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Sustainable Finance

Harald Bolsinger
Johannes Hoffmann
Bernd Villhauer Editors

The European
Central Bank as
a Sustainability
Role Model
Philosophical, Ethical and Economic
Perspectives
Sustainable Finance

Series Editors
Karen Wendt
CEO. Eccos Impact GmbH, President of SwissFinTechLadies
Cham, Zug, Switzerland
Margarethe Rammerstorfer
Professor for Energy Finance and Investments
Institute for Finance, Banking and Insurance WU Vienna
Vienna, Austria
Sustainable Finance is a concise and authoritative reference series linking research
and practice. It provides reliable concepts and research findings in the ever growing
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More information about this series at http://www.springer.com/series/15807

Harald Bolsinger • Johannes Hoffmann •
Bernd Villhauer
Editors

The European Central Bank

as a Sustainability Role
Model
Philosophical, Ethical and Economic
Perspectives
Editors
Harald Bolsinger Johannes Hoffmann
FHWS University of Applied Sciences Goethe University Frankfurt/Main
Würzburg-Schweinfurt Frankfurt/Main, Germany
Würzburg, Germany

Bernd Villhauer
Weltethos-Institut at the University of
Tübingen
Tübingen, Germany

ISSN 2522-8285     ISSN 2522-8293 (electronic)

Sustainable Finance
ISBN 978-3-030-55449-1    ISBN 978-3-030-55450-7 (eBook)
https://doi.org/10.1007/978-3-030-55450-7

© Springer Nature Switzerland AG 2021

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Preface

While economists argue about whether the new ECB head Christine Lagarde should
continue the relaxed monetary policy of her predecessor Mario Draghi in the inter-
est of financial stability and in the direction of 2% inflation, the Research Group
Wirtschaft und Finanzen (Economics and Finance) of the Weltethos-Institut at the
University of Tübingen is pushing forward the question of whether the ECB is fail-
ing completely regarding this very issue in the interest of environmental, social, and
cultural sustainability.
The expert panel meeting on October 29, 2019, at Goethe University was pre-
ceded by Petition 429/2017 submitted by economic ethicist Harald Bolsinger to the
Committee on Petitions of the EU Parliament. This petition highlights the ECB’s
active participation in undermining the values of the Charter of Fundamental Rights
(i.e., via its portfolio policy) which is binding for all EU institutions.
With this conference, the Wirtschaft und Finanzen Research Group of the
Weltethos-Institut at the University of Tübingen posed the important question of
whether the ECB, as an EU institution, can act independently of the EU’s human
rights and sustainability principles. There is a risk that it may in fact fail to take such
principles into account for economic reasons. Measured in terms of the volume of
funds managed by the ECB, this makes the efforts of ethically sustainable invest-
ment virtually meaningless. However, sustainable investment is of great importance
as a means of social and economic transformation.
This concern was discussed and made transparent in our expert panel discussion
“A Sustainable Europe: The ECB as a cardinal mistake?” We also publicly pointed
out the ECB’s responsibility to adhere to the ethical and social principles of the EU
in their economic policy implementation.
In this respect, the Frankfurt conference brought together philosophical, eco-
nomic, legal, and political arguments which we present to a wider audience in this
publication.
We have already been able to achieve a successful first step; on November 11,
2019 Harald Bolsinger spoke before the Committee on Petitions of the European
Parliament. Parliamentarians praised the petition and resolved to pursue the matter.
The demands are to be submitted to the new head of the ECB and discussed in the

v
vi Preface

Committee on Economic and Monetary Affairs of the EU Parliament as well as in

other decision-making bodies.
The expert panel discussion was held in a place steeped in the history of Germany,
namely the Eisenhower Hall of the Goethe University in Frankfurt. Designed by the
architect Hans Poelzig on behalf of IG-Farben from 1928 to 1930, it is the most
modern industrial office building of the twentieth century.
After the war, the Americans moved in and the building became their headquar-
ters for the next 43 years. On July 1, 1948, the prime ministers of the various German
states were called upon to draft the Basic Law for the Federal Republic of Germany
in this very room. Therefore, the IG Farben House can be seen as the birthplace of
our German Constitution. The negotiations regarding the introduction of the new
currency, the Deutsche Mark, were also conducted here, inextricably linking this
place with the Deutsche Mark forever.
In 1995, the Americans moved out, and the question of what to do with the build-
ing, or in other words who should move in, was posed. In negotiations between the
Federal Government and the State of Hesse, two proposals were in the air, namely
the ECB and the Goethe University.1
We chose this historic venue for our conference in the hope that it too will con-
tribute to a better future—a truly sustainable Eurosystem...
P.S. On August 5, 2020, the Committee on Petitions of the European Parliament
received a letter from the Directorate General International & European Relations
of the European Central Bank. In this letter, it is set out that the ECB has the pri-
mary objective to ensure price stability over the medium term. Whether this can or
should be done based on the human rights-related principles and obligations is
discussed in the following way: the Directorate acknowledges that the ECB is an
addressee of the Charter of Fundamental Rights, but “does not automatically have
an obligation to enforce the Charter vis-à-vis the issuers of securities it considers
eligible for use in its monetary policy operations.” This raises a lot of questions not
only for the ECB but for other EU bodies. The short letter, which tries to discuss the
complicated matter on two pages, supplies material for further research in more
than one perspective. For example one should take a closer look at this conclusion:
“The ECB also cannot simply defer to the findings of private self-authenticated
sources such as those proposed by the Petitioner.” That is probably aiming at
NGOs—but is it also true for credit rating agencies—and what would that mean for
the analysis and the European investment policy? All this shows that the discussion
about the rules and principles of the ECB strategy has only started…

Würzburg, Germany  Harald Bolsinger

Frankfurt/Main, Germany   Johannes Hoffmann
Tübingen, Germany   Bernd Villhauer

1
Meißner, Werner/Rebentisch Dieter/Wang, Wilfried HG. Der Poelzig-Bau. From I.G. Farben-Haus
zur Goetheuniversität, Frankfurt 1999.
Contents


Where Do We Stand When It Comes to Sustainable
Financial Markets?��������������������������������������������������������������������������������������������   1
Johannes Hoffmann

Ethical Standards Beyond Monetary Policy: Approaches
to a Philosophical Foundation�������������������������������������������������������������������������� 11
Bernd Villhauer
Fundamental Rights in the Core Business of the ECB: No Issue?!�������������� 19
Harald J. Bolsinger
On the Role of the ECB in Sustainable Finance��������������������������������������������� 39
Michael Schmidt

Legal Approaches to Encouraging the ECB to Comply with Human
Rights Aspects When Establishing the List of Marketable Assets���������������� 43
Marian Szidzek

Central Banks in Europe: On the Road to more Sustainability�������������������� 55
Susanne Bergius

Appendices���������������������������������������������������������������������������������������������������������� 75

vii
Where Do We Stand When It Comes
to Sustainable Financial Markets?

Johannes Hoffmann

Abstract If we intend to support sustainability in the financial markets, research

and analysis must come first. In the last 30 years, the groundwork has been laid by
the Ethical Environmental Research Group (Forschungsgruppe Ethisch-­
Ökologisches Rating) leading to a rating system for Impact Investing. The article
shows the progress in Sustainable Finance through the years and highlights essen-
tial aspects, connecting environmental, social and cultural compatibility. Only an
integrated view can lead the European fiscal and financial policy towards a new level.

1 Introduction

After 30 years of scientific work on the promotion of environmental, social and

sustainable investments and through the common interest in the Ethical
Environmental Rating Research Group, we are now well prepared for sustainable
development within the framework of the market economy. The contribution of the
Research Group was and is supported by the effort to expose hidden issues: Making
the unseen visible, freeing people from outdated traditions, encouraging new ways,
and accompanying and promoting effective altruists. Taking the path of “subversive
integration,” [1] so that human development can succeed in communion with cre-
ation. For the development of environmental, social, economic and intercultural
sustainability in the market economy, it makes sense to recall the beginnings and to
take a look at the current state of environmental, social and intercultural sustain-
ability in the economy. This will certainly provide clues for consistent environmen-
tal and social action in business, finance and the fiscal system. This must be
recognised, publicised politically and its political implementation promoted. For
me, this means in concrete terms that the example of the ECB’s de facto approach,
the central financial management institution in Europe, must be used to promote this
more effectively. That is the intention of this conference.

J. Hoffmann (*)
Goethe University Frankfurt/Main, Frankfurt/Main, Germany
e-mail: [email protected]

© Springer Nature Switzerland AG 2021 1

H. Bolsinger et al. (eds.), The European Central Bank as a Sustainability Role
Model, Sustainable Finance, https://doi.org/10.1007/978-3-030-55450-7_1
2 J. Hoffmann

2 Ethical Environmental Investments and their Origins

There were already attempts in the 1920s to integrate thinking around environmen-
tal, social and sustainability issues into the investment process. However, the eco-
nomic and political possibilities of ethical money management were brought to the
fore by two spectacular measures taken by ethically oriented investors. One was the
successful boycott of Dow Chemical in the USA during the Vietnam War, due to the
company’s supply of napalm to the military. The second was the boycott of the
apartheid regime in South Africa, which contributed decisively to the peaceful
replacement of the regime. The experience of the political effectiveness of boycotts
or divestment motivated ethically oriented investors to use financial investments not
only as a means for individual spectacular actions but systematically for an ethical-­
environmental shaping of the financial market. This began in the USA and England
as early as the 1980s. It is no coincidence that EIRIS is one of the oldest sustain-
ability agencies, founded by Peter Webster [2] coming from a Quaker background.
In Germany the concept of responsible investment started to emerge in the 1990s.
More and more investors recognized the ethical responsibility of their money. They
no longer wanted the money to be used for weapons production, human rights
abuses, environmental damage etc. The prerequisite for this was an instrument with
which the environmental, social and cultural compatibility of companies and other
asset classes could be evaluated.
In 1991, Christian-oriented bank managers and church institutions suggested to
found the project group Ethical-Environmental Rating (EÖR) at the Department of
Catholic Theology of the Goethe University for the development of such an evalua-
tion instrument. A first result was the so-called Frankfurt-Hohenheimer Leitfaden
(FHL) [3], an internationally recognised criteria tree, which was reflected in the
Corporate Responsibility Rating (CRR) methodology of Oekom Research AG in
Munich. The CRR is now firmly established. Oekom Research AG was able to
expand its market position and last year entered into a merger with ISS in New York.
In a further step, the research group founded a consortium of ethically oriented
investors, CRIC e.V., in 2000 as an information and investment platform [4]. Finally,
with the participation of the research group, the Forum Nachhaltige Geldanlagen
(Germany’s representative in the Pan-European Sustainable Investment Forum
EUROSIF) was founded in 2001, in which financial actors such as investment man-
agers, asset owners and service providers can get involved. The FNG awards an
annual label for the assessment of sustainability funds [5]. Developments in
Germany, as in other countries, show that ethically motivated investors have given
the impetus for the market segment of ethical investments, which they utilise.
The current state of development in Germany and Europe is a success story that
began around the year 2000. Today, trillions are invested worldwide in a large num-
ber of funds with different ethical-environmental profiles. Globally, sustainable
investing assets in the five major markets stood at $30.7 trillion at the start of 2018,
a 34 percent increase in 2 years [6].
Where Do We Stand When It Comes to Sustainable Financial Markets? 3

Finally, the status of the signatories of the UN Principles for Responsible

Investment (UN PRI) should also be mentioned. “Since its launch in 2006, more
than 2500 institutional investors have joined the initiative, managing a total invest-
ment volume of around USD 90 trillion (as of 12/2018).”
Sustainable investments are also proving particularly interesting for large institu-
tional investors such as pension funds, insurance companies, etc. Experience in
recent years has shown that long-term (10 years and longer) ethical-environmental
investments in the real economy (green building, sustainable infrastructure and land
and forestry [7]) generate exactly what these institutions need to fulfil their contrac-
tual obligations and at the same time promote sustainable real economy projects,
with average returns above the inflation rate.
The signs for responsible investments are therefore good, first because numerous
studies have shown that responsible investments are generally not inferior to tradi-
tional ones in terms of returns and are indeed helpful in terms of competitive posi-
tioning. “A study published by the Harvard Business School and the London School
of Business comes to the conclusion that taking ESG criteria into account when
selecting shares after 3 years generates a positive outperformance that rises continu-
ously with a longer investment horizon. The statement is based on an analysis of
180 US companies over the period 1993 to 2010.” [8]
In recent years public information regarding responsible investors has also
improved considerably. Apart from the fact that numerous ESG research providers
primarily focus on economic sustainability and, as Henry Schäfer has shown [9],
only a small group can be called value-oriented, investors receive information on
the character, quality and comparability of sustainability ratings through a study by
the EÖR project group by Claudia Döpfner and Hans Albert Schneider [10].

