or Unemployment, was published. It is a clearly-written book that follows a perfectly logical and ordered explanation, which shows not only the mental clarity of the old man, but what’s more, it shows an extraordinary maturity of thought. In those years, Keynesianism had developed sophisticated analysis methods on the rubble of classical theory that had practically shattered in the Great Depression. And the world was also physically rebuilding itself on the rubble of war. It seemed as though everything should be done again and done differently. The Great Depression, the Second World War and the atomic bomb had made mankind mature all at once. Bad memories had to be forgotten and classical economics, which had not been able to hold its own during the Great Depression, also needed to be forgotten. At the time, nobody criticised the classical concept of money like Germán Bernácer, and nobody like him admired it and tried to keep its masterful and strong internal architecture that will last forever, since it was built on the genius of great men. In A Free Market Economy…, he demystified the useless Baroque style of Keynesianism. An aged Bernácer knew what there was behind so much conceptual bagatelle. He was not fooled by so much wisdom that was nothing more than yeast inserted by scientists to inflate their knowledge. In this book he said: ‘…liquidity preference is nothing more than the old supply and demand disguised. This disguise harms the clarity of ideas and introduces strange elements. In money that is not supplied, which we add to active demand to find liquidity preference, there is a large part that does not remain inactive, due to this preference: transactional money is not inactive and is not retained because of liquidity preference, but because of the preference for consumption and for production, and a large part of the rest is not because of preference for liquidity, but because of inertia, because of indifference about illiquidity…’

Apart from this statement, there are others in this book and in articles, such as the article published in the journal Arquímedes entitled ‘Metric Economics’ which, with a careful reading, makes economists tremble as they realise their ignorance. It was as if a hurricane wind fell suddenly upon economic scientists that was instantly stripped of trash that he believed was the core of macroeconomics. This core belongs and will belong to classical economics always. It is a matter of simple logic. He who supplies money demands goods –he never tired of repeating– and he who demands goods supplies money. To speak of the supply of money and the demand for money is not even a simplistic thing, it is an absurd thing. Ultimately, classical economists were partly right when they spoke about supply and demand of what had not been consumed: this is the supply of and demand for savings. Consumption and consumer spending had already contemplated the supply of money to demand consumer goods, and the suppliers offered these consumer goods to demand money. The rest, savings, was supplied and demanded. Yet, there was something else: the supply of present money against future money; and even more, so that it is necessary to go back and look for it in the classicists. This is the supply of and demand for savings. He was, as stated above, 72 years old when he made this assertion, almost 20 years after The General Theory… appeared.

Years after his retirement from the bank, he had the honour of being appointed a member of the Academy of Economic and Financial Sciences of Barcelona. It was the year 1959 and he was 76 years old. The presentation speech could not have been more revealing: ‘Freedom versus Intervention’ (April), and it was a reaction of an economy, economic science and institutional economics cheated by an interventionism that violated the fundamental and essential principle of the market: freedom, since intervention sows confusion and disorder. The metallic noise of the classical frame that had collapsed in the thirties had bewildered economists and with all the noise, it was impossible to hear the voices of the classical economists, not even the voice of Keynes, who, we understand, had only written for those years and not with the intention of eternity. The truth is that for the old and wise Bernácer who went to Barcelona to read his speech on this classical and superb frame with closely woven pieces, only some pieces had fallen, precisely the loudest ones: those relating to monetary theory. The rest were left standing. Going back to the man and his environment, that worthy tribute by the Academy of Economic and Financial Sciences of Barcelona was by no means a tribute by a community of scientists that orchestrated admiration for the great economist. It was only a respectful, dignified and, above all, sporadic event, an oasis in the silent desert of indifference. Unfortunately, the names of the men and institutions that, far from Madrid, in Barcelona, organised Bernácer’s entry into this academy are unknown.

He had contacts with men outside of institutions, and these men left testimonies of his great worth. For example, he was friends with mathematicians Rey Pastor and José Gallego Díaz. The first was a professor in Madrid and at Harvard and died in 1962. The second was a professor at the Madrid School of Agricultural Engineers and at Stanford University and died in 1965 in Caracas. José Antonio Estrugo was another colleague of his at the school and a friend, as was José Antonio Fuentes, professor of analysis at the faculty of Madrid. They were all mathematicians and he asked them for advice. Here there is an interesting dimension of his life. It is not possible to say that Bernácer was ignorant about maths. He knew and was familiar with mathematical calculations, but math is absent from his work, not including some rudiments of integrals in his book The Functional Doctrine… His children Ramón, a mathematician, and Germán, a physicist, stated that their father said that it was not good to abuse mathematics in economics, that it wasn’t necessary, although he acknowledged that economic science can always be represented mathematically. I understand, from reading his work, on the one hand, that mathematics does not generate economic concepts and, on the other hand, it should be used less. The use of mathematics should be carried out very carefully and always knowing what is being done. In the appendix of A Free Market Economy…, he said that ‘mathematicians’ mental images, even admitting that their internal logical connection is maths, can represent things that are not true’. Oddly enough, he became enthusiastic about mathematics and with his friends founded the Spanish Applied Mathematics Society, which would later publish a magazine called Arquímedes, in which Bernácer published two articles in 1955. One was entitled ‘Metric Economics’, and in the articles he expounded a unique criticism of the economic methodology in use. He said that it was not possible to talk about demand curves, since they only existed in the minds of scientists and the mathematical explanations based on these curves were nothing more than artifices of artifices, all unnecessary. This criticism is very typical of an economist who was on the other side of everything and had an almost sensual and mechanical common sense.

With regard to demand curves, he went on to say that they were just a further illusion, living in the mental castle of economists and that ‘the same doesn’t happen with understanding gases, which graphically represent facts’. Thus, the mental images remain in such images. It was the man-of-the-street speaking, the physicist, common sense personified. Those of us who have read his work and almost understood his scientific psychology believe that Bernácer was linked to the lineage of English empiricists like Bacon, Locke, Berkeley, etc. I am referring to his scientific psychology, to his way of understanding things, to his mechanical sensuality, to his hate and disdain of metaphysics, to his marginalisation that cannot be quantified, to all types of mirages.

Bernácer never withdrew from the economic research he started in 1905, the year in which he had his first intuition that he would develop throughout his entire life. It was illness that finally drew him away, an illness that began in 1962, which was the year he wrote his last article. He returned to his hometown, which he always loved. In his soul, Madrid had only been an episode of his life, albeit a long episode of many years, during which he had two tasks, that of official and researcher at the Bank of Spain and that of a professor of physics and chemistry. But, it was nothing more than an episode. His true life, his refuge, home, cradle and tomb, was always Alicante. He returned there when he was 79 and already ill. His favourite place was a solitary cottage in front of the sea, above a gentle hill pierced by strong marine winds and surrounded by pine trees. The sea, the wind, the pine trees and the proximity to Alicante were the preferred environment of the late Gabriel Miró, who loved it and described it, of his friend that was still alive, Oscar Esplá, who sang to it, and of Germán Bernácer, who sought it out to die peacefully.

On 22 May 1965, at 82, he died surrounded by friends on the beaches of San Juan, at his home in Alicante. The friendship of a handful of dear friends and an article here or there in some newspaper were isolated acts of recognition that saved him from total oblivion. Spanish economic science completely ignored his death, apart from a brief article by his friend, colleague and follower Emilio Figueroa. The oasis was devoured by the desert of indifference.