3 What Does Sustainability Mean in the Financial Sector?

“Sustainable development means taking environmental aspects into account on an

equal footing with social and economic aspects,” [11] is an official definition on
which political agreement could be reached because it grants equal rights to con-
flicting interests. The idea of the three equal pillars (in the previous quote: points of
view) of sustainability “seems to be the price at which the idea of sustainability
found political recognition in the 1990s,” because anyone who bases sustainability
policy on equal rights “of the whole (nature) with a part of the whole (society) and
on top of that with a part of this part (the economy),” [12] does not want to know
exactly what is important or does not want to say it so bluntly.
Sustainable business activity means the consistent conservation of substances,
the preservation of the natural bases of life and production, which are intended for
the totality of all life on earth (because there are no others) and thus also for future
generations of mankind, i.e. must be preserved and passed on by the present genera-
tion. This shows in German the origin of the concept of “Nachhaltigkeit”/sustain-
ability from forestry and in English the meaning of “sustain”: to preserve, to supply.
4 J. Hoffmann

The natural foundations of life [13], breathing air, preserving biodiversity and
soil fertility, the abundance of fish, the climate system, raw material deposits, drink-
ing water, etc. can only be preserved if we give them back what we have used and
consumed for our purposes. If we do not give it back, we consume the inherited
substance. In fact, we are parasites who have to make sure that our host, the earth on
which we live, does not perish [14]. And we all know that. Unfortunately, this
understanding does not always correspond to our actions. The movement set in
motion by Fridays for Future may save us from not having to repent for our failures,
but we will still be confronted with that and repent, for repentance is a limping mes-
senger. He comes slowly but surely [15].
It is understandable that there are different opinions about what is meant by
ethical-environmental and social sustainability. This also applies to ESG Research
providers, which assess the sustainability performance of companies and other asset
classes and the ratings often show a large divergence. The study presented by
Döpfner and Schneider shows that the transparency of the research process and
assessment procedures does not need to be improved as much. Although the differ-
ences here are worth mentioning, they are likely to wear off or are relatively easy to
smooth out with some regulations.
In principle more problematic, is the difference in the concept of sustainability
on which the ESG Research Providers base their ratings. Some are heading for a
consistent ethical assessment by considering the conservation of natural and social
capital as sustainable, i.e. demanding both “environmentally” and “socially” sus-
tainable management. To this end, both the natural and the socially designed bases
of life and production must be preserved in their potential, natural capital as well as
social capital.
Both can only be maintained if companies do not incur losses in the longer term,
so that real economic capital, the total value of private productive and human capi-
tal, is at least preserved. Economically, sustainability must be considered as we look
at sustainability from environmental and social standpoints: From all three points of
view, sustainability demands the preservation of environmental, social, economic
and cultural substance, i.e. the preservation of the basis of life and production. This
is a clear definition of sustainability based on the Brundtland Commission’s
definition.
Those who make sustainability progress dependent on positive financial returns
have a strong motivation to postpone conservation investments. The same suspicion
is (rightly) levelled at companies that attach importance to making a sustainable
investment based on their individual preferences.
(“Customized”) valuation methods try not to be subjected to external ratings, but
rather try to base everything on their own customized internal evaluations.
According to the Brundtland definition and its interpretation by the German
Commission of Enquiry “Protection of Humankind and the Environment”
(26.06.1998), the goal of sustainable development is that the common goods used,
whether natural or socially designed, are no longer consumed, but are preserved (or
restored) in their potential for future generations, in such a way that they will not be
Where Do We Stand When It Comes to Sustainable Financial Markets? 5

worse off in the satisfaction of their needs than those currently living. Each indi-
vidual company must be measured against this goal.
This goal of an uncompromising definition of sustainability, i.e. for the preserva-
tion of substance instead of externalisation and therefore for sustainable competi-
tion, must be maintained. A sustainability rating following this definition may only
award the highest rating to companies or capital investments that treat all common
resources used in the same way as their own production facilities, by avoiding or
compensating for any consumption of natural and social capital through appropriate
replacement investments.
And the other levels of the evaluation scale must be oriented to the effect of the
conservation investments: the greater the remaining externalisation, the more nega-
tive the evaluation. This would gradually ensure that renewable resources—ecosys-
tems, the climate system, human health, social integration—can be restored and that
non-renewable resources—consumed raw materials or fossil energy sources—can
be reused or replaced by renewable ones within the framework of the circular econ-
omy. The ideal goal must be that no more “waste” is produced.
From a macroeconomic point of view, this must be financially viable in the long
term, but the sustainability rating of the individual company must not, under any
circumstances, be profit-oriented, not even additionally. This would violate the sus-
tainability objective, which calls for more sustainable production to grow, but at the
same time for less sustainable production to shrink; and it would also violate the
market economy principle, which measures market performance against real sales
increases and excludes all profits generated by unfair competition or pure financial
manipulation.
So if we consider the dimensions of sustainable development to be not only envi-
ronmental, social and cultural, but also economic, the consideration must be ori-
ented to the real “substance” from which we live and which we must preserve. None
of the three dimensions can be substituted by another, certainly not by financial
capital, not even at the ECB, since those dimensions are not competing with each
other, as for the return on investment, it makes no difference whether the profit is
generated by maintaining or consuming the real substance.
Unfortunately, we live in Western “feel-good capitalism … in an externalisation
society that functions in the mode of exploitation. Through the externalisation of
constraints, one’s own freedoms are created, one’s own opportunities are secured
through the destruction of foreign living environments, one’s own circumstances are
lived out through a policy at the expense of third parties.” [16] PUMA and OTTO-­
Versand, for example, have calculated how high the externalised costs are in envi-
ronmental and social terms in the context of their productions.
Sustainability in the comprehensive sense means that any externalisation of costs
for the use of common resources is excluded.
6 J. Hoffmann

4 Exclusion Criteria Versus Best-in-Class Approach

When sustainability ratings are applied, a list of exclusion criteria is often omitted.
Exclusion criteria often include the following: “There is no investment in compa-
nies which manufacture weapons of war and other military equipment, which carry
out animal experiments, which produce addictive substances such as alcohol and
tobacco, or which violate human rights”. There are some reasons why companies
and capital investments should not be assessed on the basis of exclusion criteria:
The first reasons are historical. The first step in the ethical-environmental evalu-
ation of capital investments was made through exclusion criteria. In addition, the
use of exclusion criteria corresponds to an Anglo-Saxon practice and tradition. At
the beginning of the 1990s, when banks in Germany were considering the ethical-­
environmental evaluation of capital investments, they came to the conclusion that
the German-speaking and continental European markets required a more differenti-
ated criteriology. The application with a more or less large number of exclusion
criteria alone was inappropriate to our moral understanding.
For this reason, the research group Ethical-Environmental Rating presented the
Frankfurt-Hohenheim Guideline in 1997, the only internationally recognized crite-
rion to date. The guideline comprises approx. 850 individual criteria, which extend
over three value dimensions, namely:
–– environmental compatibility
–– social compatibility
–– cultural compatibility.
Together with Oekom Research AG, Munich, the project group welded this
unique evaluation system into a rating concept, the Corporate Responsibility Rating
(=CRR). Both in the Criteriology of the FHL and in the questionnaire of the CRR,
the items are queried in a differentiated form, which are also targeted with exclusion
criteria. In contrast to the examination of as many individual companies as possible
according to exclusion criteria, the CRR rates as many companies as possible in a
specific industry. The companies are not only evaluated individually and then
excluded if necessary, but rather viewed in relation to their competitors in their own
industry, i.e. they are given an ethical-environmental rating within their industry. In
other words: through the Corporate Responsibility Rating an investor can select the
companies that are assessed as “best-in-class”.
This process not only offers a transparent opportunity to make ethical-­
environmental investment decisions, but also Its investment decision led by the
“best-in-class system” has ethical-environmental effects on the overall economic
development, because it triggers ethical competition both within the companies and
between the industry sectors.
This is very helpful for an ethically oriented investor, since he not only pursues
his individual interests, but at the same time sets in motion other developments in
the economy that trigger ethical-environmental innovations on a broad basis and
Where Do We Stand When It Comes to Sustainable Financial Markets? 7

bring about a gradual change in the capital market towards more ethical
performance.
The “best-in-class approach” takes into account the fundamental ethical experi-
ence that every human action has a double effect, i.e. has both positive and negative
consequences. This dilemma cannot be avoided by relying on exclusion criteria. In
the CRR according to the Frankfurt-Hohenheim Guidelines, no company is there-
fore deliberately excluded from the outset; instead, the ratings show the degree of
ethical-environmental responsibility the company shows in comparison with its
competitors. In addition, an opportunity and risk assessment or an analysis of the
company’s strengths and weaknesses makes it transparent to the companies as to
how they can improve ethically. In the long term, we should continue along this
path. Obviously, there are other forms which go into the same direction, i.e. engage-
ment, measuring actual impact (i.e. through the SDGs).
However, we are becoming more and more aware that, in the medium and long
term, ethical competition within and between industries will require us to expand
the ethical-environmental investment spectrum as much as the climate crisis
requires.
The effects that this has had and will have on the financial market are consider-
able, but far from sufficient for rapid and effective change in the economy if we
want to mitigate or even avert a catastrophe.
To avert a catastrophe, I consider the concept of radical decarbonisation devel-
oped by Thomas Weber together with Nana Karlstetter and Gerhard Hofmann to be
effective. If we want to make the continued existence of mankind and the world
possible, we must become aware of the approaching climatic catastrophe so as to
transform our behaviour to drastically reduce world-wide CO2 emissions. How is
this possible?
The concept “starts with the reduction of the release of previously fossil-bound
CO2, because the environmental necessity demands an absolute quantitative upper
limit and thus an almost complete cessation of this release in the future as a prereq-
uisite for all further transformation steps ….” [17] On the basis of the current CO2
release and an upper limit for global warming of 1.5 degrees Celsius, the global CO2
budget available within the upper limit should be largely exhausted in 20 years at
the latest—even with a drastic continuous reduction. The proposal therefore aims at
implementation (decarbonisation) in 20 years.
The aim of the proposal is to shape the transformation socially in such a way that
it meets the equality requirement necessary for the acceptance of the transformation
by providing all citizens with an equal CO2 budget—i.e. an equal share of natural
resources—and by ensuring that the transformation does not result in only the rich
being able to consume CO2, i.e. that financial resources are redistributed from
“wrong” to “right” consumption. In this context, “right” means avoiding products
and services that release CO2. This requires that citizens, as consumers, be given an
incentive and the opportunity to receive an income that they would not have without
this transformation, i.e. that a prerequisite be created for the acceptance of the nec-
essary transformation.
8 J. Hoffmann

The working concepts of “transformation capacity”, “transformation income”

(sometimes called a carbon dividend), etc. are to be understood as transitional con-
cepts (“transition concepts”). They can certainly be understood as preliminary
stages for a “natural asset” to be determined after the phase of transition, from
which a “basic natural income” is financed.
The proposal starts with CO2 emissions, for which the transformation provides
for an almost complete decarbonisation of economic life. In this respect, the con-
crete proposal can also be described as a “decarbonisation capacity”/“decarbonisation
income”. A future basic natural income will then be based on the total natural
resource use or material flows [18]. This will generate part of the capital required
for the transformation of society. According to the United Nations Conference on
Trade and Development (UNCTAD), between USD 3.3 and 4.5 trillion annually in
public, private, national and international funds are needed to cover the financial
requirements for the major transformation and implementation of Agenda 2030 for
sustainable development with its 17 Sustainable Development Goals (SDGs)—and
only in developing countries. This is also a challenge for the ECB [19].

5 ECB and Sustainability

As Harald Bolsinger made clear in his petition to the European Commission, “the
European Central Bank (ECB) is indirectly involved in undermining the fundamen-
tal values of the European Union. This is done on a daily basis by trading in securi-
ties linked to breaches of the Charter of Fundamental Rights of the European Union.
The impact of this action may have a significant impact on the further development
of the European Union, given the large volumes of transactions carried out by the
ECB.” [20]

5.1 What Are the Causes?

One cause—perhaps even the origin—is the stimulation of growth and financial
assets by the German Act to Promote Economic Growth and Financial Assets
(StabG) of 1967. The act came into being under the chancellorship of Kiesinger and
Economics Minister Schiller. In the interest of a more or less even economic growth,
the ideas of John Maynard Keynes came into play and replaced the previously pre-
dominant ordoliberal thinking. During my economics studies in Munich 1963—1965
I remember the lectures of Prof. Pfister e.g. on “General Economics and Economic
Policy”. Nature, labour and capital were taught to us as the basis or means of pro-
duction of the economy as equivalent and equally to be considered means of eco-
nomic development. Or to put it another way: natural capital as the totality of the
natural goods of production and social capital as the totality of the production pre-
requisites provided by the respective culture.
Where Do We Stand When It Comes to Sustainable Financial Markets? 9

The StabG was accompanied by a prioritisation and absolute setting of financial

capital with the result that natural capital and social capital could be instrumental-
ised for the externalisation of costs in favour of financial capital. The result is impure
capitalism, i.e. the consumption of natural capital, as the climate crisis clearly shows
us. Social capital is also being consumed. Income disparities are widening globally,
the number of unused workers is increasing, monotonous shopping streets are
emerging, and so on. This is not a sustainable economic development, neither from
an economic point of view nor even less from an environmental and social
perspective.
This development was reinforced by the consequences of the German Agenda
2010. Unfortunately, the critical objections to the StabG, e.g. by the Enquete
Commission “Growth, Prosperity, Quality of Life” (2010–2013) or in 1990 by
members of Bündnis 90/die Grünen in the German Bundestag, were not successful.
In my opinion, another reason lies in the person of Mario Draghi, the outgoing
ECB President. On the one hand, he is praised as an outstanding thinker and finan-
cial specialist. Peer Steinbrück says of him: “In a major crisis, he represented the
only institution in Europe capable of taking action with the ECB and was con-
demned to be a substitute actor in politics.” [21] But he does ask us to consider
whether, given the current high level of liquidity, the “negative interest rate phase”
must be abandoned. Steinbrück is not alone in this opinion. “Zero interest rates and
bond purchases have consequences for the distribution of wealth in society” [22]
and—as I see it—consequences for the preservation of natural capital and the cli-
mate crisis. Jens Weidmann, President of the Bundesbank, also opposed “Draghi’s
policy of easy money …. the consequences of the recent further reduction in the key
interest rate are so clearly felt in the lives of many citizens that even former support-
ers find that things should not go on like this. In an open letter, former central bank-
ers from Germany, France, Austria and the Netherlands have opposed the ECB’s
previous monetary policy [23]. Draghi is considered a respected specialist. But he
also gives the impression that he did not sufficiently discuss his considerations and
decisions in discourse with other experts and their perspectives. He seems to be a
lonely decision-maker. That is dangerous, because: we may live on specialists, but
we should avoid dying from their monologues.

References

1. Jean Ziegler, in: Tahir Chaudhry, Süddeutsche Zeitung, 2./3.9.2017, Nr. 202, Seite 50. See:
Jean Ziegler. Der schmale Grat der Hoffnung. Meine gewonnenen und verlorenen Kämpfe und
die, die wir gemeinsam gewinnen werden, München 2017.
2. Webster, Peter, Ethical Investment Research Service, London; in: Roche, Peter/Hoffmann,
Johannes/Homolka, Walter, Hg., Ethische Geldanlagen. Kapital auf neuen Wegen, Frankfurt
1992, p. 62-77.
3. Hoffmann, J. /Ott, K. /Scherhorn, G., Hg. , Ethische Kriterien für die Bewertung von
Unternehmen – Frankfurt-Hohenheimer Leitfaden, Frankfurt/Stuttgart 1997
4. Information: www.cric-online.org
10 J. Hoffmann

5. Information: www.forum-ng.org; see also the very informative last newsletter Nr. 95,
August 2019.
6. http://www.gsi-alliance.org/wp-content/uploads/2019/06/GSIR_Review2018F.pdf
7. Information: [email protected]
8. Zitiert nach oekom, Corporate Responsibility Review 2012, p. 14.
9. Schäfer, H.; Hauser-Dietz, A.; Preller, E.S., Transparenzstudie zur Beschreibung ausgewählter
international verbreiteter Rating-Systeme zur Erfassung von Corporate Social Responsibility,
Gütersloh/Stuttgart 2004
10. Döpfner, C.; Schneider, H.A.; Nachhaltigkeitsratings auf dem Prüfstand. Pilotstudie zu
Charakter, Qualität und Vergleichbarkeit von Nachhaltigkeitsratings, Erkelenz 2012,
see: https://www.cric-online.org/images/individual_upload/publikationen/nachhaltig-
keitsstudie2012.pdf.
11. Rat für Nachhaltige Entwicklung, see www.nachhaltigkeitsrat.de/nachhaltigkeit.
12. Meyer-Abich, Klaus Michael (2001): Nachhaltigkeit – ein kulturelles, bisher aber chancenlo-
ses Wirtschaftsziel, in: Zeitschrift für Wirtschafts- und Unternehmensethik 2 (3), 303f.
13. see Art. 20a Grundgesetz: „Der Staat schützt auch die natürlichen Lebensgrundlagen.“
14. See Kaltenbrunner, Gerd-Klaus, Schmarotzer breiten sich aus. Parasitismus als Lebensform.
Die öffentlichen Verschwender/Zur Philosophie des Parasitären/Der Staat und das ‚Soziale‘/
Paradoxien des unbeschwerten Menschseins … München 1981.
15. See for the acceptance of repentance in other contexts: Käppner, Joachim, Die späte Reue der
Konzerne, in Süddeutsche Zeitung 28./29.Mai 2014, Nr. 122, Seite 17.
16. St. Lessenich, Neben uns die Sintflut. Westlicher Wohlfühlkapitalismus lebt nicht über seine
Verhältnisse. Er lebt über die Verhältnisse anderer, in: Süddeutsche Zeitung, 30.10.2014,
Nr. 250, 9.
17. Weber, Thomas, Politischer Vorschlag zu einem „Transformationsvermögen“/
„Transformationseinkommen“als Gestaltungs- und Steuerungsinstrument in
der unausweichlichen sozial-ökologischen Transformation. Cited from man-
uscript in preperation (21.2.2019), und https://www.agentur-zukunft.
eu/2019/06/111-vollstaendige-dekarbonisierung-budgetorientiert/
18. Hofmann, Gerhard/Karlstetter, Nana/Weber, Thomas, , Politischer Vorschlag zu einem
„Transformationsvermögen“/ „Transformationseinkommen“als Gestaltungs- und
Steuerungsinstrument in der unausweichlichen sozial-ökologischen Transformation.
Manuskript from 21.2.2019, cited from Hoffmann, Johannes, Meine Träume zu Kirchfinanzen
und Kirchenentwicklung in Deutschland, Genf 2019, p. 79ff.
19. Zitiert nach: Stremlau, Silke, Nachhaltigkeit als Chance – Haltung, Regulatorik und
Querdenken im Finanzmarkt, manuscript, p. 3.
20. Bolsinger, Harald, Petition from May 2017; http://www.wirtschaftsethik.biz/publikationen/
verpflichtung-der-Europäischen-Zentralbank-auf-EU-Grundrechte
21. Gammelin, Cerstin, Interview, Die Geldpolitik hat ihre Handlungsfähigkeit verloren. Maria
Draghi, der scheidende Präsident der Europäischen Zentralbank, hat vieles richtig gemacht,
findet Peer Steinbrück – etwa mit Niedrigzinsen geholfen, als die Euro-Staaten Reformen
versäumten. Dann aber habe er den entscheidenden Moment verpasst, in: Süddeutsche
Zeitung, 22.10.2019, Nr. 244, p. 22.
22. Zydra, Markus, Neue Frankfurter Schule. Schluß mit Notenbanker-Fachsprech? Was die desig-
nierte EZB-Chefin Lagarde anders machen will als ihre Vorgänger, in: Süddeutsche Zetung,
3.9.2019, Nr. 203, p. 17
23. Gammelin, Cerstin, Jens Weidmann. Geldpolitischer Oppositionschef in der EZB, in:
Süddeutsche Zeitung, 17.10.2019, Nr.240, p. 4
Ethical Standards Beyond Monetary
Policy: Approaches to a Philosophical
Foundation

Bernd Villhauer

Abstract This paper illustrates why the European Central Bank has obligations
that go far beyond economic and financial market-related responsibilities. As a
European institution, it is committed to a core set of values, especially with regard
to the preservation of human rights. These obligations are part of its contribution to
the creation of a social and ecological market economy in Europe and do not con-
flict with its regulatory and market-related responsibilities.

The tasks of the European Central Bank (ECB) and the matters it deals with are
wide-ranging. The 1992 Maastricht Treaty and the 2007 Lisbon Treaty defined the
fundamental elements of what the ECB is and how it should function. Since the
Lisbon Treaty, the ECB has been defined as an inherent institution of the EU: like
the European Parliament, the European Council, the Council of the European
Union, the European Commission, the Court of Justice of the European Union and
the European Court of Auditors.
What is the specific responsibility and jurisdiction of the ECB as an EU institu-
tion as well as a European institution? It is important to bear this in mind at a fun-
damental level, for Europe is not only a community of peace and economic
togetherness, but also a community of shared-values based on philosophical and
ethical principles. These values also bind us together as Europeans, and these same
values will allow us to create a sustainable future.

B. Villhauer (*)
Weltethos-Institut at the University of Tübingen, Tübingen, Germany
e-mail: [email protected]

© Springer Nature Switzerland AG 2021 11

H. Bolsinger et al. (eds.), The European Central Bank as a Sustainability Role
Model, Sustainable Finance, https://doi.org/10.1007/978-3-030-55450-7_2
12 B. Villhauer

1 Europe as a Community of Shared Values

The question now is: how can we actually turn our pretty soap-box speeches into a
concrete reality? In order to answer this question, the European contracts and trea-
ties must be examined closely. The European founding documents reveal a threefold
origin in terminology as well as in objectives:
–– From the philosophical heritage of ancient Greece and Rome
–– From the Christian set of values and its perception of humankind
–– From the eighteenth century Enlightenment.
These elements have contributed to a European understanding of values as a
basis for national and transnational structures; the dynamics of the European unifi-
cation process with all its paradoxes and contradictions will be better understood if
we recognize this variety and hold ourselves back from pitting one element against
the other. The shared-values as a whole give the European project its specific
identity.
In order to gain a better understanding of the intellectual foundations of Europe,
the major speeches and announcements of important actors must be taken into
account. It is imperative to know how Robert Schuman, Konrad Adenauer, Alcide
de Gasperi, Walter Hallstein, Jacques Delors, Helmut Kohl and Jean-Claude Juncker
described the European shared-value system. We will then have a better understand-
ing of the hopes and goals with which our European “home” was built.
This has been put into concrete terms in European treaties such as the Maastricht
Treaty, which merges the previous unification treaties into the various European
Communities (EEC, ECSC, EURATOM). However, the concrete formulations in
the founding documents of the EU must always be understood within the frame-
work of their philosophical and ethical prerequisites. These lead to a specifically
European conception of humankind which can be expanded into individual values.
A series1 edited by Clemens Sedmak lists: Solidarity, Freedom, Equality,
Tolerance, Peace and Human Dignity. However in 2010 and 2018 the European
Commission conducted a survey to gain insight into what Europeans believed to be
inherent “European values” and obtained the following results: peace, human rights,
democracy, rule of law, solidarity/support of others, respect for human life, freedom
of the individual, respect for other cultures, equality, tolerance, self-realization and
religion. Interestingly, there was a noticeable shift of emphasis on certain values
from November 2010 to March 2018. In 2018 “peace” was at the top of the list with
39%, in 2010 “human rights” and “democracy” were both at the top with 38% each.
The proportion of people who found “none of these values” important was 3%
(2010) and 5% (2018).2

1
Clemens Sedmak (ed.), Grundwerte Europas, Darmstadt (WBG), 7 volumes, 2010-2017
2
Europäische Kommission: Eurobarometer 89: Die europäische Bürgerschaft, 03/2018,
Eurobarometer 74: Die öffentliche Meinung in der Europäischen Union, 11/2010
Ethical Standards Beyond Monetary Policy: Approaches to a Philosophical Foundation 13

The Treaty on European Union, Article 2 reads as follows: “The values on which
the Union is founded are respect for human dignity, freedom, democracy, equality,
the rule of law and respect for human rights, including the rights of persons belong-
ing to minorities. These values are common to the Member States in a society in
which pluralism, non-discrimination, tolerance, justice, solidarity and equality
between women and men prevail.” Such statements cannot be properly interpreted
unless it is clear that they are intended to build a framework of action based on ethi-
cal convictions and standards. This also applies to economic activities within
Europe, as well as to our foreign trade relations.
Article 3, paragraph 3 states, “The Union shall establish an internal market. It
shall work for the sustainable development of Europe based on balanced economic
growth and price stability, a highly competitive social market economy, aiming at
full employment and social progress, and a high level of protection and improve-
ment of the quality of the environment … ” According to the EU, then, it is a social
and ecological market economy. It is prepared to combine economic development
with social and political objectives instead of pitting them against each other. This
was made clear as early as May 9th 1950 in the famous Schuman Declaration, “The
French Government proposes that Franco-German production of coal and steel as a
whole be placed under a common high authority, within the framework of an orga-
nization open to the participation of the other countries of Europe. the pooling of
coal and steel production should immediately provide for the setting up of common
foundations for economic development as a first step in the federation of Europe,
and will change the destinies of those regions which have long been devoted to the
manufacture of munitions of war, of which they have been the most constant
victims.”
The Treaty of Lisbon states that the EU should develop into a “competitive social
market economy.” Ensuring prosperity and full employment should go hand in hand
with preserving employers’ rights. It is no coincidence then that the treaty also
declares the EU’s accession to the European Convention on Human Rights.
It begs the question then, how can we connect the economy and the shared-­
values in the context of the European institutions? How can traditions become
guidelines for action and what does this mean for the ECB?

2 Values and Law

One of the classic mechanisms of arbitration and implementation is the law. The
implementation of ethical principles via legal means must be required and pro-
moted. European law can certainly be understood as an implementing body of a
shared understanding of values, also with regard to the ECB's policy. The European
Community sees itself as a constitutional entity. Its actions and the role of the
institutions are laid down in treaties. All treaties, from the Treaty of Rome (1957) to
the Treaty of Lisbon (2007), were repeatedly amended, construed in debates and
reshaped in detail. The European Central Bank, with its legal foundation, is also the
14 B. Villhauer

subject of such discussions, with both the various national concerns and the EU’s
position in world markets dictating contexts for discussion.
But this is where the fundamental issue of the ECB’s independence comes into
play. The central bank was designed as an independent body with an extensive
scope for action for good reason, and it has been assigned the main task of ensuring
price stability for equally good reason. How can its mandate be understood in this
context? Clearly, the ECB must be independent of political influence in its decision
making. It was not created to support the economic policies of individual actors; it
must make decisions for the good of the European community as a whole and main-
tain a long term perspective. It can only do both as an independent institution.
However, it is also inherently embedded in fundamental European norms such as
the recognition of human rights, and therefore also dependent on these norms. These
shared values can be understood as essential elements and prerequisites of the ordo-­
liberal framework which the ECB, like all other EU institutions, must adhere to. The
ECB is free to act independently within this framework. The drafting of the ECB's
price stability policy also occurred independently within this framework.

3  he Law as the Only Available Implementation Measure

T
Within the Context of a Social and Ecological
Market Economy?

Is this legal dimension sufficient? The connection between law and values can be
addressed with this question: where does the relation with codified law begin, and
where does it end? When must law be complemented by ethical reflection in theory
and an ethos in practice? The age-old debate on “law” vs. “justice,” i.e. on the nor-
mative aspects of law, cannot be addressed here. We leave this to Feuerbach,
Radbruch, Geiger, Kelsen, Fikentscher and Rüthers, all of whom can give insight
into this complex question. The former President of the Constitutional Court of
Baden-Württemberg, Eberhard Stilz, described the relationship between law and
ethics as follows, “… the totality of moral norms, i.e. the ethos, is an indispensable
foundation and reference for legal norms.”3
He argues that the supreme law within our legal system is also our most funda-
mental value: the inviolability of human dignity. To further illustrate his point he
quotes the so-called Böckenförde Dilemma, which I will cite here in shortened
form, "the liberal, secularized state lives by requirements that it cannot guarantee
itself (…) On the one hand the liberal state can only survive if the freedom it grants
its citizens is regulated from within by the moral substance of each individual and
the homogeneity of society itself. On the other hand, it cannot guarantee these inter-
nal regulatory forces on its own, by means of legal coercion and authoritative
decrees, without relinquishing its liberal character, and, on a secularized level slip

3
In: Ulrich Hemel (ed.), Weltethos für das 21. Jahrhundert, Freiburg i.Br. 2019, pg. 140
Ethical Standards Beyond Monetary Policy: Approaches to a Philosophical Foundation 15

back into totalitarianism from which it once led society out of in the
Confessional Wars.”4
I believe it to be of use to relate this insight, which initially refers to religious
traditions and norms, to the sphere of the European legal system. First of all, it is
important to note that the European system is very different from what the above
citation deems the “state.” Next we must ask whether or not, and if so how, the con-
cept of "homogeneity" plays a role. If homogeneity is not defined too narrowly, as
cultural, linguistic or even ethnic homogeneity, then we can broaden our view of
living together on the basis of shared-values, a European understanding of what it
means to be humans, a European understanding of the world and also of the law.
This is not only theoretical in nature, but based on experience; anyone who has trav-
eled outside of Europe, whether it be to Ghana or Paraguay, to China or Korea, or
even to the USA or Russia, has surely noticed how specifically European her or she
is, and undoubtedly realized what connects him or her with a Portuguese, a Polish,
or a Dutch person.
It is interesting that Böckenförde explicitly refers to the establishment of peace
after the series of religious wars, which were inherently European conflicts. He also
addresses another aspect that is important to fully comprehend the moral founda-
tions or parameters of legal provisions: the interpretation of legal norms, as well as
their implementation and practical application in everyday life. In a liberal or free
society, a person must constantly make the conscious choice to comply with legal
norms. They must also interpret them in a way that corresponds to the overall con-
text and objectives of the legal system. Their individual ethos and their ethical com-
petence to speak and act in the right way must complement the legal guidelines; in
essence breathe life into them. “Compliance” must be complemented by
“conscience”—a constant check of one’s conduct and one’s conscience.
This applies to both the individual as well as the collective level. The economic
and financial policy of the EU must also be subject to a constant process of critical
self-reflection. This critical reflection has two advantages: on the one hand, it
enables internal learning processes both in the specific field of financial policy and
in the larger field of European unification. On the other hand, it abets international
legitimacy, strengthens unity and imparts vitality. This is more important than ever
in view of the current rise of national populisms and the crisis of multilateral orga-
nizations and agreements.5

4
Quote from: Hemel 2019, pg. 143
5
A reference concerning the threat to the regulatory and arbitrational role of the World Trade
Organization (WTO) in the current (December 2019) world situation must be included here.
16 B. Villhauer

4  he ECB’s Contribution to a European Social

T
and Ecological Market Economy

Alongside a variety of measures, the ECB practices enormous interventions with its
purchasing programs. Broad, sweeping statements (“whatever it takes..!”) regarding
future policies inherently impact and change the situation of all market participants.
This power must go hand in hand with responsibility and accountability. Ethical
competences must be a vital requirement in the political and economic sphere as
well. The social market economy in Germany is a perfect example of how an ethical
framework does not destroy the market, but shapes it instead. Looking at the German
economy, ethics is clearly not a limiting factor, but rather a driver of innovation.
Therefore the “responsible finance approach” also opens doors, not to restrict the
financial market, but to transform it.
Pricing mechanisms play a special role here. It is worth recalling the discussions
regarding the Corporate Sector Purchase Programme (CSPP) and the criticism of
economists as to whether the wrong incentives for price formation were given,
whether misallocations were abetted and whether there was a risk of market distor-
tion. It is not easy to find a balance, but much like the adherence to the standards of
fundamental human rights and social norms, we must find a way to design a sustain-
able market that does justice to the current situation and paves the way for a social
and ecological market economy. To this end, however, the naive idea of self-­
regulating markets must be put into question. Theorists can learn a lot from practi-
tioners who have long been confronted with political markets or pricing mechanisms
in which externalizations of the costs of environmental destruction are not factored
into the price.

5 Market Conforming and Non-market Based Policies

Of particular interest to researchers are the specific characteristics of the financial

markets that allow for modelling. It must be noted that it is not the purpose of this
paper to delve into detail regarding the markets types which are suitable for shaping
within the framework of the social market economy. It is obvious, however, that in
particular the financial markets, with their political dependencies, their powerful
stakeholders, their monopolies and oligopolies and their mixture of a high degree of
regulation regarding certain national concerns and uncontrolled growth on a global
level, definitely do not correspond to the market-ideal found in textbooks.
The interaction between the law and compliance complicated by the many gray
zones renders voluntary legal compliance insufficient; instead the EU institutions
must constantly question whether they are acting on the basis of the shared-values.
A region like Europe, which is becoming increasingly unimportant in military and
economic terms, is particularly dependent on moral authority.
Ethical Standards Beyond Monetary Policy: Approaches to a Philosophical Foundation 17

This is not necessarily connected to a singular “European identity” or with

encroaching bureaucratic standardizations. It is precisely this unity in diversity, this
awareness of common goals and obligations, e.g. the protection of human rights that
can offer Europe a way out of its present crises.
The realization that economic dynamism must also be utilized in order to ensure
a successful coexistence lies at the heart of the matter. Nothing can effectively put a
stop to today’s market forces—but it is possible and crucial to control the direction
and dosage of these forces, as well as the creation and modelling of specific market
situations. Within this context it is helpful to analyze the determining factors regard-
ing a European market economy which fosters people and the environment through
the lens of institutional economics.

6  uture Tasks for the President: Christine Lagarde’s

F
Decisions

What will be the development of the ECB’s concrete policy in the near future? This
depends on many factors, such as the global economic environment and nationalist
and populist movements in the various countries. However, the policy of the new
ECB President Lagarde will also play a major role in this development. There are
many indications, based on what has been made public regarding Christine Lagarde’s
plans, that sustainability will play a greater role, at least the tendency seems to be
there. Two major recurring themes in her speeches are “responsible finance” and
“sustainable finance.” Will she really put more emphasis on a more sustainable
Europe? In the past, she has repeatedly taken a stand for a more sustainable and
ethically minded financial system.
Any actions taken in the direction of accountability and sustainability will not
only presumably harmonize with the "Green New Deal" announced by Ursula von
der Leyen, President of the European Commission, but also mutually reinforce one
another. However, resistance from the ECB’s Executive Board, and/or from the cen-
tral banks of member states is also to be expected. A well- known voice of opposi-
tion is the president of the Bundesbank, Jens Weidtmann, who stated at an ECB
event in Frankfurt in October 2019, “I believe that a resolute and effective climate
policy is necessary—but only by implementing the right measures and via demo-
cratically legitimized actors.” He continues, clearly taking an opposing stance in
light of demands for the purchase of “green” bonds and the creation of a sustainable
portfolio: What measures should be taken, what behavior should be encouraged or
punished? These are political questions that elected governments and parliaments
must answer.”6
It is within Christina Lagarde’s power to put this in a new perspective. At the
hearing before ECON, the European Parliament’s Committee on Economic and

6
Quotes from: „Handelsblatt“, 29.10.2019
18 B. Villhauer

Monetary Affairs, which was part of her nomination process, she stated, “… the
discussion on whether, and if so how central banks and banking supervisors can
contribute to mitigating climate change is at an early stage but should be seen as a
priority.” However, she also pointed out the leadership responsibility of the European
Commission, “The most appropriate, first-best policy response and initiatives pri-
marily fall outside the realm of central bank policies.”7 It remains to be seen what
this will mean for the ECB.

Bibliography

1. Markus Brunnermeier, Harold James, Jean-Pierre Landau, Euro. Der Kampf der
Wirtschaftskulturen, München (C.H. Beck) 2018
2. Europa-Recht (dtv Beck Texte), München (C.H. Beck) 201727
3. Nils Goldschmidt/Michael Wohlgemuth (ed.) Grundtexte zur Freiburger Tradition der
Ordnungsökonomik, Tübingen (Mohr Siebeck) 2008
4. Michael Heine/Hansjörg Herr, Die Europäische Zentralbank. Eine kritische Einführung in die
Strategie und Politik der EZB und die Probleme in der EWU, Marburg (Metropolis) 20083
5. Ulrich Hemel (ed.), Weltethos für das 21. Jahrhundert, Freiburg i.Br. (Herder) 2019
6. Hans Joas/Klaus Wiegandt (ed.), Die kulturellen Werte Europas, Frankfurt a.M. (Fischer) 20105
7. Clemens Sedmak (ed.), Grundwerte Europas, Darmstadt (WBG), 7 volumes, 2010-2017
8. Alexander Thiele, Die Europäische Zentralbank: Von technokratischer Behörde zu politischem
Akteur?, Tübingen (Mohr Siebeck) 2019

7
Quotes from: „The Parliament”, 06.09.2019
Fundamental Rights in the Core Business
of the ECB: No Issue?!
Experience with the EU Petition 429/2017

Harald J. Bolsinger

Abstract Petition 0429/2017 has been brought forward by Prof. Harald Bolsinger.
In this article he describes backgrounds and developments around the petition. The
petition, submitted on May the 8th 2017, addressed the investments policy of the
ECB. Compliance with EU Fundamental Rights, it claimed, should be specifically
included into the eligibility for EU owned assets. As Bolsinger explains, at the
moment the ECB is involved in violations of the Charter of Fundamental Rights of
the European Union through possession and trading of unethical securities.

1 How It All Began

Our world is facing major economic, ecological, cultural and social challenges,
which all influential players must help to overcome—including the financial indus-
try. This experience report explains the origins of the EU petition 0429/2017 and its
development until the end of 2019. This paper describes the process from the peti-
tioner's subjective point of view and thus conveys his personal perception and
opinion.

1.1 Climate Challenge and Beyond

The earth’s temperature will most likely increase by nearly 5 degrees Celsius by
2050 if all companies worldwide were to follow the production of the companies in
the DAX 30! The global warming contribution of the DAX 30 companies ranges
from just under 1 to up to 11 degrees Celsius. This would surely result in the utter
ruin of the earth and humanity as a whole would be threatened. This climate indicator

H. J. Bolsinger (*)
Faculty for Economics and Business Administration, University of Applied Sciences
Würzburg-Schweinfurt (FHWS), Münzstraße 12, Würzburg, Germany
e-mail: [email protected]

© Springer Nature Switzerland AG 2021 19

H. Bolsinger et al. (eds.), The European Central Bank as a Sustainability Role
Model, Sustainable Finance, https://doi.org/10.1007/978-3-030-55450-7_3
20 H. J. Bolsinger

is known as “X-Degree-Compatibility” (XDC) and expresses, on the basis of scien-

tific data, by what degree the earth would warm up by 2050 if the behavior of the
company in question were to be adopted by all companies worldwide. (see www.
right-basedonscience.de/en) Similar estimations can be made regarding all other
global challenges focusing on a sustainable global society. The results are equally
frightening and have opened our eyes to the fact that “business as usual” is no longer
compatible with the goal of a dignified and secure future. Many of our current sup-
ply chains and production methods are still fraught with human rights violations,
environmental degradation and corruption, even though we operate within a global
regulatory framework designed to counter act such unacceptable and contemptible
behavior. The various analyses of established sustainability rating organizations
prove that the number of ethical issues in companies has increased in all industries
(see e.g. data from www.issgovernance.com/esg/)
Profitable business models that have implemented unethical and destructive
management almost as a matter of course can only be changed holistically by
depriving them of the economic basis for their ethically questionable behavior. Not
only can consumers exert influence by voluntarily changing their consumer behav-
ior, but financial market players can also indirectly influence ethical economic
activity instead of sharing responsibility for unethical economic behavior.
Commercial banks and insurance companies can make a positive contribution with
their investment policy, as can central banks. For Europe, “can” does not apply to
the Central Bank, instead it is a “must” that has already been codified in terms of
regulatory policy, as Bernd Vilhauer's previous contribution makes clear.

1.2 Hidden Places of Horror

While accompanying a courageous, small universal bank in Germany on its way

from a regular bank to a bank focusing on sustainability, I noticed some important
points in the reorganization of the investment policy which affect all banks equally;
it is within the decision-making authority and responsibility of the bank itself to
invest its funds in areas that have either beneficial or detrimental impacts on society.
Due to the widely prevailing view that investment decisions are not ethical deci-
sions, but rather a balancing act between return, risk and liquidity, horrible invest-
ment decisions regarding treasury and investment policy are not unusual.
Commercial banks invest in a wide range of companies that quite obviously destroy
the environment; they invest in large banks that have already been convicted in the
past for their corrupt and criminal behavior, or even in companies that exploit peo-
ple treating them like slaves. How can this happen? First of all the blindness of the
decision-makers regarding the ethical dimension of their investment decisions is to
blame. However this can easily change if we take the blinders off by creating a clear
definition of exclusionary ethical criteria and a sustainability rating prior to the
investment decision. Whether you’re a bank teller at a small bank or the CEO of a
billion-dollar institution, it’s clear to everyone that a willingness to invest signals
Fundamental Rights in the Core Business of the ECB: No Issue?! 21

the belief that the business in question shall grow or at least remain as profitable as
it is at the time of investment. Nobody invests with the intention that his investment
will be lost or that the return expectations will not be met. Investment and lending
therefore have a clear normative dimension: what the money is invested in is
regarded as desirable, worthy of promotion and ethically good. With his money, the
investor enables growth and continuity of the business in which he invests. However,
countless commercial banks act as if this is not the case. They publicly present
themselves as trustworthy, honest and credible having no intention to do anyone or
anything harm. Unfortunately, their investment activities reflect exactly the oppo-
site. They often green wash their actions by putting solar panels on the roof, offering
Fair Trade coffee to their customers and printing on recycled paper. At the same
time, however, billions are invested in coal-fired power plants, exploitative business
models and large banks that actively promote tax avoidance and conduct wealth
management for war criminals. These depots or “places of horror” are hidden from
the public and remain undisclosed for reasons of competition policy.

1.3 The ECB as Role Model

While commercial banks can largely determine their own exclusion criteria for
investments, this has never been the case for the European Central Bank. The mini-
mum requirement regarding the ethics of this European institution’s portfolio policy
is laid down in a binding agreement in the Charter of Fundamental Rights of the
European Union. The Lisbon Treaties empower the EU Charter of Fundamental
Rights as the primary law in all European institutions. This is also true for the ECB!
All the activities of the ECB as an European institution must, therefore, comply with
the codified values of the Charter of Fundamental Rights. This is the sober regulatory
framework that is already in place and this is how the ordoliberal principle of our
European eco-social market economy functions. This is also the reason why in the-
ory the ECB is a role model for the commercial banks to not participate in and not
promote environmental destruction, the acceptance of child labor as well as slave
labor, the facilitation of corruption and fraud in its financial market policy, which is
designed independently of day-to-day political influence. Upon first glance I thought
monetary policy does not need to go hand in hand with companies that commit the
above-mentioned crimes in order to function. However, on closer inspection, I dis-
covered that the ECB does not care at all about its exclusionary criteria or has even
been remotely held accountable to them by anyone so far! It became clear to me why
so many, and I mean so many, commercial banks do not waste a single thought on the
indirect impact of their investments. For the great regulator, the ECB, does not do it
either—although it has been obliged to do so for more than a decade. So why should
the small commercial banks be obligated to do so?
The reason for this blatant ignorance is quite simple and wearisome—it is to
maintain a so called “market neutrality.” Participation in corrupt business and tar-
geted environmental destruction is owed to market neutrality—that’s the way the
Exploring the Variety of Random
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The Project Gutenberg eBook of The Amethyst
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Title: The Amethyst Cross

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(La Trobe University, Australia)

THE AMETHYST CROSS

 BY THE
SAME AUTHOR

THE MYSTERY
OF A SHADOW

CASSELL AND COMPANY, LTD.

LONDON, PARIS, NEW YORK, TORONTO AND MELBOURNE
"'Father!' she shrieked!" (see page 194.)

THE

AMETHYST CROSS
 BY

FERGUS HUME

AUTHOR OF "THE MYSTERY OF A HANSOM CAB,"

"FLIES IN THE WEB," "THE PURPLE FERN,"
"THE MYSTERY OF A SHADOW," ETC.

WITH COLOURED FRONTISPIECE BY

C. DUDLEY TENNANT

CASSELL AND COMPANY, LIMITED

London, Paris, New York, Toronto and Melbourne 1908
 ALL RIGHTS RESERVED

CONTENTS

CHAPTER.
I. THE BEGINNING OF A MYSTERY
II. THE UNEXPECTED HAPPENS
III. ANOTHER MYSTERY
IV. A FAMILY HISTORY
V. MRS. WALKER'S OPINION
VI. PURPLE AND FINE LINEN
VII. AFTER MIDNIGHT
VIII. UNDER A CLOUD
IX. TWO GIRLS
X. THE DEUS EX MACHINA
XI. THE SEAMY SIDE
XII. A COUNTERPLOT
XIII. MRS. WALKER'S VISIT
XIV. THE FAMILY LAWYER
XV. A STARTLING LETTER
XVI. RECOGNITION
 XVII. DISGRACE
XVIII. LADY CHARVINGTON'S ACCUSATIONS
XIX. MR. HALE EXPLAINS
XX. JOURNEYS END IN LOVERS' MEETING
XXI. TWO INTERVIEWS
XXII. THE PLOT
XXIII. ONE PART OF THE TRUTH
XXIV. ANOTHER PART OF THE TRUTH
XXV. REVENGE
XXVI. THE END OF IT ALL

THE AMETHYST CROSS

CHAPTER I

THE BEGINNING OF A MYSTERY

THE blackbird knew. He had paired for the fifth time in as many
years, and esteemed himself wise in the matters, of love. Therefore,
from the budding chestnut wherein his nest was built, did he
sympathetically watch the bachelor and maid who sat below. They
were lovers as he knew very well, for only lovers could have gazed
so persistently into one another's eyes, and therein did they behold
each other as each wished to be. Which sentence is cryptic to those
who are not lovers as these were.

They might have looked at the smoothly-flowing river, singing quietly

to itself not a stone-cast away, or round a tangled garden, delicately
beautiful with the young greenery of May, or up into the azure
depths of a sky, flecked with silvery clouds. But they preferred--
wisely it may be--to look into each other's eyes, to clasp hands and
to remain silent with that eloquent muteness, which is the speech of
true love. Oh! the blackbird knew the meaning of these things very
thoroughly, and chuckled with such glee that he finally broke into
glorious song concerning the new love, the true love, the old love,
the bold love, which comes evermore with the blossoms of spring.
But these inhabitants of Paradise did not require the bird to reveal
the obvious. Their hearts were also singing the song of the early
year.

"It can't last for ever," murmured the maid dreamily, "it is too
beautiful to last, since we are but mortal."

"It shall last for ever; it must," corrected the bachelor, wise in that
wisdom of the gods, which comes to wooers, "for we love with our
souls, dearest, and these cannot die."

She knew that he was right, for her heart told her so. Therefore did
they again look into one another's eyes and again become silent,
while the fluting blackbird explained more than mere human speech
could render. And he, perched on a swaying bough, was only too
willing to interpret. He knew: he was wise. And listening Nature
heard complacently. To such ends had she shaped her children; for
such a reason had she provided their Arcadia.
As Arcadia, like Marlowe's hell, is not circumscribed, it chanced that
this especial one was by Thames-side, and those who dwelt therein
were up-to-date in looks and dress and manners. Only their feelings
were those of classic times, and as he told her the old, old story,
which is ever new, she listened with the instinctive knowledge that
the tale was wonderfully familiar. She had read it in his eyes, after
the manner of maids, long before he dared to speak.

And this river Paradise was not wholly unworthy at so comely an

Adam and Eve, although limited in extent and untrimmed in looks.
Lord Beaconsfield declared that the most perfect garden is that
cultivated to excess by man and then handed over to the caprice of
Nature. The owner of this demesne apparently subscribed to this
dictum, for the garden, well-filled with expensive flowers and shrubs,
had long since relapsed into wildness. On either side of the narrow
strip of land, sloping gradually to the stream, extended low walls of
mellow red brick overgrown with dark-green ivy. The flowerbeds
were luxuriant with docks and nettles and charlock and divers
weeds: the pathways were untidy with lush grass, and the tiny lawn
at the water's edge was shaggy and untrimmed. A wooden landing-
stage floated near shore at the garden's foot, and to this was
attached the young man's boat. At the far end of this neglected
domain could be seen a thatched cottage with whitewashed walls
and oblong lattices quaintly diamond-paned. So rustic and pretty and
old-world did it look that it might well have been the fairy-dwelling
of a nursery tale. And the lovers themselves were young and
handsome enough to deserve the care of the fairies.

He was tall, slim, well-formed, and Saxon in his fairness. His curly
hair--so much of it as the barber's shears had spared--was golden in
the sunlight, as was his small moustache, and his eyes were bravely
blue, as a hero's should be. The white boating-flannels accentuated
the bronze of his skin, and revealed the easy strength of an athlete.
He looked what the girl took him to be--a splendid young lover of
romance. Yet he was but a City clerk of prosaic environment, and his
youth alone improved him into Don Juan o' Dreams.
The girl resembled Hebe, maidenly, dainty, and infinitely charming;
or it might be Titania, since her appearance was almost too fragile
for the work-a-day world. With a milky skin; brown-haired and
brown-eyed; with a tempting mouth and a well-rounded chin, she
looked worthy of any man's wooing. She was sweet and twenty; he
but five years older, so both were ripe for love. And then the spring,
joyous and fresh, had much to do with the proposal just made. Her
answer to his question had been tunefully commented upon by the
irrepressible blackbird, who expressed no surprise when the echo of
a kiss interrupted his song.

"But my father will never agree, George," sighed the girl, after this
outward and visible sound of acceptance.

"Dearest Lesbia"--he folded her manfully in his arms--"I don't see

why your father should object. I am not rich certainly, as a
stockbroker's clerk doesn't earn large wages. But for your dear sake
I shall work and work and work until I become a millionaire."

Lesbia smiled at this large promise. "We may have to wait for years."

"What does it matter so long as our hearts are true?"

"They may grow sick with waiting," said Lesbia, sighing. Then she
proceeded to look on the practical side of their idyll, as the most
romantic of women will do at the most romantic of moments. "You
earn only two hundred a year, darling, and my father--so far as I
know--can give me nothing. He has his pension from Lord
Charvington, and makes a small income by his work in the City, but"-
-here came a depressing pause.

"What does Mr. Hale do in the City?" asked George abruptly.

Lesbia opened her brown eyes. "I don't know, dear. He goes there
two or three times a week, and always seems to be busy. I have
asked him what his occupation is, but he only laughs, and declares
that dry business details would not interest me. I am sure no girl
ever knew so little of her father as I do. It's not fair."

"Strange!" murmured the young man meditatively. "I never see Mr.
Hale in the City, and although I have asked several people, no one
appears to know the name. Of course, darling, the City is a big
place, and your father may do business in a quiet way. Still it is odd
that no one should know. I wish I did. I might help him."

"In what way?"

"Well, Lesbia, the wages I receive at Tait's office are small, and--
and--and"--here George flushed for no apparent reason--"and there
are other things to be considered. If I could only get something else
to do I should leave Tait's. Your father might be willing to let me
enter his office, you know, and then I could work up his business,
whatever it might be."

The girl nodded. She was a matter-of-fact young woman. Since

Hale's income was limited she was compelled, as housekeeper, very
often to consider ways and means. "You might speak to my father."

"And may I mention our engagement?" he supplemented.

"No-o!" Lesbia looked doubtful. "I had better announce that. Father
has a temper, and if he grew angry, you might grow angry also."

"Oh no." George was entirely in earnest when he said this. "I should
always remember that he was your father and that you love him."

Lesbia again looked doubtful. "Do I love him?" she mused.

"One is supposed to love one's father," suggested George.

She stared at the river. "Yes! I suppose so. Honour your parents, and
so forth. I don't honour my father, though--his temper is too bad. I
am not quite sure if I love him."
"Oh, my dear." George looked nervous.

"Don't make any mistake, dear boy. I like my father, since we are
good friends, and usually he is kind--that is, when he is not in a
rage. But then, you see, sweetest," she sighed, "he is nearly always
in a rage about some trifle. Look at the garden," she waved her
hand vaguely, "I wanted to hire a gardener to make it look more
respectable, and father was furious. He declared that he did not
want people to come spying round the cottage. Spying! Such an odd
word to use."

"Your father is an odd man," said George ruefully, "and he certainly

has not been over-hospitable to me. Perhaps he guesses that I have
come to steal his jewel, and one can't be hospitable to a robber."

Lesbia pinched his chin. "You silly boy, my father doesn't think so
much of me as you do. I sometimes wonder," she went on sadly, "if
he loves me at all. I am very much alone."

"He doesn't treat you badly?" demanded George with sudden heat.

"No, dear, no. I shouldn't allow anyone to treat me badly, not even
my father. But I fancy he regards me as a necessary trouble, for
sometimes he looks at me in a disagreeable way as though he
fancied I was spying."

"Why do you use so disagreeable a word?" asked the straightforward

clerk.

"My father used it himself in the first instance," she rejoined

promptly; "perhaps because he doesn't want anyone else to meet
the queer people who come to see him,--generally after dark. Men
who smell of drink, who use slang and dress like grooms,--certainly
not gentlemen. Of course I never talk to them, for when they
appear, my father always sends me to my room. I'm sure," sighed
the girl dolefully, "that if it wasn't for old Tim, the servant, I should
be quite alone."
George hugged her. "You shall never be alone again!" he whispered,
and Lesbia threw her arms round his neck with great contentment.

"Oh, darling, you don't know how good that sounds to me. If it were
only true. You see, my father may object."

"He can object until he is tired," cried the ardent lover. "If he does
not make you happy I must. And when he sees this----"

"Oh!" Lesbia clasped her hand in delight at the sight of a cheap

turquoise ring, "how lovely!"

George frowned at the mean gift. "It was all I could afford," said he.

"It is all I want," she said, as he slipped it on her engagement finger,

"it's not the cost, or even the thing. It's what it means. Love and joy
to you and me, dearest boy."

But George, having a generous heart, still lamented. "If I hadn't to

keep my mother," he said ruefully. "I would save up and give you
diamonds. But two hundred a year goes a very little way with my
mother, even when her own small income is added. You see, dear,
she never forgets that my father was the Honourable Aylmer Walker,
and she will insist upon having everything of the best. This is a
beastly cheap ring, but--but----"

"But you denied yourself all manner of nice things to buy it for ME,"
finished Lesbia, pressing a kiss on his willing cheek.

"No, dear, no," he said valiantly, "only a few pipes of tobacco."

"You dearest donkey," cooed the girl, more touched than she chose
to confess, "doesn't that show me how you love me. As to the ring,"
she surveyed the cheap trinket critically, "it is exactly what I wanted.
The stones are the colour of your dear eyes."

George, man-like, was delighted. "You know the colour of my eyes?"

Lesbia boxed his ears delicately. "I knew the colour exactly one
minute after our very first meeting."

"Did you love me then?"

"No. Certainly not: how conceited you are."

"Then why did you notice my----"

"Oh, a woman always notices these things, when a man is nice."

"And you thought me nice?"

Lesbia fenced. "Good-looking, at all events. You wore a dark flannel

suit striped with pale green."

"So I did," cried George, delighted, "it was at Mrs. Riordan's picnic
near Bisham Abbey a year ago. And you were there."

Lesbia laughed and nursed her knees. "I must have been, since I
can describe you so exactly. What did I wear, dear?"

"I don't know," said George promptly.

"Oh!" she was quite disappointed, "and you call yourself a lover?"

"I do," he rejoined stoutly, "for, as I fell in love with you the moment
we met, I saw only your eyes and your angel face. How could you
expect me to remember a mere dress when----"

"Oh, what nonsense--very nice nonsense; still nonsense."

"I like talking nonsense to you."

"And I like to hear it from you. But it isn't bread and butter."

"You're thinking of afternoon tea," said George Walker audaciously.

"No. I'm thinking of how we are to live when we marry."

The mere mention of that delicious word made George forget the
warning conveyed by the sentence. "Marry! Marry you! Oh, heaven!"

"A pauper heaven, I fear," said Lesbia; then fished in her pocket,
"see, the only valuable thing I possess, besides your love. It is for
you."

"Oh, my dear, it's not a man's ornament."

"As if that matters, since I give it to you," she said, laughing. "I must
give you something, and this is all I have to give."

She held out her hand, on the palm of which rested an amethyst
cross formed of four deeply purple stones, set lightly in gold filigree,
with a loop at the top for the necessary chain to pass through. Not a
very uncommon ornament at the first glance, George decided,
although very beautiful. But on looking more closely he became
aware that there was something bizarre about the thing. In the
centre where the four stones met was a tiny cube of malachite,
graven with a golden crown and inscribed with minute letters. The
pansy-blossom hue of the stones contrasting with the vivid green of
the cube gave the ornament rather an uncanny look.

"What a queer thing," said George, transferring the cross to his

broad palm.

"Yes! isn't it?" said Lesbia eagerly, and then brought out a
magnifying glass. "And the inscription is still queerer."

George poised the powerful glass over the slab of malachite, and
with some difficulty deciphered the golden Gothic letters. "'Refuse
and Lose,'" he read slowly. "Now what does that mean?"

"You stupid darling," cried Lesbia, pinching his ear, "can't you see? If
you refuse the cross--which is married life; you lose the crown--
which is me."

Walker thrust the cross into his pocket, handed back the magnifying
glass and solemnly embraced the girl, "I'll take the cross and the
crown and you, and everything I can get," he whispered in her ear.
"I don't exactly see the meaning, of course, but----"

"Was there ever such a dense man?" Lesbia demanded of the

blackbird in despair. "It's a religious symbol, of course. If you refuse
to bear life's cross in the way you should, you lose the crown which
ought to be yours in heaven."

George took out the ornament again and looked at it seriously. He

had a considerable strain of the Puritan in his nature, to which the
idea appealed strongly. "I shall certainly not refuse life's cross," he
declared soberly, "and may we both some day wear a crown in a
better world."

"My darling, my dearest, my best," she murmured, embracing him

fondly. The touch of seriousness in George's gay disposition
enhanced his value in her eyes. She approved of so sterling a
character.

"Where did you get the cross?" asked Walker, while the jewels
winked in the sunshine. "From your father?"

"No!" she replied unexpectedly. "He doesn't know that I possess

such a thing. But my nurse, old Bridget Burke--Tim's mother, you
know--who died last summer, gave it to me on her death-bed and
warned me not to tell my father about it. She said that it came from
my dead mother, and was to be given by me to the man I loved. So
you see, my darling, that even though it is a woman's ornament, you
must take it."

"I'll wear it round my neck," declared George. "It will bring me good
luck, I am sure."
"So Bridget said," observed the girl promptly. "She had the 'sight,'
you know, George, and declared that the cross would bring me luck
and money and love and position. I don't know how, unless it is by
marrying you."

"Ah, my love," said George somewhat sadly. "I can only give you my
heart. Money and position must come later. But if we both obey the
inscription and bear the cross we shall win the crown of success in
the end. Look how the gems flash, Lesbia--an earnest of the future."

While they were both admiring the cross, a tall, lean man, perfectly
dressed in a Bond Street kit, came softly down the grassy path. He
looked like a gentleman, and also like a hawk, and his pale eyes
wandered from one bent head to the other until they dropped to the
flash of the jewelled cross, which glittered on Walker's palm. Then
the newcomer started nervously, and took a step nearer to observe.
Lesbia and her lover looked up as the shadow of the man fell across
them, and in the movement they made, the cross fell on the grass.

"Oh, father, how you startled us," cried the girl, springing to her feet.

Mr. Walter Hale did not reply. His eyes were still on the purple stones
of the cross, and when his daughter stooped to pick it up, he
twitched his fingers as though anxious to take it from her. "Where
did you get that?" he demanded abruptly and harshly.

"Bridget gave it to me, and I have given it to George," she said,

handing the ornament to her lover. "It belonged to my mother."

"It did," said Hale sharply, "and therefore must not pass out of the
family."

"It won't," said Lesbia cheerfully; "George is to be my husband."

Mr. Hale frowned. "You have yet to gain my permission," he said in

dry tones. "Meanwhile, Mr. Walker, give me back the cross."
"No!" said George, who did not like the tone of his future father-in-
law and could be obstinate when necessary. "Lesbia gave it to me,
and I intend to keep it."

"Lesbia had no right to give it to you," cried Hale, his voice rising,
and he extended his hand to take his desire. But Walker was too
quick for him and dexterously swerving, shot the cross into his
pocket.

"It is Lesbia's first present to me," said he, excusing his obstinacy.

"She has no right to make you presents," foamed the other, who had
now entirely lost his temper.

"She has the right of a lover," retorted George coolly.

"There can be no question of love between you and my daughter."

The girl moved to her lover's side, very pale and very defiant. "That
is for me to decide," she said coldly, but with determination.

"You go against your father, Lesbia?"

"For the first time in my life. And why not, when the matter is so
important?"

Hale bit his lips and tried to stare her down: but as her eyes did not
drop before his own he was the first to give way, and did so with
inward rage. With an impatient shrug he wheeled to face young
Walker. The two presented the striking contrast of untainted youth
and artificial age too much versed in the evils of life. And youth had
the advantage, for--as in the case of Lesbia--the older man tried to
dominate without success. He was forced to take refuge in idle
threats.

"If you do not give me back that cross, it will be the worse for you,"
remarked Hale, very distinctly and with menace.
George clenched his fists, then, with a glance towards Lesbia, ended
the argument by stepping into his boat. As he rowed off, Hale, who
had not attempted to stop him, turned bitterly to his daughter.

"You have ruined me," he said between his teeth, and returned
hastily to the cottage.

CHAPTER II

THE UNEXPECTED HAPPENS

To say that Lesbia was amazed conveys imperfectly her state of

mind. The sudden arrival of her father, the hasty departure of her
lover, the mysterious incident connected with the amethyst cross,
and the still more mysterious remark which Mr. Hale had made--
these things perplexed and, very naturally, alarmed her. At once,
with the swiftness of an imaginative brain, she conjured up visions
of disgrace and shame and criminal publicity, going too far in her
surmises, after the fashion of such a brain. For after all, as a calmer
reflection suggested, there was nothing in what had taken place that
should induce such happenings, although there were several
disquieting hints.

For a few moments the girl remained where she was, too agitated to
move; but when Hale disappeared into the cottage, and George's
boat vanished round a bend of the shining river, she woke to the fact
that for her own peace of mind it was necessary to ask questions. At
once she ran up the grass-grown path, and speedily found herself in
the narrow passage, which led right through the house from back to
front. But she only entered to hear the street door bang, and flew to
open it again in the hope of catching Mr. Hale before he could go far
away. But the man must have made good use of his legs, for when
she peered out into the quiet side street she noticed that it was
empty. This vanishing of her father without an explanation dismayed
her more than ever, and in the hope of gaining some sort of
information she sought Tim in the tiny kitchen, calling on him loudly.
A soft voice like a well-tuned lute answered her from the scullery.

"Ah, Miss Lesbia, and what wud ye be after spoilin' yer pretty voice
for now? Don't ye, me darlin', don't ye!"

"Why has my father gone out, Tim?" asked Lesbia sharply.

An odd little man emerged from the scullery and stood coolly
rubbing his nose-tip with the toe of the boot he was polishing. "An'
how should I know, miss? Didn't he come tearing through the
passage, as if the divil wor after him, an' lape like a trout int' the
street? Sure ye must have seen the masther rampagin' yersilf."

"I know that father came and found me with George and----"

"Ah, thin, 'tis Garge, is it?" muttered Tim, beginning to brush

mechanically.

"And rushed away in a temper because George would not give him
my amethyst cross."

Crash went the boot on the floor, and the blacking-brush followed,
while Tim stared out of his melancholy grey eyes as though he saw
a ghost. Decidedly the ornament was causing a considerable
sensation, although Lesbia could not understand why her father
should rage, any more than why Tim should stare. "Like a stuck pig,"
as she said, inelegantly. And the annoying thing was that he did
more than stare.

"Oh, blissid saints in glory!" groaned the Irishman, crossing himself.

"What on earth do you mean?" asked the girl, tartly, for she was
beginning to weary of these mysteries.

"Oh, blissid saints in glory!" Tim moaned again, and, picking up the
boot and the brush with the expression of a martyr, went into the
scullery to peel potatoes.

Lesbia, who was a determined young woman, followed, quite bent

upon getting at the root of the disturbance.

"Come and talk, Tim."

"Sure an' I must git the dinner ready anyhow, Miss."

"Come out, or I'll come in," cried Lesbia, standing at the door.

"Sure ye wudn't dirthy th' clothes av ye," coaxed Tim, and very
unwillingly scrambled back into the cleaner, drier kitchen with the tin
basin of potatoes in his huge fist.

He was certainly an ugly, under-sized man, and looked like the

wicked dwarf of a fairy tale. But the similarity was all on the surface,
for Tim Burke was as good and devoted a little Paddy as ever dipped
his fingers into holy water. But his appearance was not
prepossessing, for he was broader than he was long, and on a pair
of hunched shoulders was set askew a gigantic head much too large
for his squat body. His short legs were crooked, and he usually
walked in a crab-like fashion in unexpected directions--that is,
whither his brain did not direct his legs to go. He was barely five feet
high, and his shaggy beard was as red as the untidy hair covering
his poll. He was quite a monstrosity.

Nevertheless, Tim had his good points, for Nature had given him
beautiful grey eyes, pathetic as those of a dog, and a sweet
sympathetic voice, which sounded like a mellow bell. To hear Tim
sing Irish ditties of the heart-breaking sort was a treat not to be met
with every day, but he rarely sang them, save to Lesbia, whom he
adored. And small wonder, for she alone was kind to the odd,
uncouth, little man. Mr. Hale, whose selfishness was phenomenal,
treated Tim like a white slave and, indeed, he might be called one,
seeing that he worked like a horse and received no wages. Yet he
was an admirable housekeeper and a magnificent cook. With such
qualifications he could have procured a well-paid situation. Yet, for
Lesbia's sake, he remained at Rose Cottage, watching her like a cat
a mouse, but with more amiable intentions. She was the legacy
which his mother Bridget, the girl's nurse, had left him on her death-
bed, when she died some twelve months before.

Lesbia, looking like a fairy princess attended by her dwarf, perched

herself on the kitchen table with a severe face. To lose no time while
being questioned, Tim set to work peeling the potatoes, for Mr. Hale
growled like a bear when his meals were not placed punctually on
the table. As he peeled each potato, he dropped it with a splash into
a bucket of clean water and rarely raised his sad eyes to the face of
his young mistress during the conversation which ensued. Also--and
this Lesbia noticed--he conversed very reluctantly, and every
admission was wrung from unwilling lips.

"Tim," said his mistress severely, and beginning at the beginning,

"you are the only son of my nurse, Bridget Burke."

"I am that, Miss, her only boy, Miss, and a good mother she was to
me."

"A good nurse also, Tim. She loved me."

"An' who wudn't, ye pretty creature? Ain't I devoted to ye likewise,

me darlin'? Answer me that now?"

"I shall do so," said Miss Hale significantly, "when our conversation
comes to an end."

Tim groaned and winced. "Bad luck to the crass," he breathed, "an'
may the Vargin forgive me for sayin that same."
"Why, bad luck to the cross?" demanded Lesbia, coming to the point.

"An' how shud I know, me dear?"

"But you do know," she insisted. "Tim, your mother gave me that
cross."

"Did she now?--the owd fool."

"How dare you, Tim, and Bridget dead? She was your mother."

"Deed an' well she might be, Miss, for an uglier owd woman nivir
could be found in County Clare, forby she left it for this blissid
country whin I wor a gossoon."

"Did my father bring her over from Ireland, Tim?"

"Not he," Tim shook his Judas-coloured head. "Divil an eye did the
pair av us clap on the gintleman for many a long day. Wasn't I a
bare-futted brat runnin' wild about Whitechapel till my father--rest
his sowl--wos tuck by the police for shop-liftin'--bad luck to thim? An'
he died in gaol, poor man--ah, that he did, laving me mother an' me
widout bread in the mouths av us."

"What did Bridget do then, Tim?"

"Sure she come to Wimbleton or a place hard by," admitted Tim

reluctantly, "sellin' apples an' nuts, an' a mighty bad thing she made
by the sale."

"I want to know exactly how she came to be my nurse?" said Lesbia.

Tim bent over the potatoes deeply interested in the peeling. "Why,
Miss, your father--" here he swallowed something--"the masther,
Miss, and a kind, good gintleman, tuck pity on her and give her the
situation as your nurse, me dear."

"But my mother?"
"Oh, howly saints, an' how cud she say anything whin she wos dyin'
an' you but a year old? But my mother nursed you like her own
choild, Miss, till ye went to that school at Hampstead. But ye came
back here just whin she was dyin', poor sowl."

"I did, a year ago," said Lesbia significantly, "and in time to receive
the cross, Tim."

"May the father av lies fly away wid it!" groaned the dwarf. "An' may
the saints forgive me for the wicked wish."

"Whatever do you mean, Tim?"

"Mane, ah, nivir ask me what I mane. But the crass isn't with ye
now, an' ye'll be the betther widout it."

"Oh!" Lesbia slipped off the table with a heightened colour, "does
that mean it is unlucky? I gave it to George, you see, and----"

"Ah, divil doubt but what you'd give the head av ye to Garge,"
grumbled Tim, taking up the tin of peeled potatoes. "Ah, well, 'tis
betther he shud have it nor you, me dear."

"But why, but why?" asked Lesbia, frantic with curiosity.

"Ah, nivir ask me, Miss," replied Tim enigmatically, and departed to
continue his culinary work; also--as she could see--to avoid further
questioning.

Failing Tim, the girl resolved to learn what her father would say,
when at dinner. This was a meal which Mr. Hale never missed, as he
was devoted to the pleasures of the table and appreciated Tim's
excellent cooking. He always arrayed himself in purple and fine linen
to do justice to the viands set before him, and it was the rule of the
cottage that Lesbia should also dress appropriately. Her father prided
himself upon being ultra-civilised, and would have eaten a red
herring with sartorial ceremony. The table was admirably laid with
crystal and silver and valuable china, and--decorated with flowers in
graceful vases--looked extremely pretty. Tim, in a livery of his
master's devising, acted as butler, and the wines were as good as
the food, which is saying a lot. Mr. Hale might live in a humble
cottage and might mix with queer people, but he was a sybarite,
who enjoyed the good things of this life artistically prepared. The
room was beautifully furnished, and Lesbia was more beautiful than
the room. Therefore, on this especial night, Mr. Walter Hale had both
his palate and his eye gratified. His ear was not ministered to quite
so pleasantly, as, after dinner, and when Tim had left the room to
prepare the coffee, he renewed the subject of the cross with his
daughter.

"Lesbia," said he, fixing his eyes on her somewhat flushed face, and
looking extremely high-bred, "why did you give away that cross?"

"Bridget, who presented it to me on her death-bed, said that I was

to bestow it on the man I meant to marry. I have done so."

This was a very defiant speech, and Hale frowned. "I shall not allow
you to marry young Walker," he said distinctly.

Lesbia shrugged her shoulders with indifference. This was not the
way to manage her. "I am sorry, father, as I have decided to become
his wife."

"He has no money, you silly girl. I know for a fact that he is paid
only a small salary by Michael Tait, who is a screw and a skinflint
where his own pleasures are not concerned. Moreover, Walker has to
support his widowed mother, and she is not likely to welcome a
daughter-in-law who will curtail her comforts, such as they are. A
hard woman, Lesbia, a very hard woman, my dear. I ought to know,
as we have been acquainted for years."

The prospect did not seem alluring, but love sustained the girl.
"George might get a better situation," she ventured to remark, a
trifle anxiously. "Why," she added, this as though the thought had
just struck her, "he might help you, father."

Hale spilt the port wine he was pouring into his glass. "What's that?"

"You need not speak crossly, father," replied Lesbia, puzzled by the
sharpness of his tone. "I merely suggested that George might enter
your office, and then he----"

The man rose suddenly and began to pace the room with the glass
of wine in his hand. But the look he cast upon his daring child was
so grim that the unfinished sentence died on her lips. "'George--
might--enter--your--office!'" he repeated slowly, and ended with a
cynical laugh. "Humph! I wonder now----" he laughed again and
checked his speech. Then he finished his glass of wine and returned
to the table. "When does Walker come to see you again?" he asked
abruptly.

"To-morrow night at six o'clock," said Lesbia, promptly. "He rows

down the river from Medmenham, or walks along the towing-path,
every evening."

"A devoted lover truly," said Hale drily, "and how long has this pretty
wooing been going on?"

"For a few months," said Lesbia, rather alarmed by the stern

expression of her father's face. "Don't be angry. After all, it was you
who introduced me to George."

"The more fool I, seeing his age and looks and poverty. Lesbia!" he
placed his knuckles on the table and leaned across it. "You must
marry my friend, Captain Sargent."

"Ex-Captain Sargent," cried Lesbia scornfully, and rising

unexpectedly. "I shall do nothing of the sort. I don't even like him."

"Pooh! Pooh! Pooh! He is a gentleman----"

"So is George."

Hale rapped the table sharply. "Do not interrupt, you minx. Sargent
has retired from the army, it is true. But he has a good income and a
pretty bungalow at Cookham. We were in the same regiment until I
left the service some fifteen years ago; so I know him well. He will
make an excellent husband--a very excellent husband indeed."

"But, father, he is nearly as old as you are."

"What of that? Sargent is a handsome man and looks young."

Lesbia bit her lip, and tapped her foot on the ground. "I shan't marry
him."

Hale scowled. "You shall. I am your father and you shall do as you
are told, my dear. And if you don't marry Sargent you shall certainly
not marry Walker, unless----" he stopped suddenly.

"Unless what?"

"Unless you get that cross back from him," stormed Hale angrily.

Lesbia was nothing if not direct, and the mystery of the cross piqued
her exceedingly. She ventured on a leading question. "Why do you
want that cross so much, father?"

"It belonged to your poor mother," said Mr. Hale sentimentally, "and
means more to me than you can ever guess. I missed it from your
mother's jewel-case when she died; but I never expected that
Bridget Burke, who was supposed to be the soul of honesty, had
stolen it."

"No! no. I don't believe Bridget would have stolen anything."

"Bridget would have done anything that suited her," retorted Hale
grimly, "and if she came by the cross honestly--say by your mother
giving it to her--why did she not let you show it to me?"

"I can't guess: perhaps she thought you would take it from me."

"I might and I might not," replied Hale hesitatingly, "but at all events
I should not have allowed you to give it to young Walker. You must
ask him to return it at once."

"I shall not," said Lesbia determinedly.

"You shall," cried Hale, and their eyes met like those of two duelists
crossing swords. But the father's eyes fell first. "You dare to defy
me."

"Not exactly, but----"

"I want no explanations, thank you; but I'll make a bargain with you.
If Walker returns that cross he can have you as his wife. If not, I
shall refuse to allow him to haunt the cottage or pay attentions to
you. And remember, Lesbia, that I hold the purse-strings."

"George can keep me," panted Lesbia, her colour rising.

"George has to keep his mother. Marry him without a dowry and see
what the Honourable Mrs. Aylmer Walker will say."

"You cannot give me a fortune, father."

"I can give you two thousand a year if you are obedient," said her
father coolly, and walked towards the door. "Think it over, Lesbia,"
and he left her to meditate on the astounding news.

Lesbia was naturally astonished, since she never dreamed that her
father was so wealthy. Everything in the cottage was good of its
kind, and even luxurious, and the living was excellent. But at times
Hale appeared to lack ready money, and frequently impressed upon
Tim that it was necessary to be economical. Why then should he act
in this way when he appeared to be rich, and why should he offer so
large an income on condition that the cross was returned? So far as
Lesbia understood her father's hard nature, he was not a man to pay
generously for a merely sentimental idea.

However, the fact remained that if she could get the amethyst cross
returned, she could marry George and bring him a substantial dowry.
After much reflection, she determined to ask George for the
ornament. After all, she could easily give him something else, and it
was worth satisfying her father when so much was at stake.

For half a moment Lesbia thought that she would put on her cloak
and hat, and walk along the towing-path to Medmenham in the hope
of meeting her lover. It was now half-past eight, as dinner had taken
place at seven.

Mr. Hale had gone out, and Tim, as was his custom on fine evenings,
was paddling about in a boat on the river, sometimes rowing and
sometimes fishing. She was alone and the solitude was becoming
irksome. A great wave of desire for love and sympathy came over
the girl, and she longed to see George Walker immediately, not only
to tell him of her father's offer, but to be petted and kissed and
comforted. But a few minutes' reflection showed her that it was not
advisable that she should walk alone to Medmenham, especially as
the chances were that she might not meet her lover. It was true that
he would certainly be at home, but Lesbia did not know Mrs. Walker
and, from the description given by her father, hesitated to meet that
formidable lady. On the whole, then, she decided, it was better to
wait until George came as usual on the ensuing evening.

Being alone, it was difficult to find entertainment. Lesbia played the

piano for a few minutes: then she read and afterwards enjoyed a
game or two of Patience. Finally, feeling bored in the lonely house,
she retired to bed about ten o'clock. There she speedily fell asleep,
and dreamed that all obstacles were removed, and she was George
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